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Telkom 'rebalances' bandwidth pricing


Johannesburg, 31 Aug 2007

The fixed-line operator is rebalancing its national and international bandwidth pricing.

This follows arguments by the Communications Users Authority of SA (CUASA) that Telkom's international connectivity and national backhaul pricing structure is so disparate that it nullifies government's infrastructure investments.

Telkom group executive for corporate communications Lulu Letlape did not provide details as to how the process would take shape, or when the re-balanced tariffs would be filed with the Independent Communications Authority of SA.

Letlape refutes allegations by CUASA and the SA Value Added Network Association (SAVA), that SA has a price disparity in international and national bandwidth pricing. She says these statements are misleading and inaccurate.

CUASA chairman Edwin Thompson claimed rental for a Telkom STM-1 (155Mbps) line from Johannesburg to London costs R1.7 million per month, while a much shorter connection offering the same bandwidth to Cape Town costs R1.8 million per month.

This comparison is inaccurate, as the Johannesburg to Cape Town connection costs R1.6 million, Letlape says. "The R1.8 million figure quoted seems to be based on the old tariffs for domestic services."

Letlape further argues that the use of distance as a baseline for price comparisons on telecommunication services can be deceiving. "Cost components and economies of scale would be more accurate for comparing different rates."

Access, in many cases, is the most expensive part of providing a service, especially if it is a high-bandwidth service where a fibre cable has to be installed specifically for the purpose, she says. Additionally, there are more infrastructure and maintenance resources needed to offer a national access network compared to an international network, she notes.

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