Neotel vs. Telkom SA: Deregulation at a Snails Pace

Duncan Mcelod of the Financial Mail has written an excellent piece at Mybroadband .
it describes the problems of Neotel, The first competitor in South Africa competing against TelKom, which though technically not a monopoly, is still dominating the market. Let me summarize:

• Neoteol intially had problems in licensing stemming from being underfunded
• Telcom is tieing up large businesses with multi year contracts
• Telkom bought significant billboard space adjacent to the Neotel offices before the lease was closed.
• Neotel sells wholesale bandwidth to ISPs based on its concession to stay afloat
• Neotel is laying its own fiber networks, but is 18 Months to two years away from completion
• During this time Telkom has hiked consumer prices try to get its profits now

Neotel's Strategy, based on to Mcleod's interview with Ajay Pandey, is to move from populations centers outward.

"Its consumer-focused network, linked to the main network wirelessly, will initially be built in Johannesburg, Pretoria, Durban, Cape Town, Port Elizabeth, East London, Bloemfontein, Nelspruit, Witbank and other key towns. Those in more outlying areas will have to wait a few years for Neotel's wireless services."

Neotel is also experimenting with new technologies. Neotel is getting read to do a pilot in the city of Gauteng where it is constructing a network of base stations using a wireless system using CDMA2000. The pilot will kick soon have about 20 base stations.

However: Neotel does NOT want to start a price war, ( I'm sure it needs to get profits back to its own investors)

Landey also alludes to the emerging belief that bundling services is the long term answer.

The results to date: It still takes six months to get a phone. Consumers are still waiting.