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Telkom SA to cut IP Connect pricing

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Telkom is the latest South African operator to come to an agreement with the country's Competition Commission (CompCom) to address concerns over IP Connect pricing and reducing the digital divide.

In December, the CompCom released its final recommendations from its Data Services Market Inquiry. Telkom was told that its wholesale division, Openserve, had to substantially reduce the price of IP Connect "to remove excessive pricing concerns."

Telkom said it and the Commission had reached an agreement whereby the introduction of a new aggregated wholesale solution would remove concerns over its current IP Connect product.

IP Connect allows local Internet service providers (ISPs) to connect to Openserve's broadband network and in turn provide connectivity to their own customers.

Telkom said in an emailed statement that Openserve's new product suite "will introduce transparency and remove any perceived competition problems associated with the provision of wholesale broadband connectivity."

According to Telkom's Group CEO, Sipho Maseko, Openserve has been considering changing the way it provides wholesale broadband over its copper and fiber 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," said Maseko.

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

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, it said.

Telkom Group's CEO, Sipho Maseko
Telkom Group's CEO, Sipho Maseko

Data pricing
On the mobile front, Telkom said it has always been committed to providing cost-effective mobile solutions to its subscribers and "there was therefore no need for the Commission to recommend that Telkom lower its prices when it concluded its Data Services Market Inquiry."

The CompCom had more prescriptive demands for MTN and Vodacom, telling both operators to reduce mobile data prices by between 30% and 50%, or face prosecution. (See SA Competition Commission Forcing MTN & Vodacom to Cut Data Prices.)

The CompCom also asked all operators to come up with pro-poor measures including giving users a "lifeline package" of daily free data, as well as zero-rating content from public benefit organizations and educational institutions. (See Free Data for All: SA Competition Watchdog.)

Telkom said it is already offering zero-rated access to essential government services and educational institutions, including the primary URLs of more than 60 universities and FET institutions. It is also offering free access to other knowledge-enhancing sites such as Wikipedia, Everything Science, Everything Maths and DBE Cloud and has zero-rated official coronavirus information sites.

Last week MTN announced it would give its customers 20MB daily free "lifeline data" and reduce data prices, of 1GB and smaller prepaid bundles, by between 25% and 50% in April. (See MTN to give SA users 20MB free data every day.)

The previous week Vodacom had announced it would reduce its data bundle prices by between 30% and 40% in South Africa and launch a range of other free data services for citizens. (See Vodacom to slash SA data prices by 30%.)

Both MTN and Vodacom said they would reduce the price of 1GB of prepaid data from R149 ($8.50) to R99 ($5.65).

Cell C CEO, Douglas Craigie Stevenson, this week told Connecting Africa that Cell C would also be giving its customers a "lifeline package" of free data and would zero-rate educational sites. (See Cell C planning to give customers free 'lifeline' data .)

Telkom has not made any data price reductions, in fact earlier this month Telkom actual changed pricing on its popular data-led FreeMe mobile plans, including data bundles, and they now offer slightly less value than before. A bundle for 800MB of data on Telkom FreeMe will now cost you R99 ($5.65) the same as 1GB on MTN or Vodacom and 1.5GB of data will cost R139 ($7.95). The FreeMe bundles do however also offer some voice minutes and SMSs along with the data.

In terms of the CompCom's recommendations, Telkom said it had agreed to improve transparency of pricing and 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.

Paula Gilbert, Editor, Connecting Africa

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