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The Great Disconnect

The South African Government’s intransigence in dealing with the energy crisis has a spectacular precedent: it’s failure of leadership in telecommunications. Ten years from now, however, no one should have to say “we told you so”. But there are 10 essential demands that have to be met, writes ARTHUR GOLDSTUCK

You don’t have to spend a decade analysing internet connectivity in South Africa to understand that the Government is the one organisation that does not have the strategic ability to connect South Africans.

Yet, the policy of the Government has been to have a stake in all entities that supply connectivity. The Minister of Communications has insisted that Government also have a share of any new undersea cables designed to deliver additional telecommunications capacity to South Africa. And, despite all the evidence that points to it being a bad move, other Government departments, too, are joining the rush for control of such capacity.

Laying the undersea cablesThe result? Instead of having three or four global suppliers at the beginning of 2008, as had been the prospect as recently as a year ago, we will still have only the SAT3/SAFE cable, which is still controlled by Telkom.

However, the undersea cables represent only one aspect of the great disconnect in South Africa.

The following is a priority list of 10 essential demands for the health of telecommunications and internet connectivity in South Africa. In collaboration with colleagues and associates, helped along by participants in public debates at numerous conferences, the list has evolved over time, and will keep evolving.

What is unlikely to change very fast, however, is the demand at the top of the list, which is not about connectivity at all:

1. A national priority towards literacy and computer literacy.

Computer access without literacy will have limited impact on disadvantaged communities. And literacy programmes must be followed by computer literacy programmes on a massive scale.

2. An open approach to licensing new undersea cable landing points.

Government has stated that all undersea cables must have some form of partnership with Government, citing Telkom’s refusal to give up control of the SAT3/SAFE cable as evidence that Government must have a say in such access. However, it is a generally accepted contention that more open competition will have a more powerful impact in this regard.

3. Immediate liberalisation of the SAT3/SAFE cable.

Again, Telkom has the management contract for the cable, negotiated with three dozen other partners. However, Government has stated that it could declare the landing point for the cable a national resource, and nothing has come of this threat.

4. Free Wireless Broadband for schools and police/emergency services.

Sentech’s MyWireless has been a commercial failure but could be a social triumph if integrated into a public works programme geared towards complete schools access. The cost can readily be justified relative to the enormous benefits of an e-ready country.

5. Exclusion of local data from bandwidth caps.

All data allocations from the networks price local and international bandwidth at the same rate. While some still allow local data access after the cap has been reached, they do not take account of the contribution of local data to reaching the cap. This is a harmful business practise which violates the rights of consumers.

6. Reduction in local call charges.

Telkom has not reduced the cost of local calls since it became a commercialised institution in 1990. While it has reduced all data costs, this has benefited the “haves”, leaving the “have-nots” even more disadvantaged. This is one of the key factors in the dwindling of dial-up access in South Africa.

7. Reduction of and cap to interconnect fees.

The lack of regulatory control of the interconnect fee for mobile calls has added up to 100% to the cost of cellphone calls, and it appears that fixed line number portability will be hamstrung by a similar obstacle. Government and the Regulator have a key role to play in limiting such abuse.

8. Reduction of fixed line rentals.

Fixed line rentals represent the single telecoms cost that has continued climbing through all of Telkom’s price reductions and maintaining of costs. This continues to increase the barrier to entry for those who would have opted for a fixed line instead of a mobile phone.

9. An independent regulator.

Regulatory processes cannot be determined by a Government that has vested interests in maintaining various forms of the status quo.

10. Commitment to an open licensing approach to telecommunications.

The Electronic Communications Act promises an enticing vision of open competition, but if its implementation is muddied by policy directives and interpretations that are anti-competitive, it will prove to be an albatross around the figurative neck of South African telecommunications. Instead, it could represent an eagle, soaring with new expectation and potential.


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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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