AT&T, Telkom in interim deal after legal threat

Johannesburg, 29 Jul 2002

Telkom today confirmed that it has reached an agreement with network service provider AT&T that should halt the court case between the parties.

In what it calls an interim agreement, Telkom has agreed to supply AT&T with the data lines it needs to provide its services on condition that it is satisfied those lines will be used only for legal purposes. The parties expect the agreement to be made an order of the court tomorrow and Telkom will then review 13 AT&T requests.

However, Telkom will have a 30-day window to seek a court review of a ruling by the Independent Communications Authority of SA (ICASA). The ruling is the foundation for AT&T taking it to court.

The dispute between the companies goes back at least two years, as Telkom refused to provide AT&T with services it says would be used to circumvent the five-year monopoly it was granted in certain areas of telecommunications. AT&T at various times sought to involve the World Trade Organisation and US government in the dispute, as it said Telkom, which competes with it in non-exclusive services, was simply trying to stifle competition.

In June, ICASA ruled on a set of complaints between the parties in a judgment that slammed Telkom several times for faulty logic and found no legal contravention by AT&T. In early July, AT&T said it would go to the courts to demand services as Telkom had failed to abide by the ruling.

Local AT&T head Peter Davies could not be reached for comment.

Telkom is withholding at least one data line from one other Internet service provider (ISP), says Edwin Thompson, co-chairman of the ISP Association. That line, however, is a requested link to interconnect with AT&T and he does not foresee Telkom withholding lines in future.

"I think they`d be playing with fire to withhold services from anybody now, except if there is a provable intention to run voice, for instance."

Thompson says the ICASA ruling that Telkom wants reviewed opens it up to damage claims should it now withhold services. Specifically, he believes any ISP denied data lines that could show it had customers intent on using them could go to the Competition Commission and ask it to impose a penalty.

"What you have is Telkom in a very high risk position," he says, pointing to continued moves by the company to rid itself of potential legal liabilities before it is publicly listed, as its government owners plan to do next year.