http://m1.mny.co.za/BBStks.nsf/Current/C2256A2A0053166642256EF9005C76DA?OpenDocument
Fire the boss
By: Belinda Anderson
Posted: 2004/08/23 Mon 18:48 | © Moneyweb 1997-2004
In sport, when a team loses a series or a season, it is usually the captain or the coach who takes the fall. The same happens in business – although companies tend to hide behind the veil of amicable departure – the CEO or executive more directly responsible for a big mistake or period of underperformance will ordinarily be fired.
Why, then, is Communications Minister Ivy Matsepe-Casaburri still in office?
Under her watch, South Africa’s telecommunications costs have become among the most expensive in the world and growth in connectivity has been stunted. The Department’s attempt to license a competitor to incumbent Telkom has so far gone from one aborted effort to the next. The search has spanned a period of nearly three years. Polite onlookers refer to the SNO (second national operator) acronym as “still no operator”. And, despite the introduction of some competition, this is still marginal, while in most areas Telkom continues to expand its monopolistic stranglehold over the sector.
Some blame Telkom, but ultimately it has shareholders to please. As such it has been behaving in line with its fiduciary duties by tying up corporate customers, making good profits and laying off workers to improve efficiencies. In the final analysis, Telkom would not be able to enforce its apparent bullying tactics were there a strong competitor preventing such behaviour. And the task of licensing that competitor falls upon the Department, which Matsepe-Casaburri heads.
Government seems never to tire of repeating just how important the sector is to the growth of the economy. And yet, perhaps surprisingly, Matsepe-Casaburri was reappointed to her position as Minister for a second term earlier this year despite her failure to license an SNO.
Given that all industry players are ultimately at the mercy of the minister, few will speak out on the record about who should take the fall for the delays – not now, nor in past interactions. But, given the opportunity to do so “off the record”, many will tell you that Matepe-Casaburri has cost the country dearly. One influential industry player said Matsepe-Casaburri’s biggest fault was an inability to make decisions.
Some time after the SNO process started, research firm BMI-Tech estimated the delays in licensing a competitor had cost the country about R1-bn. The analyst who conducted that research, Dobek Pater, now the telecoms analyst for Africa Analysis, says all the operators say more should have been done in terms of liberalising the telecoms market. But, he says, the Department’s decisions are taken by a number of people, not only the Minister.
Industry up in arms
The industry’s anger at the slow pace of liberalisation is palpable.
Last week, the Online Publisher’s Association (OPA), which represents the top 16 online publications, wrote a letter to government expressing its concern over the continued high cost of calls and internet services. The OPA cited a 2003 report by World Wide Worx saying that SA had slipped in the rankings of the most-connected countries in the world from the top 20 to 34th position last year. According to the OPA’s analysis, South Africans are forced to pay about 13 times more for broadband services than a better-quality offering costs in the UK.
Earlier this year, another survey, by NUS Consulting, found Telkom’s call costs were the highest among 14 countries it surveyed around the world.
In February, the Competition Commission found Telkom had engaged in anti-competitive practices and referred a complaint by the SA Value Added Network Services Association and others to the Tribunal. And more recently, the Internet Service Providers Association had banded together to warn that it would take Telkom to the Commission if it successfully bought fourth-biggest internet service provider Tiscali’s SA business. Tiscali last week announced that M-Web and not Telkom had indeed been the successful bidder. But, it is telling that the industry was angry enough to issue a warning even before the fact.
Not all bad, but…
Some might say a call for Matsepe-Casaburri’s resignation is a little harsh – it is, after all, a complex industry with rapidly-changing market conditions that experienced a global fall-off right in the middle of the SNO process. This probably scared off foreign investors, many of whom had started to divest from countries like SA.
This must be taken into account, as must the fact that the Ministry has also made progress in many areas.
Since 1996, the legislative framework has been overhauled, and the Convergence Bill seems likely to be tabled by the end of the year. Under Matsepe-Cassaburi’s leadership, Thintana was brought in as a strategic shareholder to Telkom in 1997, and the former parastatal was successfully listed last year. Under her watch, Sentech began offering wireless broadband internet access, and a new operator, Wireless Business Solutions expects to offer mobile wireless broadband from February next year. She also presided over the formation of arivia.kom, a successful IT parastatal, and participated in the drafting of a black economic empowerment charter for the sector, which is anticipated will be finalised soon.
But, the fact remains – South Africa is being left behind by the rest of the world. A recent survey by Network Wizards (with data from the World Bank) showed SA’s growth in internet hosts between 1998 and 2004 was the slowest relative to its peers by a huge margin. And South Africa was beaten not only by countries like Argentina, Poland and Turkey, but also by the likes of Saudi Arabia and Iran (although the latter two came off a very low base). See previous article: A mole in SA telecoms policy
Matsepe-Casaburri told Parliament in June that she would announce a decision on the SNO before the end of this month. She has one week left.
But, even if the Minister were to surprise the market and license the SNO this week, the business case for the operator is not the same as it was three years ago when the process began and Telkom’s legal monopoly was just about to expire.
