A lobby for nationalisation of infrastructure

[podo]

In light of the further delays that have become aparent in licensing the second national operator, I feel it is time to begin seriously advocating a different approach to telecommunications service in South Africa. Telecommunications is an essential sector in any developing economy, and the lack of proper telecommunications, due to inadequate infrastructure, detrimental policies and cost barriers can be a serious hindrance to the development of a nation's economy.

In my opinion, proper telecommunications service is as important to business and the general public as any other general utility, such as water, sanitation and electrical power. In line with this, I believe that the only way for proper telecommunications service to be implemented in South Africa is service provision managed directly from government or municipal level.

What I wish to propose to the government is not abnormal for a developing economy, and can, indeed, be a catalyst for economic growth and foreign investment in the South African telecommunications sector.

I believe very strongly that all South African citizens will benefit from the renationalization of South Africa's backbone telecommunications infrastructure. At present, all conventional telecommunications infrastructure in South Africa is owned by Telkom, however, Telkom did not make the investment to construct the infrastructure, they simply inherited it from the Post Office upon privatization and subsequent stock market listing.

From this, I will infer that while Telkom presently owns the infrastructure, it does not rightfully belong to them, but should belong instead, to the South African public, who funded its construction through tax payments.

I would like to propose a scheme whereby backbone infrastructure becomes the property of the state, who can then resell access to the infrastructure to operators providing basic or value added services. In this kind of scenario, a profit need not be generated from the backbone infrastructure. Access can be resold to operators at a reasonable tariff, enough to fund proper maintenance and investment in expansion.

Operators who buy access to the infrastructure can then provide a range of telecommunications services to clients in all sectors, ranging from basic voice service, to complete value added packages.

Such a scheme will allow smaller players to enter the telecommunications market, and will attract foreign investment without exposing South Africa to the dangers associated with infrastructure being privately owned by foreign companies. In turn, this will promote competition between operators and value added service providers in the telecommunications market, without the need for drawn-out licensing procedures.

Of course, for this to be possible, government would need to renationalize the telecommunications infrastructure which is currently owned, quite unfairly, by Telkom. Telkom would then need to enter the value added services market and compete with other operators through pricing and service, just as any other company. Government will not loose out from such a scheme in any way, as government still holds a great deal of Telkom stock, they can continue to derive profit from Telkom's operations, while providing a telecommunications environment which attracts investment and encourages competition.

I realise that writing this post to a web forum will not convince the government, in fact, this message will probably never even reach the government, however, I have decided to start my crusade here in the hope of enlisting support for the cause from those individuals which the issue of proper telecommunications effects most.

What I wish to propose to you all is the formation of a national lobby group, dedicated to promoting the feasibility of an infrastructure renationalization program. Please note that I do not wish to start a "bang on their door today" flash mob. This will not generate the immediate result that most forum members are after, but I believe, if done correctly, it can be a big step in the right direction.

The lobby group would need to operate toward an attainable, long term goal, with a solid strategy. We will need to formulate concrete, specific plans for several aspects of lobbying.

Firstly, we will need to enlist the support of the general public. A web site with complete information on the plan, feasibility, the possible benefits and an opportunity for public comment will need to be established.

Second, we will need media coverage to raise public awareness of the issues surrounding telecommunications in South Africa, and of the proposal. Coverage will have to be arranged through continued contact with media organizations around the country, and through aggressively promoting the lobby.

Third, we will need to enlist the help of large roll players in the South African economy. Even with great public support, we will simply not be taken seriously unless we can prove that we have the support of businesses that carry influence in the South African economy. In order to receive support from corporate South Africa, we will need to offer companies membership of the lobby, and generate publicity for corporate members, through advertising on the web site and other media.

This group may also include smaller businesses that carry influence in the South African market place, and can bring valuable support to the table. Strong corporate and small to medium size enterprise membership will afford the lobby essential credibility in dealing with government and industry role players.

We will also need to enlist the support of trade unions with strong membership representation in the telecommunications sector. It is critical to involve trade unions in such a lobby, as they will provide us with a valuable perspective in terms of the human resources aspect of a renationalization program, and the problems it might pose in terms of job losses or working conditions for lower level telecommunications workers.

Lastly, we will need to enlist the support of a coalition of political parties. Parties who understand the critical nature of proper telecommunications in a developing economy will be valuable lobby members, and will provide the lobby with support and credibility in terms of negotiations with government.

Once established, the lobby will need to formulate a long term strategy whereby public awareness of the issue can be raised to a point where we will be taken seriously by government. The ultimate goal would be to gain access to parliament for an open hearing in to the issue, allowing us to present the case for renationalization to the government and the people of South Africa.

I can not, however, undertake the formation of such a lobby group on my own, and will require the support of other forum members. If you feel passionately about the issue of telecommunications in South Africa, and would like to support such a lobby in any way you can, through providing media contact, leason with role players, trade unions or political parties, or any other form of support, please respond to this posting with your pledge.

Again, let me reiterate, I am not interested in participants who merely wish to vent their anger in public, or who may simply wish to join the organization to gain publicity for themselves. I wish to form a lobby group with a serious long term strategy for promoting change, comprised of serious members. Please, if you decide to pledge your support, back it up with actions when the time comes.

