ISPA welcomes Telkom, CompCom settlement
The Internet Service Providers’ Association (ISPA) has welcomed the Competition Commission’s “historic” settlement with Telkom, which will see the operator pay R200 million in penalties.
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.
On Friday (14 June), it was announced that Telkom and the competition commission had reached a settlement which will see the operator add a R200 million penalty to the R449 million fine it already owes for abusing its dominance in the broadband market.
In August 2012, the competition tribunal found that, between 1999 and 2004, Telkom had leveraged its upstream monopoly in the facilities market to advantage its own subsidiary in the competitive value added network market.
Telkom’s conduct caused harm to both competitors and consumers alike and impeded competition and innovation in the dynamic VANS market, and a R449 million fine was imposed on the telco.
The latest settlement relates to claims made against Telkom for similarly abusing its dominance in the market from 2005 to 2007.
Dominic Cull
“The settlement breaks new ground by attempting to deal with the causes of the original transgression,” said regulatory advisor for ISPA Dominic Cull.
As part of the settlement, Telkom has committed to the functional separation between its retail and wholesale divisions and promised to implement a transparent transfer pricing programme to ensure non-discriminatory service provision by Telkom to its retail division and ISPs.
More significantly, the telco has also committed to wholesale and retail pricing changes for the next five years, which are estimated to yield R875 million savings to customers.
“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 said.
“This is far more constructive than simply giving Telkom a fine, and consumers are set to benefit, not just the complainants.”
ISPA said it would ensure that the terms of the settlement are enforced adequately and that the monitoring of Telkom’s subsequent conduct is effective.
“The effectiveness of the settlement will only be able to be judged through its implementation,” Cull said.
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