Telkom Hikes rates!!

The price of a three-minute local call, made during office hours, is going up by more than 11% from August.

The tariff increase Telkom has requested from the government will lead to three-minute calls rising to R1.30 from R1.17. This will hit companies hardest, given that such calls are the bulk of business telephone bills.

But according to Telkom, the average phone bill will be going up by only 1.7%. I will leave it up to you to decide whether the increase will be 11% or 1.7%.

A reason there has not been much of an outcry over the looming hike is that it takes a lot of experience and specialist knowledge to decipher Telkom’s annual prevarication in its price increase announcements.

When Telkom switched from charging in units of three minutes to one minute about a decade ago, it trumpeted a small drop in what it charged per unit.

It relied on South Africans’ poor numeracy, with few consumers twigging that its price was effectively going up by about 60%.

Nowadays, Telkom charges per second, but its press release makes no mention of what it charges per second and what this will be from August.

After wading through stuff like, “Telkom has an ongoing commitment to provide our customers with the best possible service at a fair price within the context of current economic realities”, and “containing our proposed tariff adjustments to substantially below the price control formula as well as the CPI, tangibly demonstrates this commitment”, from Godfrey Ntoele, group executive for national sales and marketing operations, we get a clue that local office-hour calls will rise by 4.2c per minute.

But this omits to mention whether VAT is included, and with Telkom, invariably it is not.

A request for clarification got the answer that local office-hour calls will be rising to 0.072c per second from 0.065c — an 11% hike.

This works out at 4.32c per minute, not the 4.2c as quoted in the press release. Quibbling over what might just be a rounding error might sound pedantic but that, along with Telkom slipping in the announcement amid a barrage of year-end results information, serves to add to my already low opinion of this corporation’s honesty.

When the government insisted on maintaining Telkom’s land-line monopoly in the face of a worldwide shift to opening telecoms markets, consumers were promised that the utility would not be permitted to raise its prices by more than the consumer price index (CPI) minus 3.5%.

Statistics South Africa reported CPI as 8% this week, so Telkom should not be permitted to hike its tariffs by more than 4.5%.

According to Telkom, it is barely asking for a third of the increase permitted by its licence. Its press release claims the “basket of tariffs” it bases its calculation on will result in an average increase of only 1.7%.

Telkom gets away with the annual fiction that its hike is CPI minus 3.5% with the aid of Icasa.

Analysts can only speculate what goes into Telkom’s “basket of tariffs” since it is a closely guarded secret between the phone company and its regulator.

The customer on whom Telkom bases its average seems to be some mythical being who never phones during “standard time” (7am to 7pm) and only calls the one Polynesian island to which Telkom is offering a special rate to help bring down its average international call tariffs.

Business Times