Willie Viljoen
Web Developer

Adaptive Web Development

 

[Goobie]

What happens if the backbone or part of the infrastructure breaks down, who will be responsible for fixing ie. the SAT3 cable?

 

[podo]

The state, but you'd actually be surprised at how well they might do this. Remember, the last SAT3 outage lasted over a week. Can you remember any major power or water outages, for instance, not caused by serious natural disasters or terrorism, that have taken more than a few hours to repair? Indeed, when a large truck overturns on the N1, is it not open for traffic within 12 hours?

What I am suggesting is that telecommunications infrastructure be considered a basic necessity by the state, as is power, water and sanitation. In other words, I want the responsibility to provide all citizens with telecommunications infrastructure to be transferred back to government, and I might even go so far as to demand that an amendment be added to the constitution where reasonably priced telecommunications is considered a basic right, instead of a luxury.

This should allay your fears about maintenance, since having telecommunications service entrenched as a basic right would bourdon the government with a civil responsibility to maintain the infrastructure, just as it has to maintain transport, power, water and sanitation infrastructure.

There are many countries in the world where proper telecommunications service is considered a basic right, and where basic service is maintained by the state as a utility, instead of it being considered a peripheral luxury. Value added service providers are also allowed to resell access to the infrastructure to consumers and business, including improved service level agreements, bundled packages and even increased bandwidth.

Willie Viljoen
Web Developer

Adaptive Web Development

 

[reech]

I'm in - where do we start - speaking to the likes of the cuasa or govt itself?

 

[Karnaugh]

SAT3 cable is not part of our infrastructure. Part of it belongs to Telkom, thats all.

- Colin Alston
colin at alston dot za dot org

"Getting traffic shaping right is easy and can be summed up in one word: Dont." -- George Barnett

 

[reech]

Surely the government could *requisition* telkom's international bandwidth resources ..?

 

[mbs]

I have no difficulty with the lobby group proposal and its intent <i>per se</i>, but do foresee some issues regarding ownership and policy conflicts.

Regarding the former, the Telkom backbone infrastructure is already effectively owned by Government and the direct public, through its shareholding (albeit not 100%). I'm not so sure that re-nationalising the backbone infrastructure will fly, as there would seem to be no point, other than allocating the management thereof directly to Government personnel. Given the current inefficiencies of the Department of Communications, this would probably worsen the already piss-poor Telkom management oversight of the backbone infrastructure (other than the promotion of profit, as obscene as it might be). Sure, I go along 150% with the stance that telecomms is a basic public utility, but do foresee difficulties regarding Government management...

The latter issue broaches the question of policy as currently circumscribed by the activities of the Department of Public Works, and quite possibly the Department of Trade and Industry, if not others. This has to do with Government's privatisation of state assets policy, and a nationalisation drive would fly in the face of this. I'm almost positive there are a number of issues that would rear their ugly heads here, not least the question of potential derailment of lateral agreements with others. Methinks some serious lawyering and policy research/formulation would be required - this is something an advocacy group would be hard put to provide, particularly with limited funds...

 

[podo]

reech,

Sadtly it's not that simple. Basically, the government would have to change legeslation to allow this first. Then, it would have to buy Telkom and its shareholders out for the infrastructure, which rightfully, they should never have acquired in the first place.

Willie Viljoen
Web Developer

Adaptive Web Development

 

[Jerrek]

Bad idea. Name one country in the world that is better off with a nationalized telecommunications infrastructure.

 

[pat22]

Renationalisation crossed my mind too. However, the true solution is total deregulation and multiple licence issue. But we have a huge problem: government and its red attitude. Control seems to be the key word at every level.

As it stands today, podos argument is correct IMHO. We just have to make the best out of a very difficult situation. And if renationalisation will assist and progress SA quicker where the SNO will not, it is probably the only way forward.

The government seems obsessed with the fact that a SNO is going to make a massive difference when in reality it will not. We need multiple player action.

 

[Sabre]

Podo,

Although you present (as usual) a well thought out proposal, I have to disagree. Essentially you want a government that has been unable to setup a SNO for the past 2 years (let alone legislate other critical areas like VOIP and convergence) to effectively manage and upgrade the Telkom backbone? I don't think so.

I would rather suggest Telkom be split up into multiple smaller public companies, similar to the AT&T split, each of these smaller companies are then free to compete with each other. There should be no restrictions on who may carry voice traffic, etc as this will enable many more companies to enter this space, this will really weed out those companies that are not dynamic or progressive.

I honestly believe less govenment involvement and more open competition are the way to go, even though this may take more time to implement.

 

[James]

Sabre

Problem is even with that idea, who then controls the backbone. You have to have 1 entity controling the backbone and other entities utilising it, else if faults occur every one will look at each other to fix it.

The sollution lie in a single entity, be it the gov or even telkom being responsible for the backbone and leasing the lines at a "regulated" price to smaller teleco companies.

There is no peace without war!!!

 

[martin]

Have to agree with Sabre on this one. Split up Telkom or deregulate telecoms in SA.

