Huge penalty ‘could cripple Telkom’

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IOL pic feb15 telkom tribunal Independent Newspapers Telkom is facing a massive fine in a case before the competition tribunal. Photo: Sizwe Ndingane

Johannesburg - Telkom will appear before the competition tribunal on Wednesday in a case which may see the company go bust, SABC news reported on Tuesday.

The Competition Commission has asked the tribunal to find Telkom guilty of excessive pricing and abuse of the market and wants the company to be fined R3.5-billion, the broadcaster said.

Eight years ago, an investigation by the commission found that Telkom was guilty of charging excessive prices to smaller independent companies - which relied on the company's network infrastructure to provide data services like the Internet and SMS.

The commission also found that Telkom was discriminating against the independent service providers in that its charges were less for companies affiliated to it.

The proposed R3.5-billion penalty has raised a few eyebrows, SABC reported.

“Any fine of R3.5-billion is very big for any company in South Africa to pay and you could have a problem where the company's survival at stake,” Mike Schussler, director of Economists.co.za, was quoted as saying.

“When you look at that kind of fine in a company that's really got declining revenues, if you really look at it, it's really going to be difficult for it to survive under that sort of fine and I think we need to get the balance right between competition and the ability of a company to carry on.”

Telkom is expected to centre its argument around this when it takes the stand on Wednesday, SABC said.

The company is expected to first argue for the case against it to be dismissed, failing which the penalty against it should be symbolic rather than punitive in nature. - Sapa


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Monkey, wrote

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04:26pm on 20 February 2012
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What about Eskom Telkom twin and the cousins Cellphone networks?

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Anonymous, wrote

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09:49pm on 16 February 2012
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It is interesting to note that that SA environment differs greatly from from the rest on the world. We all no that we can't even protect our homes, imagine protecting infrastructure spread over hundreds of kilometres. During the soccer world-cup an German engineer commented that he experienced more fibre breaks in one month in SA than in his career in Europe. Please note no feeds where lost, very good network engineering. Telkom may change but will the SA environment. Why did BT and AT&T not buy into this environment?

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I can't stand Telscum, wrote

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06:02pm on 16 February 2012
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Burn Telkom Burn!! A few things to note though: Telkom are a listed entity and they wont go under. They may be unbundled and parts sold off but it is impossible for telephones and internet to just stop. Dont be ridiculous!! Secondly, there is a massive overstock of staff at Telkom anyway. Thirdly, Telkom is sitting on MANY billions of rands worth of assets so there is such a small chance of anything really changing... sadly... Having said that, imagine the impossible. Breaking up Telkom would only lead to improved service levels and real competitive pricing. Interconnect costs would drop massively which would also increase competition! There are hundreds of smaller telecoms companies waiting to pick up if anything were spun-off. Imagine how SA could finally have REAL internet and how the poor would benefit!! Wouldnt it be a great day in SA??

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Anonymous, wrote

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02:50pm on 16 February 2012
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Telkom must die a painful death, I hope it is split into many pieces and people still get to keep their jobs but as a whole Telkom needs to die and more fair and open companies need to be born from the ashes to not just take us into the future but to stop Telkom holding us into the past. And I agree with comments below that it is sad for the employees but we as S.Africans are sick and tired of the needs of the few outweighing the needs of the many!

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Anonymous, wrote

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09:40am on 16 February 2012
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Why would any want to cripple a company, have you ever thought of the staff and their families, yes, Telkom does have problems, and so does many other companies have, the decision makers should be hold accountable for wrong doings, and not TELKOM as a whole, as we say in afrikaans," moenie almal onder dieselfde kam skeer nie. Long live Telkom................

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Anonymous, wrote

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10:06pm on 15 February 2012
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remember the fine will be past on to the consumers......think... best to nail those who complied with the dominance on the so called incompetent management & the mininsters of comunication as they all had a finger in the doing...

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Deon Fialkov, wrote

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07:10pm on 15 February 2012
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Where did they get this strange amount? Did they take the average of all the lottos played in South Africa ?

