ISPA Lodges Complaint With Competition Commission

13 December 2005

The Internet Service Providers’ Association (ISPA) today lodged a broad-ranging complaint with the Competition Commission regarding Telkom’s anti-competitive activities in the Internet services market.

A large number of Internet service providers (ISP) compete with Telkom for the provision of Internet services. But at the same time, most ISPs are forced to obtain their underlying telecommunications services from Telkom.

“ISPA’s complaint to the Competition Commission follows an increasing stream of complaints from ISPA’s members,” says Masedi Molosiwa, joint-chair of ISPA. “From the smallest ISPs right through to the largest, the reports are the same: 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.”

In the retail market, Telkom determines the price that resellers must pay for SAIX ADSL 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 price, so that competitors cannot afford to stay in business.

Similar problems exist in the wholesale market. Telkom controls access to key facilities such as international bandwidth, and to local loop access services such as ADSL. By controlling the price that ISPs pay for these services, Telkom makes it difficult for large ISPs to compete with Telkom’s wholesale offerings.

“Telkom’s position as both a supplier and a competitor allows it to force other ISPs out of the market,” says Greg Massel, joint-chair of ISPA. “Fewer viable competitors means that Telkom is in a position to keep the price of services such as broadband at an artificially high level. Ultimately, the consumer is paying the price for Telkom’s tactics.”