Telkom and IS shake hands

ADSL South Africa (Broadband South Africa), 6 March 2007

Telkom and Dimension Data subsidiary, Internet Solutions (IS), have reached an out-of-court settlement. This will end a four-year legal dispute.

‘IS and OmniLink (a Didata subsidiary which was subsequently folded into IS) sued Telkom for R127m in damages in 2003, alleging that the fixed-line operator had unlawfully withheld telecom services from the two companies. They alleged that Telkom’s actions had caused enormous damage to their businesses’ (Telkom, Didata make peace, Mcleod, Financial Mail, 2 March 2007).

Of course Telkom is denying the above allegations, but the purpose of this article is not to establish whether Telkom was at fault or not. We rather want to focus on the settlement reached as well as the fact that time is running out for Telkom in regards to playing regulator.

‘In terms of the settlement between the two parties, Telkom has agreed not to withhold facilities from IS and will meet a defined service-level agreement where it will provide facilities and do repairs within specified times. In return, IS has agreed to drop its damages claim against the operator’ (Telkom, Didata make peace, Mcleod, Financial Mail, 2 March 2007). In other words, they’ve reached a win-win settlement.

‘In the past, Telkom has been accused by Internet service providers of behaving as if it, and not the Independent Communications Authority of SA, regulated the sector’ (Telkom, Didata make peace, Mcleod, Financial Mail, 2 March 2007). Well, one can’t really blame Telkom if it got a little bit carried away in that department, because let’s be honest, ICASA was and is just a ‘bag full of talking bones’. If ICASA did its job in the first place there wouldn’t be any space left for Telkom to play regulator. Don’t get the wrong idea, we don’t encourage Telkom to play regulator, but we can see from Telkom’s point of view why it was beneficial to play regulator. We also understand that a lack of competition presented Telkom with the opportunity. In other words, we do not totally blame ICASA for the state of affairs, because even if ICASA did its job, it would be a very difficult one at best.

Does this mean that Telkom will be able to keep on playing regulator and get away with it?

No, hopefully not for very long…

‘In the absence of meaningful competition, service providers such as IS still rely heavily on Telkom’s facilities to provide services to their customers. But, with second network operator Neotel about to get off the ground and competition coming from other quarters, Telkom will have to be nicer to third-party service providers if it wants to retain their business. IS is Telkom’s biggest client’ (Telkom, Didata make peace, Mcleod, Financial Mail, 2 March 2007). In other words, a player such as IS can take its business elsewhere if Telkom don’t change its ways of doing business.

What about Telkom’s other legal battles?

While the settlement with IS is notable, Telkom still has to face a number of legal battles.

‘The competition authorities are probing Telkom for alleged anticompetitive behaviour stretching back years. And the recent loss of its appeal in the constitutional court in its dispute with US software supplier Telcordia could cost it a small fortune. Telcordia is demanding US128m in damages, though the final figure, to be determined in arbitration proceedings later this year, is likely to be quite a bit less’ (Telkom, Didata make peace, Mcleod, Financial Mail, 2 March 2007). In other words, Telkom might have to pay for a lot of sins, past and present.

ADSL South Africa(Broadband South Africa) welcomes the end of the legal dispute between Telkom and Internet Solutions (IS). We hope that Telkom chooses to create an environment where there’s not enough oxygen for such disputes to flare up in the first place.