Johannesburg, 02 Feb 2007
There is market speculation that Telkom will announce interconnection charges for Internet service providers (ISPs) that could damage the business case for emerging markets to provide voice over Internet Protocol (VOIP).
Low level ISPs previously did not interconnect with Telkom, and were not charged this fee. It is speculated that Telkom is moving towards interconnecting directly with these ISPs and charging them a per-minute fee of between 80c and R1.
Geoff Rehmet, new business development manager at Internet Solutions, says the rates could damage the business case for VOIP because it squeezes ISPs' profit margins.
"Looking at the current interconnection rates the mobile operators have, there is insufficient margin for VANs [value-added network service providers] to make a profit on VOIP calls and operate a viable business," he says.
Rehmet adds it is necessary for Telkom to reduce interconnection rates for ISPs to well below what the mobile operators are currently being charged. He and an anonymous industry source note mobile operators pay Telkom 28c per minute to terminate calls on Telkom, while the fixed-line operator pays mobile operators R1.25 per minute. Therefore, emerging ISPs will be forced to pay almost three times what the mobile operators will pay.
No comment
Telkom has refused to comment on the matter, but says it is reviewing interconnection recommendations from the Independent Communications Authority of SA (ICASA).
These draft regulations were published on 27 January in the Government Gazette and stakeholders have until 31 March to provide comment.
Controlled retreat
However, Storm business development director Dave Gale says Telkom's interconnection rate for ISPs will not kill VOIP.
"VOIP is more than saving money; we just have not matured to that point yet," he says, pointing to VOIP's convergence abilities.
Gale notes that in the drive to lower telecoms costs, incumbents will fight a controlled retreat, while new entrants will fight for faster change.
"ICASA needs to bed down market definitions first, then start working on levelling the field at a pace that brings change without chaotic disruption. It is a tightrope, and needs astute and strong leadership," he says.
ICASA has published a notice of its intention to draw up market definitions. Industry players feel these guidelines will go a long way towards assisting with final interconnection and facilities regulations.
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