Telkom
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- "Telkom" is also the name of an Indonesian telecommunication company - see TELKOM
Telkom is the monopoly wireline telecommunications provider in South Africa. Telkom is a semi-privatised, 39% state-owned company, listed dually on the NYSE (Symbol: TKG) and Johannesburg Stock Exchange.
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Telkom market position and ownership
Telkom has a monopoly on both handling international connections to and from South Africa on the SAT3 & SAFE backbone lines, which account for the majority of international bandwidth in the Republic, and fixed-line communications over public roads.
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Telkom was managed by US-based SBC Communications from 1997 to 2004. SBC has since sold its interest in the company.
Infrastructure
At a 2002 estimate, there are close to five million fixed lines currently in use in South Africa, all of which are currently owned and operated by Telkom. According to the World Factbook, it is the 'best developed and most modern in Africa'. It consists of local copper loops, microwave and fiber optic loops, and wireless connections.
The first use of telecommunication in the Union of South Africa was a single line telegraph connecting Cape Town and Simonstown. After Bell Labs' development of the telephone, the first undersea links were introduced, first connecting Durban and Europe, and soon after, the rest of the world. The network continued to develop organically in a heavilly regulated market as international technology developed. At this point, telephone services were operated by the South African Postal Service.
In the 1960s, South Africa was connected to 72 nations and total outgoing annual international calls numbered over 28,800.
The routing and billing system were almost completely digital by the mid 1980s, which made way for the currently used systems of ATM, SONET, ISDN and others. Telkom SA, Ltd. was founded on 1 October, 1991.
Broadband Internet in South Africa
Telkom provides ADSL to subscribers, typically to inner-city and surburban areas in Pretoria, Johannesburg, Cape Town, and Durban. The roll out of the service continues, and penetration is increasing into lower-income and rural areas. Telkom is currently the largest provider of broadband in the country, with over 120,000 subscribers at last count in 2005.
The cost of ADSL services are separated into a line rental fee, a connection fee and an Internet Service Provider (ISP) fee. Telkom has an overt monopoly on the first two services, but the company allows local ISPs to repackage the third item. An installation fee also applicable. There is a lengthy backlog in several ADSL installation departments caused by demand far exceeding supply, along with a severe shortage of subscriber slots in local DSLAMs.
Different connection speeds on offer (associated with different connection fees) include 192/64, 384/128, 512/256 and 1024/256 kilobits per second of bandwidth for downstream/upstream respectively. Total ADSL usage per calendar month is limited, with the limit depending on the ISP package used. Telkom's default ISP package limits the user to three gigabytes in a calendar month, with port prioritization and bandwidth shaping. Packages offering up to thirty gigabytes are available from other ISPs. An average ADSL subscriber in South Africa pays roughly R670 ($109 currency conversion) per month for access; the annual sum of this fee is around 11.8% of the national per-capita income.
Competition
Recent legislation passed by the South African government have lowered many restrictions on companies wishing to provide telecommunication access in the Republic. Competitors to the land-line monopoly have flourished, with special note given to providers of wireless broadband, who provide greater geographical penetration, by means of the technology used, than Telkom. Examples of these providers include Sentech, an extension of the state-owned South African Broadcasting Corporation, and WBS Co., a black owned enterprise.
The three cellphone networks in South Africa, listed in terms of numbers of subscribers, are Vodacom (who both Telkom and the United Kingdom's Vodafone own large stakes in), MTN and Cell C. There are approximately twice as many cellphone subscribers than land line subscribers in South Africa, and since these networks route their calls over their own network, GSM providers have taken a large chunk of Telkom's business.
Another promising technology is Voice over Internet Protocol (VoIP), which may decrease the amount of calls made over the PSTN in the near future. Telkom's international calling rates are already far undercut by VoIP providers: A Telkom call to the United States will cost R1.40 a minute ($0.19 currency conversion); a call of the same duration made through Skype will cost only one tenth of that - R0.14. ($0.02 currency conversion)
Competition in broadband and telephony is diminished immensely due to the fact that Telkom owns the international links to the rest of the world - the vast majority of bandwidth and telephone calls are routed through them. Finally, although the Government are taking steps to liberalise the market, laws regarding telecommunications are still quite restrictive relative to the United States and other developed nations.
An example of restrictive legislation is the Draft Convergence Bill, which attempts to control the development of such commerce.
Telkom is currently under much fire from the Independent Communications Authority of South Africa (ICASA), who accused it of excessive ADSL line charges.
Criticisms
The continuing monopoly of Telkom in South Africa's communications industry, and governments large stake in the company have been perceived as not being in the public interest. Call costs are considered to be high, and the regulator ICASA as toothless. Telkom has a monopoly of all international calls originating within South Africa excluding VoIP, and of traffic over the SAT3 fibre that provides most of South Africa's international bandwidth. The indecision over the second network operator, to Telkom's advantage, is also not considered to be in the public interest.