DOTCO wants to stop Telkom

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Cape Town, 26 Oct 2005

Cape Town-based Internet service provider (ISP) DOTCO has filed an urgent application in the High Court to stop Telkom from going ahead with its per usage ADSL billing, which is due to come into effect from 1 November.

Telkom says it is aware of the pending legal action and its legal team is working on a response to the challenge.

DOTCO, which has been reselling a 30GB ADSL offering since March through its "All you can eat" service, alleges that Telkom`s new billing structure would unfairly prejudice it in the market and effectively means a tenfold price increase for users.

Brendan Hughes, a lawyer at Michalsons Attorneys, which acts on behalf of DOTCO, confirms that an urgent application is to be brought on Thursday and that DOTCO will ask the court to interdict Telkom from introducing usage-based billing at the new wholesale prices.

The dispute originates from a letter sent to DOTCO, and other ISPs, in August stating that it would change its billing structure from one of set usage and a soft cap to one of per usage per gigabyte and a hard cap.

'Only recourse`

Johan Ferreira, DOTCO`s MD, says his main aim is to get Telkom to honour its contract with his company.

"If Telkom has to change the billing structure and the result was an unchanged price, then that would be one thing. However, the net result here is that a service that was originally resold for between R300 and R600 for up to 30GB would now cost R1 800 wholesale and the ISPs would have to still add their mark-up," he says.

"We have tried to negotiate with Telkom but it appears as though the only recourse we have is to apply to court to stop them from implementing their new billing structure."

ICASA complaint

DOTCO has also lodged a complaint with the Independent Communications Authority of SA (ICASA), which is separate from the High Court action. In that complaint, DOTCO cites section 53 of the Telecommunications Act, which allows the regulator to tell a full telecommunications licence-holder to refrain from acting in a manner that unfairly prejudices another party.

"The section 53 dispute highlights the manner in which the new usage-based billing operates unfairly against self-authenticating ISPs. We are still waiting for ICASA`s response on that issue," Hughes says.

A Telkom statement says usage-based billing is necessary because it provides each ISP with the flexibility to determine its own ADSL Internet product offering and terms of usage allocation.

"Telkom will purely perform the role of ADSL Internet access [bandwidth] wholesaler as opposed to the perception created by the industry that it is regulating ADSL usage. Telkom will provide tools to control ADSL sessions," the statement says.

Related story:
Telkom`s ADSL taken to ICASA again