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Telkom settlement welcomed

Dominic Cull, regulatory advisor for the Internet Service Providers’ Association (ISPA), has broadly welcomed the news that the Competition Commission has reached a settlement with Telkom.

The settlement is in response to a series of complaints lodged against Telkom in 2009 relating to abuse of its dominant position. The complaints were made by ISPA, Internet Solutions, Mulitichoice and Verizon, amongst others.

As a public version of the settlement agreement has not been circulated, it is important to note that ISPA has not yet considered the actual terms of the settlement in full. The Association is basing its media statement of today on the Commission’s press release of last Friday.

In terms of the settlement mentioned in the latter press release, Telkom will pay a R200 million fine over three years.

More importantly, says Cull, the settlement breaks new ground by attempting to deal with the causes of the original transgression. Telkom will separate its retail and wholesale divisions and put in place a transparent pricing programme to ensure non-discriminatory service provision by Telkom to its retail division and third-party Internet service providers. The settlement also includes arrangements for monitoring Telkom’s future conduct, as well as wholesale and retail pricing reduction commitments that should yield consumer savings of R875 million over five years.

‚”The settlement addresses the reality that Telkom is both an active competitor and the provider of the basic infrastructure and services that the whole industry relies upon,‚” Cull notes. ‚”This is far more constructive than simply giving Telkom a fine, and consumers are set to benefit, not just the complainants.‚”

Cull warns, though, that the effectiveness of the settlement will only be able to be judged through its implementation. In particular, he says, ISPA will be watching to ensure that it is enforced adequately and that the monitoring of Telkom’s subsequent conduct is effective.

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