A large number of internet service providers (ISPs) compete with Telkom for the provision of internet services, but most are forced to obtain their underlying services from the telecommunications giant.
According to the joint chair of ISPA, Masedi Molosiwa, "ISPA's complaint to the Competition Commission follows an increasing stream of complaints from members... [that] Telkom is using its dominant market position to take business away from other ISPs. We want the Competition Commission to take a good, hard look at the way the market is structured, and make sure that our members are able to compete fairly to provide reasonably priced services to their customers."
Telkom sets the price that retail resellers have to pay for SAIX ADSL accounts, but it also competes directly with those resellers in the guise of TelkomInternet, enabling it to squeeze the margin between wholesale and retail prices so that competitors cannot afford to stay in business.
Similar problems exist in the wholesale market - Telkom controls access to key facilities such as international bandwidth, and to local loop access services like ADSL. By controlling the price that ISPs pay for these services, Telkom makes it difficult for larger ISPs to compete with Telkom's wholesale offerings.
"Telkom's position as both a supplier and a competitor allows it to force other ISPs out of the market," said Greg Massel, joint chair of ISPA. "Fewer viable competitors mean that Telkom is in a position to keep the price of services such as broadband at an artificially high level. Ultimately, the consumer is paying the price for Telkom's tactics."
