Next year could be a particularly uncomfortable one for Telkom. Internet service providers have signalled their determination to bring the monopoly fixed-line operator to book for what they allege are ongoing and widespread anticompetitive practices.
The Internet Service Providers' Association (Ispa), an industry organisation consisting of more than 80 ISPs, has lodged a broad-ranging complaint with the competition commission, accusing Telkom of "anticompetitive activities in the Internet services market".
Telkom, through its TelkomInternet retail and SA Internet Exchange (Saix) wholesale Internet divisions, competes directly with ISPs. At the same time, ISPs have to obtain their underlying telecom facilities from Telkom. This, Ispa alleges, has led to widespread abuse.
"Ispa's complaint . . . follows an increasing stream of complaints from members," says Ispa co-chair Masedi Molosiwa. "Telkom is using its dominant market position to take business away from other ISPs. We want the competition commission to take a good, hard look at the way the market is structured, and make sure that our members are able to compete fairly to provide reasonably priced services to their customers."
It's not the first time that ISPs have taken their grievances to the competition authorities. In late 2002, Ispa and the SA Vans Association lodged a similar complaint with the commission. In February 2004, the commission referred the matter to the competition tribunal for determination, saying that Telkom had "abused its dominant position by engaging in a pattern of anticompetitive practices". The commission said the effect of these practices, including legal actions and threats of service termination, had been to chill competition in the ISP market.
Telkom, however, took the case to the high court, where it has subsequently stalled. Ispa is more confident that its new complaint won't be taken on review. The association has taken special care to ensure Telkom isn't able to use legal loopholes to tie up the process in the courts, says Ispa management committee member Marc Furman. "Telkom's strategy is to stall and prevent these things from coming before the tribunal. I think Telkom knows that the tribunal is a robust institution . . . and is quite keen to avoid any telecom matters coming before it."
Why bring a new complaint? "The abuse has continued and it has been across the board. This was an issue faced by first-tier ISPs . . . but it has now reached all the way down to second-tier ISPs," Furman says.
Ispa says the division between Telkom's infrastructure business and its ISP business is insufficient. It claims that cross-subsidisation is rife.
For example, in the retail market, Telkom determines the price that resellers must pay for Saix broadband accounts. But it also competes directly with those resellers in the guise of TelkomInternet. This enables Telkom to squeeze the margin between the wholesale and retail prices, so that competitors can't afford to stay in business, Ispa says.
Telkom says it can't comment on Ispa's complaint as it has yet to study its content.
