South Africa’s broadband crossroads

MTN SA CEO Zunaid Bulbulia says that the Internet and digital economy are fundamentally changing the world of communications and commerce

By - October 13, 2013
Zunaid Bulbulia

The Internet and digital economy, which continue to grow at a rapid rate, are fundamentally changing the world of communications and commerce – but questions are being raised on whether this will translate into benefits for all.

This was the challenge that South Africa’s executives and ICT industry thought-leaders grappled with at the MyBroadband 2013 Conference, gathering to deliberate on the best ways to deal with broadband challenges.

Addressing the conference, MTN South Africa CEO, Zunaid Bulbulia said it was clear that through the ICT industry, the lives of the people could be transformed and bridge the digital divide.

“Broadband connectivity contributes to economic growth and development, and every 10% incremental broadband penetration will result in a 1.38% point in GDP growth rate,” he said.

Providing mobile broadband for all has immense economic benefits, such as aiding small and medium businesses, jobs created in ICT, and quality of life improvement.

Mobile broadband growth can also assist the South African Government to reach its target of 100% voice penetration and Internet access, and deliver on its 2020 “broadband for all” strategy.

However, Bulbulia warned that these benefits do not come cheap, as the investment needed is immense and needs to be balanced with fair regulatory intervention.

“The industry is at a cross road, as regulatory intervention to bring prices down may have unintended consequences of creating an unsustainable environment that could force incumbent operators not to invest in broadband rollout,” explained Bulbulia.

He cautioned South Africa to follow the US option of less regulatory intervention and avoid the disastrous EU alternative of aggressive regulatory intervention on pricing.

In Europe, competition engineered through multi-licensing hasn’t worked and resulted in limiting investment and a number of operators ended up being bankrupt. Many in precarious financial positions has resulted in the deployment of LTE infrastructures occurring at a slow pace.

“Market performance in the EU is being hampered by the inability of operators to exploit economies of scale and scope, thereby slowing network deployment, impeding innovation, and harming consumer welfare,” said Bulbulia.

But in the US, the more relaxed regulatory environment has resulted in a thriving market with high technology adoption, more infrastructure investments, and early and large blocks of LTE spectrum allocated – and most importantly, welfare incentives for the consumer.

“Which road will South Africa choose – less or aggressive regulatory intervention? We at MTN believe that investment is key to broadband access,” added Bulbulia.

“This will enable us to roll-out long-term evolution (LTE) optimally and assist government to deliver on its 2030 Millennium Vision and also assure that broadband is no longer the exclusive purview of the few.”

To prepare for less regulatory intervention, MTN South Africa is moving decisively into the digital space through broadening its products and services to customers to provide universal access, support economic growth and offer good returns to its investors.

“We believe that as a mobile network operator we have an important role to play as an enabler for many aspects of digital space, providing quality connectivity anywhere, linking customers and businesses, and allowing intelligent systems to operate independently,” said Bulbulia.

To meet the underlying need for services in the ‘New World’ digital space, MTN South Africa has invested significant capital in developing basic services that can meet the increasingly sophisticated demands of the customers and improve mobile broadband infrastructure.

“Through our vision, we want to do more than just connect every customer to the digital world. We are undertaking this to make a serious play in the digital services space,” concluded Bulbulia.

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