South Africans could soon have so much TV to watch they’ll never want to leave home. Icasa is mulling over 18 applicants for new pay-TV licences and says it won’t place a limit on the number of licences it will issue.
Telkom Media, a subsidiary of the fixed-line operator, has already secured as much as R7,5bn to build satellite and Internet-based pay-TV services in anticipation of receiving a licence. Other operators claim to have cumulatively secured billions of rand in funding.
The result will be a free-for-all in pay-TV, which will drive down prices and dramatically improve the variety of TV channels available to South Africans.
Some of the successful applicants won’t survive — some analysts have suggested that SA can only reasonably sustain two or three national pay-TV operators. But that is no reason to place limits on the number of licences up for grabs. It is not government or the regulator that should determine what the market can bear, but rather the companies that are prepared to stump up the cash to compete. It is inevitable that some of them will merge their operations and that some will go bankrupt. That’s the free market. Consumers will benefit, even if some of the new entrants don’t make it.
Icasa’s enlightened approach to opening up the pay-TV market raises the question: why can’t the same be done in telecoms, where a lack of competition has led to high prices?
New network licences have to be sanctioned by communications minister Ivy Matsepe-Casaburri. The Electronic Communications Act, which governs the sector, makes Matsepe-Casaburri the judge of how much competition the market can bear. She has to issue invitations to apply for new network licences. This, the thinking goes, ensures an orderly “managed liberalisation” of the sector.
But managed liberalisation has had little effect other than to protect incumbents and keep prices high.
Imagine, instead, a policy framework where anyone who wanted a telecom licence could get one. As in pay-TV, investors would likely flood in, not necessarily to operate national networks, but certainly to provide services where it makes sense. Just 10 years ago, multibillion-rand investments were necessary to build telecom networks. Today, wireless technologies allow companies to build networks at relatively little cost.
Heck, even consumers are doing it, though arguably not legally. The not-for-profit Johannesburg Wireless Area Users’ Group (Jawug), and other consumer interest groups, are building wireless mesh networks in SA’s cities using Wi-Fi on unregulated radio frequency spectrum.
A range of companies, including Altech, MWeb, Verizon Business and Internet Solutions, are itching to be given the go-ahead by Icasa to build wireless access networks to circumvent Telkom. All have been granted test licences to use an inexpensive wireless broadband technology called WiMax. But it’s not yet clear whether they’ll need to be licensed as network operators — and therefore be required to get the go-ahead from the gatekeepers in the ministry of communications.
It’s true that radio frequency spectrum is scarce, but there’s little reason that it shouldn’t simply be sold off to the highest bidders on a use-it-or-lose-it basis. There’s no strong argument against creating a free and vibrant market in spectrum trading.
Matsepe-Casaburri has shown a willingness, at the expense of consumers, to protect incumbent operators from competition. She should draw a lesson from Icasa’s moves to open up pay-TV.