ISPA calls for ‘Telkom tax’ to be reduced

24 May 2010

The Internet Service Providers’ Association of South Africa (ISPA) is calling on ICASA and Telkom to revisit the issue of ADSL line rental and access charges to help bring the prices of broadband down in South Africa.

The organisation says that the ‘Telkom tax’ is one of the factors still keeping broadband prices artificially high in South Africa and believes that there is scope for line rental charges to be restructured and reduced. In particular, ISPA believes that consumers should not be forced to take a voice line to access an ADSL line.

“We applaud the many steps that the South African broadband market has taken forward in recent months, especially with competition in the undersea cable market driving bandwidth prices down dramatically during 2010,” said ISPA General Manager Ant Brooks,

“However, South Africa’s high line rental costs remain a major barrier towards wider adoption of broadband in the country. While we accept that Telkom and other fixed-line providers incur a cost providing line infrastructure, we believe that fees for analogue line rental and ADSL access should be lower.”

Brooks pointed out that the analogue line rental and DSL access costs for a 4

Mbps ADSL service alone cost R544 per month, which means that high-speed DSL access is unaffordable for most South Africans before bandwidth costs are even factored into the equation.

“A major part of this cost – R131 – is related to an analogue voice line rental tariff for a service many consumers don’t even want,” he added. “But we also believe that there is some scope for the access portion of the tariff to be brought down.”

Brooks said that Telkom is able to impose a tax because of its stranglehold on local loop infrastructure, which is in turn a product of its protracted monopoly period. Although ISPA would be happy if Telkom would proactively look at this issue, it may be necessary for ICASA to address it with new regulations.

ISPA believes that the margin on ASDL access should be greater, but this should not mean that the price to consumers should be higher. ISPA instead would support a more equitable distribution of ADSL revenues between ISPs and Telkom.

“ISPA understands that there is a need for ADSL access charges since there is a cost component associated with this infrastructure. ISPA also understands the need for differential pricing according to the speed of the line since higher-speed lines need more backhaul bandwidth.

“But we are asking for more transparency and equitability in how access charges are billed to ISPs and consumers. Line rental and ADSL access are among the few elements of total ADSL costs that have not come down over the past few years,” Brooks concluded.