Telkom seeks 18% DSL price drop

Fixed-line monopoly Telkom said this morning its customers can expect to benefit from another price reduction from 1 August, provided the proposed price changes are approved by the Independent Communications Authority of SA.

Acting CEO Reuben September explained the regulatory formula would have allowed Telkom to file a change in the basket of products of 8.7%, meaning it could have increased its prices by 8.7%. However, the company instead is filing for an overall price decrease of 1.2%.

In a statement released ahead of it annual results presentation, Telkom said the tariff changes would especially benefit DSL subscribers. They will enjoy an average reduction of 18.2% and in the entry-level (up to 384Kbps access) of 38%.

The new broadband offering - the entry-level Do Broadband - which combines DSL 384Kbps access and Internet service provision - has also been cut and will cost R199 per month, including VAT (a 29% reduction).

According to September, the reductions in DSL reflect Telkom's commitment to making broadband more affordable, attractive and accessible.

In the first year after launching DSL, Telkom had approximately 20 000 DSL customers. On 31 March 2007, it had over 250 000 subscribers, reflecting the influence of volume on DSL costs.

He adds that Telkom's operational plans are well in place to deal with the anticipated increasing DSL demand because of the price reduction. Moreover, approximately 40% of new customers have opted for self-install, which allows customers to do the portion of the installation that takes place on their premises themselves.

The statement also says business customers of Telkom's data products will see "considerable savings", with an average decrease of 12%.

International private leased circuits have been reduced by 30% (cable) and 12% (satellite), Diginet (overall) has been reduced by 11%, Megalines reduced by 10%, and ATM Express reduced by 10%.

There is also to be a 10% decrease in long-distance call charges - 65c per minute, including VAT, during standard time and 32.5c per minute, including VAT, during callmore time - and a 9% average reduction in international calls.

"Those with family or business ties in the UK and US will especially benefit, with calls costing 95c and 85c, including VAT, during global peak times and global off-peak times, respectively. Calls to neighbouring countries see an average decrease of 15% during peak times and 19% during global off-peak times," the statement says.

The minimum charge for local calls remains unchanged at 59.4c, including VAT, as does the per-minute rate of 38c, including VAT, with a small increase in the callmore rate (from 16c to 17c per-minute, including VAT).

However, in certain instances, business considerations have dictated price hikes, offset by the reduction in call charges, and include a 12% increase in line rentals.

The monthly rental on analogue lines will increase to R111.90, including VAT for residential, and R148.68, including VAT for business, Telkom says.

"That we have kept our increases well within these limits and have filed for an overall price decrease of 1.2% on our basket services, clearly demonstrates our on-going commitment to our customers.

"While the net impact of the proposed prices will vary among customers, the overall effect will be a reduction in the cost of telecommunications in SA."