Telkom to cut IP Connect broadband prices

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 25 Mar 2020
Telkom group CEO Sipho Maseko.
Telkom group CEO Sipho Maseko.

Telkom has reached a settlement with the Competition Commission (CompCom) to reduce the price of the telco’s IP Connect products.

While ordering mobile operators to slash their data prices in its Data Services Market Inquiry last year, the competition watchdog said Telkom’s business unit Openserve must also reach agreement with the commission on substantial price reductions for the IP Connect products.

It said failure to reach the necessary agreements within specified timeframes will result in the commission proceeding to prosecution under the appropriate sections of the Competition Act.

So far, MTN and Vodacom have announced plans to reduce mobile data prices by up to 50%.

IP Connect allows Internet service providers (ISPs) to connect to Telkom’s broadband network to enable them to provide high-speed connectivity to customers.

It is one of the biggest cost drivers for ISPs and has previously been cited as a major inhibitor to growing broadband in SA because ISPs argued the cost was inflated and limited competition.

Over the years, Telkom has been reducing the price of IP Connect products.

In a statement today, Telkom says in order to enhance competition in the delivery of fixed broadband access, Telkom and the CompCom have reached an agreement with the introduction of a new aggregated wholesale solution that removes concerns over the current IP Connect product.

Telkom and the commission have agreed the new product suite to be offered by Telkom’s wholesale division, Openserve, will introduce transparency and remove any perceived competition problems associated with the provision of wholesale broadband connectivity.

According to Telkom group CEO Sipho Maseko, Openserve has been considering changing the way it provides wholesale broadband over its copper and fibre infrastructure for some time.

“Telkom is pleased that following concerns identified during the data services market inquiry, we were able to reach this settlement with the commission,” says Maseko.

Telkom says during discussions with the commission, it was agreed the structure and initial pricing of this new offering from Openserve would reduce wholesale charges to ISPs for fibre broadband wholesale customers and in this way remove the pricing concerns raised in respect of IP Connect.

The new Openserve offering, which is structured as an aggregated end-to-end solution, will allow ISPs to manage their costs and compare the Openserve fixed broadband prices with the prices of other wholesale broadband providers more easily, thus enhancing competition in the fixed broadband connectivity market, the company notes.

On the mobile front, Telkom says it has always been committed to providing cost-effective mobile solutions to its subscribers.

Says the company: “There was, therefore, no need for the commission to recommend that Telkom lower its prices when it concluded its Data Services Market Inquiry.

“In continually striving to ensure citizens get the best value when purchasing data services, Telkom has agreed to improve transparency of pricing in line with the inquiry recommendations. Telkom will notify its customers of the in-bundle effective rate per megabyte in its purchase confirmation messages to subscribers. Telkom will also notify subscribers of this rate via SMS when data bundles are successfully purchased.”