 

[mbs]

Before this topic degenerates into a debate about the pros and cons of deregulation, free market principles, quasi-political stances, competition, and so on, I would suggest that posters read very carefully what PODO is proposing - he is not advocating a "nationalized telecommunications infrastructure" <i>a la</i> JERREK, but simply the formation of an advocacy group, which could lobby the powers-that-be to ensure that telecomms is seen as a public utility that all have a basic right of access to, at affordable cost. This is a way of 'levelling the playing fields' for all of our citizenry, and would go some way towards achieving Government objectives. My understanding is that he has proposed that ownership of the telecomms backbone infrastructure only be re-nationalised (note for KARNAUGH: don't equate this with physical assets - it has to do with ownership of the assets, whether partial or not), and made available to providers, including Telkrap, at a constant cost based on equable, auditable, affordable rates.

IMHO this has nothing to do with issues of deregulation, etc. - instead, this is a soberly thought-out proposal which could go some way towards resolving the mess we're in, provided due consideration is given to the hurdles that have to be overcome. As said previously, we would need some serious lawyering/policy research and formulation, as well as address the basic issue of Government (in)competency to manage the backbone infrastructure...

 

[dikbek]

Government should force ALL players to have to deliver their service at fixed prices. Simple example is Health & Pharmaceuticals!

If minister of Telecomms were to fix prices and profits this would solve the problem and now there is a precedent!

Problem solved.

 

[reech]

Anyone rember this? http://news.bbc.co.uk/1/hi/business/1583675.stm although the situation was different (the company was being bailed out by the government at this stage) - the infrastructure was essentially re-nationalised much to disgust of the small shareholders.

 

[Sabre]

The link below will be of interest here: why Bell in the US was split up; the parallels to Telkom are interesting.

Considering where the telkoms industry in the US has progressed to from 2001, is indicative of the benefits that can be achieved by splitting and privatising monopolies.

http://news.com.com/2100-1033-271346.html?legacy=cnet

 

[podo]

Sabre,

An interesting idea, although it might not work in South Africa, due to the crucial difference between our current predicament, and the predicament faced by our friends across the water.

AT&T was not at any time during its history, a state owned entity, nor was it a legally protected monopoly at any time. Telecommunications on the continental U.S.A. started up informally during the 19th century, through early telegraph connections which eventually connected most of the continent of North America, and later connected it to Europe, through the efforts of Cyrus W. Field (http://www.atlantic-cable.com/Field/papermerchant.htm).

Following the American Civil War, many companies started up around the U.S., connecting settlements, towns and cities together with telegraph infrastructure. There was at that time, no government telecommunications regulations imposed by any U.S., state or federal government institutions. Essentially, the U.S. telecommunications market at the time was a free for all, much like the wild west, open to anyone willing to risk the investment.

In 1875, Alexander Graham Bell, having perfected the early telephone, formed the American Telephone and Telegraph Company. The company was mainly funded by revenue from the patent for the telephone, at that time, a revolutionary alternative to the telegraph. Using the revenue generated, AT&T began a systematic process of buying out or bankrupting through unfair competition, all of its smaller opponent telegraph operators. It further ensured a monopoly on voice telephone services be refusing to license the patent for the telephone to any third party operators.

At the time when the patent for the device expired, all viable competitors had essentially been driven out of the market, and AT&T held a position in the U.S. market which would prevent any effective compettition, as it also refused, at the time, to interconnect its telephone infrastructure, the Bell System, with that of any other operator. Hence, nobody would really consider any other operator as it would be impossible to talk to any AT&T user, and since almost all telephone users at the time were AT&T users, it would be pointless to opt for any other operator. AT&T were the Microsoft of their time.

This monopolistic business practice would allow AT&T a complete strangle hold on the American telecommunications market for more than a century, during which time, the company derived massive profits from a captive market place, without any government intervention, since business being conducted in this way, was part of the "American dream."

Eventually, the government stepped in to break the hold of the massive monopoly by splitting it, and ownership of its infrastructure, in to small companies, limited to operating in certain regions. This opened up the market for other companies to start providing national and local service. I should note that the market had always been legislatively open in the U.S., AT&T was not, as is the case with Telkom, a legally protected monopoly, they were simply a monopoly protected by their monopoly, which, after 1984, is illegal in the United States.

The problem here is that Telkom are protected by government imposed regulations that can not be lifted, for our own sake. If the industry were to be completely deregulated, there would be nothing stopping a monopolist like AT&T from coming in, forcing local competitors out of the market, and then milking us for cash, like they milked the Americans for over a century.

Splitting Telkom would have no real effect either, as we would still just have a number of protected monopolists. The only difference would be that each province would have its own monopolist, instead of one large monopolist. This would not drive down prices, as the "baby-koms" could just decide on one common fixed price anyway.

Willie Viljoen
Web Developer

Adaptive Web Development

 

[reech]

OK - nationalisation seems contentious - how about lobbying for legislation to the effect that telkom, while controlling and maintaining the international links, has to do so on a NFP basis, and any 'profits' generated have to be re-invested in international connectivity? they should be forced to supply isp's and others with international links at cost(though some might call this nationalisation by the back door)