D-day looms for Telkom
Telkom is set to go in front of the Competition Tribunal this week, on Wednesday (17 July) as it seeks clarity over terms reached in a R200 million settlement for abusing its dominance in the broadband market.
The settlement agreement addresses various complaints lodged against Telkom from 2005 to 2007 by the Internet Service Providers Association and others.
The settlement package, announced in June, includes:
- An admission of guilt;
- Financial penalty of R200 million;
- Functional separation between Telkom’s retail and wholesale divisions along with a transparent transfer pricing programme to ensure non-discriminatory service provision by Telkom to its retail division and ISPs;
- Effective monitoring arrangements of its future conduct;
- And wholesale and retail pricing commitments for the next five years estimated to yield R875m savings to customers.
The agreement is subject to confirmation by the Competition Tribunal.
Telkom however, will seek to gain clarification on a number of points within the original agreement, most notably where the agreement relates to a “functional separation” between its retail and wholesale divisions.
Over the 2014, 2015 and 2016 financial years, Telkom will also be made to reduce the prices of wholesale services implicated in the complaint and used by ISPs to deliver their IP VPN and Internet access services, and related retail products.
The price reductions are weighted more heavily in favour of wholesale services (at least 70% wholesale) to bring about a more competitive market and will amount to an estimated R875m savings to the market.
Telkom will also ensure that any price reductions are not reversed in the 2017 and 2018 financial years.
Commissioner Shan Ramburuth said: “We are satisfied with the settlement agreement and expect that it will lead to a more open and competitive market and translate to lower prices for consumers.”
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