The Communications Users Association of SA (CUASA) and the SA Value-Added Network Association (SAVA) have criticised government's strategy to lower telecommunications costs. They argue that it leaves out an important element of the solution.
CUASA and SAVA say investments in undersea cables and the deregulation of the South African telecoms environment will not benefit South African consumers, unless the anomaly in national backhaul prices is addressed.
"Government, investors and telecoms stakeholders are laudably spending a lot of time, energy and money focusing on the introduction of new undersea cables to help solve SA's bandwidth problems," says CUASA chairman Edwin Thompson.
However, the bigger problem is national backhaul connectivity costs more than international connectivity.
"A Telkom STM-1 (155Mbps) line from Johannesburg to London is ludicrously expensive to rent, at R1.7 million per month, while a much shorter connection offering the same bandwidth to Cape Town costs more at R1.8 million per month," he says.
<B>African connectivity investments</B>
* Sea Cable System (Seacom): $550 million in private funds. Likely to be operational in early 2009, and connects Africa and Europe.
* The East African Submarine Cable System project (Eassy): $240 million, connecting African countries.
* SA's Infrastructure Company (Infraco): $700 million on connecting SA with the UK and Brazil.
* The Nepad Broadband Infrastructure Network (NBIN): $46 million, connecting 23 African countries. The cost is expected to escalate.
*The Reliance Group, an Indian consortium: R1.5 billion on a cable connecting SA with other African countries.
African initiatives not landing in SA
* East African Marine Systems: $700 million, connects Kenya, Somalia and Sudan.
* Regional Satellites Communication (Rascom): $50 million on the design and launch of an earth-orbiting satellite system that will allow for point to multiple point telecommunications throughout the African continent.
Source: Frost & Sullivan analyst Lindsay McDonald
This pricing anomaly effectively nullifies any landing point liberalisation or new, ocean-based connectivity services, regardless of how fast or cost-effective they may be, says SAVA chairman Paulo Froes. "The situation is ridiculous!"
Telkom's fault
Froes and Thompson blame Telkom for the pricing disparity, saying the fixed-line operator is "throwing a spanner in the bandwidth works again". They also argue that Neotel fails to provide competition, as Telkom still monopolises the supply of local bandwidth.
"Telkom is controlling how the network is structured, so it's no surprise when one notes that all local bandwidth is routed through Telkom's international bandwidth hub in Johannesburg," says Thompson. Even Internet connections from Cape Town-based ISPs are routed to Gauteng first, before being rerouted back to the Mother City, he explains.
"Clearly, Telkom has introduced local pricing structures which will negate any benefits which may come from the liberalisation of the SAT-3 landing point, or any other landing point connecting the country to international and fairly-priced bandwidth," says Froes.
Froes says the pricing structure also shows Telkom cross-subsidised what is essentially a monopolised service. This is something that is not supposed to happen in terms of South African telecoms regulation, he notes.
Telkom says it is aware of the debate. However, a spokesman was unable to confirm the pricing structure, or refute the allegations that it is cross-subsidising a monopolised service. A statement would be provided in due course, says the spokesman.
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