Johannesburg - Fixed-line operator Telkom may be forced to further reduce prices on high-speed internet access if the Independent Communications Authority of SA (Icasa) finds that the rates are higher than the costs to offer the service.

Icasa has finalised the regulations for the provision of asymmetric digital subscriber line (ADSL) and the council is expected to sign the resolutions today. The regulations follow hearings Icasa held last month after customers complained that Telkom was charging excessive tariffs for its ADSL service.

In findings last year, Icasa found that Telkom's access levies and service charges were financially burdensome to subscribers. It concluded that the charge for ADSL access should only be levied at the start of the service and thereafter customers should pay a line rental fee.

This month Telkom announced that it was reducing its average ADSL prices by 24 percent to R362 a month. The price reduction, if it is approved by Icasa, will take effect in August.

Outgoing Icasa councillor Mamodupi Mohlala said ADSL prices were part of Telkom's price cap, which had to be submitted annually. However, the regulator would study Telkom's charts of account and cost allocation manuals (COA/CAM), which give details on how much the operator spends on products and services and how that relates to the price paid by the customers.

Telkom's recent announcement on ADSL price reduction was a "step in the right direction", Mohlala said. "Obviously, in time, we are hoping to see further reductions. Once there has been a proper analysis of COA/CAM, then we will look at Telkom's prices of ADSL. That will give a scientific base to say you are underpricing or overpricing."

Telkom is expected to submit its COA/CAM reports at the end of September, but it was unclear when they would be analysed.

Telkom's ADSL price reduction was slammed by consumer body MyADSL, which claimed that the tariffs remained 800 percent higher than international offerings. MyADSL said Telkom had "quietly" increased its ADSL installation costs by 8 percent.

It said the 24 percent reduction on access translated into an effective saving of 12 percent on ADSL subscribers' payments, and this was not taking the 8 percent increase in installation charges into account. MyADSL suggested that Telkom reduce ADSL prices by 70 percent.

During the ADSL hearings, industry players such as Internet Solutions urged Icasa to prescribe a mandatory wholesale pricing structure for, among other things, national and international bandwidth and wholesale access for internet service providers to ADSL lines. These measures should be put in place before forcing Telkom to unbundle its local loop, otherwise it could backfire.

But Mohlala said the wholesale pricing structure was subject to the COA/CAM process. She said full competition on ADSL would only happen once Telkom had unbundled its local loop - telephone lines linking homes and offices - which would give other players access to this infrastructure. Minister of communications Ivy Matsepe-Casaburri is expected to provide policy directives on the local loop unbundling.

Mohlala said local loop unbundling and SAT3, the undersea cable, had a direct impact on ADSL.

Icasa has also come up with a definition of broadband high-speed internet services that would protect consumers. High-speed services such as ADSL, 3G and WiMax are characterised as broadband. According to Icasa, broadband is a high-speed data connection that has the ability to download at a speed of 256 kilobits per second.