Another raw deal for consumers?

Says Gregory Massel, joint chair of ISPA, "This transaction will aggravate an unfair situation because Telkom has a reputation for cross-subsidising valued-added services with income from its basic telephony monopoly.

"The end result of cross-subsidisation is consumers paying higher charges across a range of services and it remains an area worthy of investigation by the Competition Commission."

BCX is one of South Africa's biggest providers of information technology (IT) services, including systems integration, data storage and outsourcing. BCX also provides solutions in competition with Internet Service Providers (ISPs) such as Internet access and web hosting.

Authorities have failed to force Telkom to adhere to transparent accounting practices to prevent cross-subsidisation. ISPA will highlight this issue in its Competition Commission submission.

"Telkom is doing everything in its power to entrench its unfair position in the run-up to the entry of the second national operator (SNO). The anti-competitive bundling of basic telephony services and value-added network services in ways not available to other players will be made that much easier if the monopoly buys BCX," concludes Massel.