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Joe Kruger, wrote

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04:33pm on 15 February 2012
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I understand the concerns by employees of Telkom, but the entire country cannot be held back for the sake of a one companys employees. What about all the other companies that went under because of Telkoms practices. Perhaps instead of paying this huge fine and continuing its monopoly anyway, telkom could negotiate to fasttrack local loop unbundling which they have been deliberately dragging out for years with bureaucratic red tape and finally allow some competition in fixed line service providers.

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Zinzi, wrote

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03:15pm on 15 February 2012
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That is not the point. They cannot base their argument on current events! That's just ridiculous! This based on eight years ago, NOT now. Perhaps the amount should be ajudicated or some arrangement needs to be made. However, Telkom needs to be brought to book.

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Gman, wrote

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03:01pm on 15 February 2012
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Telkom has definitely abused its customers for many years and is solely responsible for holding SA back by not allowing access for the poor and a lot of middle class people to the worlds knowledge with its ridiculous pricing, unfair terms and lack of service in general. For instance the fact that you have to pay for a phone line rental when you install an ADSL line, although this is unneccessary they refuse to allow this payment to be dropped. This is completely against the CPA as it is a forced service and does not add value to the service you requested. Telkom has a monopoly which is bad enough but they have continued to abuse this monopoly for many years. I think the fine is a bit steep but the prices they have been charging and the service they have given in the past 15 years is a disgrace and really has helped to keep SA firmly as a third world country.

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aNON, wrote

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02:30pm on 15 February 2012
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i like the idea of forcing considerable tariffs reductions to the people most affected, the consumer, gets the benefits. also the exec and senior management should be fined in their personal capacities for allowing or perpetuating this rip-off.

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Rod, wrote

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02:24pm on 15 February 2012
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Great! So is everyone going to be be shut down and having to re-apply for a new service elsewhere and the costs relating thereto! I don't think that the majority of you cry babies have thought this through! What about the loss of jobs? The cell companies are the biggest threat insofar as costs and penalties are concerned! So think twice and wisely!

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Anonymous, wrote

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12:44pm on 15 February 2012
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duh, what about the ISPs that went bang because of telkom, were forced to run at a loss, or penalised if they try to do their own thing?

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brains, wrote

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12:17pm on 15 February 2012
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If telkom goes bust. The country would come to a standstill. You wont be able to withdraw money or swipe your card. Other ISP's cannot handle the load. Dont be stupid competition commision

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Willie, wrote

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12:14pm on 15 February 2012
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Telkom have been crippling other telco businesses for years, and benefitted handsomely from abusing their dominant position. Why should they get special treatment ? Let them do a rights issue to their shareholders or go belly up. Someone will step into the void and do double with half the resources

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DaMotman, wrote

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12:06pm on 15 February 2012
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It is about time Telkom got their comeuppance. It has been too long that they have controlled the telecoms industry

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MarkAlex, wrote

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11:34am on 15 February 2012
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I agree, give Telkom a break, DSL servies mostly affected by people stealing the copper cable. I have ADSL at home and haven't had my service go down once. It is still cheaper to call fro Telkom phone to Telkom phone.....try doing that with a cellphone.....you will be bon-dry half-way through the month. R3,5bn ....hey Julius, keep your hands out of that pot okay !!!

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Mike, wrote

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11:11am on 15 February 2012
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Neotel is the way to go,I was a Telkon customer,and have never looked back after changing.

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Anonymous, wrote

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11:08am on 15 February 2012
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The big problem here is that the country can ill afford to loose more jobs. Telkom employs a substantial amount of staff. I would recommend a fine but not something that is going to close the company down

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Anonymous, wrote

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11:07am on 15 February 2012
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Good stuff - fine Telkom for their dis-honest practices! Moreover - make way for free, fair and transparant services. No more parastatal companies and goevernment protecting them. Telkom had the monopoly and thought it was god - your time is UP!

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