Second fixed-line operator will not usher in competition, says DataPro

People who think real competition will be introduced to the telecommunications industry when the second fixed-line operator is introduced are delusional because while Telkom has improved its "market attitude" significantly - and now generally operates using sound business principles - the second operator is going to be bogged down by "the usual old parastatal mentality".

So said Douglas Reed, MD of premier Internet service provider (ISP), DataPro.

"The second fixed-line operator basically comprises of parastatals - Transtel and Easitel part of Transnet and Eskom. These companies, including black empowerment company, Nexus, are going to have a 49% stake in the new operator. The problem is that they are going to have a lot of sway over the incumbent operator and they, in my belief, are not bringing much to the table. They have the same mindset of the old Telkom and have, in fact, employed a lot of ex-Telkom employees. The problem with this is that most of these employees also have the attitude of the old Telkom from the mid-1990s, where "business is a right and nothing to do with being earned".

Reed said his company is "becoming increasingly impressed" with Telkom`s business practices. "They used to view us as competitors, but they have done a complete turnaround. They have totally re-positioned themselves and have become very competitive - and have upped their customer service levels. They now view ISPs as wholesale customers.

"This is a 360% degree swing from a few years back when we were viewed as competitors. We actually sell airtime for them and they realise this. I don`t believe the second or third operator - who is also going to be fundamentally a parastatal - will be able to compete effectively against Telkom.

"This fundamental shift is noticeable at senior management level. Hopefully this will shift down throughout the organisational and eventually include wholesale pricing. I doubt that anyone will effectively compete, they are just too big - and now that they are rapidly taking on more of a free enterprise approach to business, they are going to be even more formidable."