From the Letters to the Editor. Cape Times Business Report, 23 September 2004.

http://www.busrep.co.za/index.php?fS...icleId=2236148

<b>Government will probably be funding the sorry SNO show itself</b>


A recent article by Vincent Gore cites "onerous barriers of entry" for those who would compete with Telkom in the telecommunications market.

Government has been trying unsuccessfully for a number of years to create a second network operator (SNO) to compete with Telkom's monopoly.
The dream was that a mighty international telecom giant would come into the market like a shining white knight and effectively finance a large and capable competitor to Telkom.

But the government has shot itself in the foot by placing so many restrictions on such a venture that the desired international partner has avoided the venture like the plague.

So all that government is left with is using the parastatals, Transnet and Eskom, and some fundless black economic empowerment entities to bring about an effective SNO. A major part of the shareholding has been set aside for a financial backer, which the government states it is unable to name just yet.

This is government double speak for the fact that it does not have a financial backer, as what canny financier is going to invest in such a dodgy partnership, one that is fighting within itself and cannot agree on how to proceed.

The likelihood is that government is going to have to finance the whole sorry show itself, via one of its institutions such as the Industrial Development Corporation
. That will make the SNO just another taxpayer-funded operation to compete with its own government-owned interests in Telkom. Makes no sense.

The modus operandi of the new SNO has to be to cherry-pick Telkom's largest and most profitable customers.

Gore talks of "the end consumer with smaller profit margins". Well, that's us, you and me, the little guys with the single lines in far-flung places.

The SNO cannot touch this unprofitable business as it would go broke. Telkom, on the other hand, will lose some of its most profitable business and will look to increase its profits by charging its captive small users. That means small, single-line users are going to pay even more than the present heavy charges.

As it is structured at the moment, I cannot see the SNO being of any benefit other than to a few large telecoms users, whilst the little guys are likely to pay more for our fixed-line services.

The minister formally announcing the granting of the SNO licence is a laugh. It is like announcing you are going to bake a giant cake when not all the chefs are present, the recipe has not been agreed on and the full ingredients are not available!


G John W Plimmer
Montagu

<b><hr noshade size="1"></b><font size="2"><font color="red"><b>You can take Telkom out of the Post Office but you can't take the Post Office out of Telkom.</b></font id="red"></font id="size2">