South Africa's Competition Tribunal imposes heavy fine on Telkom

09.08.2012
South Africa has become the first country in Africa to impose a heavy fine on an incumbent telecommunications operator for abusing its dominance in the market.

The Competition Tribunal has fined Telkom ZAR449 million (US$55 million) for abusing its dominance of the telecom market between 1999 and 2004. The Competition Commission in February asked for a ZAR3.5 billion fine.

The fining of Telkom by the Tribunal is expected to have a ripple effect in the region, whose telecom market is still dominated by incumbent operators that have been accused of bullying private operators.

In 2010, under the influence of the African Union, African ministers of information and communication technologies agreed to fast track the harmonization of telecom policies and regulations in order to end monopolies and enhance communication in the region. The move was expected to bring to an end monopoly policies that are blamed for the poor and expensive communication services in the region. But nothing has changed so far.

Incumbent operators still dominate the region's telecom market. resulting in near suffocation of private operators, which have to pay huge sums of money for using incumbent operators' facilities, including international gateways. But monopolizing the telecom market by incumbent operators has been the only sure way for those operators to survive competition from the private operators, which are investing heavily in new technologies.

The Telekom fine is, however, expected to signal the beginning of the end of monopoly policies.