South Africa: It's simple: Telkom keeps the costs up

23 April 2012

Business Live - 21 April 2012

With announcements on new undersea cable and plans to rejuvenate telecoms policy, South Africans can be forgiven for wondering when landline broadband costs will come down.

Although the ICT industry is complex, the solution is simple. Everywhere else fixed-line internet is a cheap and abundant enabler of the information economy. But in South Africa broadband costs are among the world's highest.

High prices are caused by a problem with the last mile, the local loop. This is the piece of copper from an exchange to a home or work premises, which Telkom controls exclusively.

Simply put, the problem with the cost of internet access is Telkom. The national telecoms utility is a mess - less of a mess since Pinky Moholi took over as group CEO, but still a mess.

Telkom cannot make money from its own network. It cannot make money letting its own lines before it adds the other services, like phone calls or internet access. T he access deficit appears to be the reason why Telkom is stalling local-loop unbundling that would give other service providers direct access to its customers.

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Categories: ICT

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