Pater says there is still a business case for the SNO, but it will not be another fully-fledged telecoms giant to take on Telkom, as had been envisaged by government. Instead, it will have to be a “cherry-picking, agile organisation” focussing on profits and competing only in certain sectors. Big business will be likely to benefit in the form of bundled voice and data services, but Pater says it is unlikely that consumers will benefit greatly from the introduction of the SNO.
NUS Consulting managing director George Rahr warned at the time of its survey earlier this year that the window of opportunity for the SNO was closing every day that its licensing was delayed.
If Matsepe-Casaburri is not ultimately to blame for the bungling that has characterised SA’s telecoms landscape and cost the country dearly, then who is?
<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">
Fire the boss
By: Belinda Anderson
Posted: 2004/08/23 Mon 18:48 | © Moneyweb 1997-2004
In sport, when a team loses a series or a season, it is usually the captain or the coach who takes the fall. The same happens in business – although companies tend to hide behind the veil of amicable departure – the CEO or executive more directly responsible for a big mistake or period of underperformance will ordinarily be fired.
Why, then, is Communications Minister Ivy Matsepe-Casaburri still in office?
Under her watch, South Africa’s telecommunications costs have become among the most expensive in the world and growth in connectivity has been stunted. The Department’s attempt to license a competitor to incumbent Telkom has so far gone from one aborted effort to the next. The search has spanned a period of nearly three years. Polite onlookers refer to the SNO (second national operator) acronym as “still no operator”. And, despite the introduction of some competition, this is still marginal, while in most areas Telkom continues to expand its monopolistic stranglehold over the sector.
Some blame Telkom, but ultimately it has shareholders to please. As such it has been behaving in line with its fiduciary duties by tying up corporate customers, making good profits and laying off workers to improve efficiencies. In the final analysis, Telkom would not be able to enforce its apparent bullying tactics were there a strong competitor preventing such behaviour. And the task of licensing that competitor falls upon the Department, which Matsepe-Casaburri heads.
Government seems never to tire of repeating just how important the sector is to the growth of the economy. And yet, perhaps surprisingly, Matsepe-Casaburri was reappointed to her position as Minister for a second term earlier this year despite her failure to license an SNO.
Given that all industry players are ultimately at the mercy of the minister, few will speak out on the record about who should take the fall for the delays – not now, nor in past interactions. But, given the opportunity to do so “off the record”, many will tell you that Matepe-Casaburri has cost the country dearly. One influential industry player said Matsepe-Casaburri’s biggest fault was an inability to make decisions.
Some time after the SNO process started, research firm BMI-Tech estimated the delays in licensing a competitor had cost the country about R1-bn. The analyst who conducted that research, Dobek Pater, now the telecoms analyst for Africa Analysis, says all the operators say more should have been done in terms of liberalising the telecoms market. But, he says, the Department’s decisions are taken by a number of people, not only the Minister.
Industry up in arms
The industry’s anger at the slow pace of liberalisation is palpable.
Last week, the Online Publisher’s Association (OPA), which represents the top 16 online publications, wrote a letter to government expressing its concern over the continued high cost of calls and internet services. The OPA cited a 2003 report by World Wide Worx saying that SA had slipped in the rankings of the most-connected countries in the world from the top 20 to 34th position last year. According to the OPA’s analysis, South Africans are forced to pay about 13 times more for broadband services than a better-quality offering costs in the UK.
Earlier this year, another survey, by NUS Consulting, found Telkom’s call costs were the highest among 14 countries it surveyed around the world.
In February, the Competition Commission found Telkom had engaged in anti-competitive practices and referred a complaint by the SA Value Added Network Services Association and others to the Tribunal. And more recently, the Internet Service Providers Association had banded together to warn that it would take Telkom to the Commission if it successfully bought fourth-biggest internet service provider Tiscali’s SA business. Tiscali last week announced that M-Web and not Telkom had indeed been the successful bidder. But, it is telling that the industry was angry enough to issue a warning even before the fact.
Not all bad, but…
Some might say a call for Matsepe-Casaburri’s resignation is a little harsh – it is, after all, a complex industry with rapidly-changing market conditions that experienced a global fall-off right in the middle of the SNO process. This probably scared off foreign investors, many of whom had started to divest from countries like SA.
This must be taken into account, as must the fact that the Ministry has also made progress in many areas.
Since 1996, the legislative framework has been overhauled, and the Convergence Bill seems likely to be tabled by the end of the year. Under Matsepe-Cassaburi’s leadership, Thintana was brought in as a strategic shareholder to Telkom in 1997, and the former parastatal was successfully listed last year. Under her watch, Sentech began offering wireless broadband internet access, and a new operator, Wireless Business Solutions expects to offer mobile wireless broadband from February next year. She also presided over the formation of arivia.kom, a successful IT parastatal, and participated in the drafting of a black economic empowerment charter for the sector, which is anticipated will be finalised soon.
But, the fact remains – South Africa is being left behind by the rest of the world. A recent survey by Network Wizards (with data from the World Bank) showed SA’s growth in internet hosts between 1998 and 2004 was the slowest relative to its peers by a huge margin. And South Africa was beaten not only by countries like Argentina, Poland and Turkey, but also by the likes of Saudi Arabia and Iran (although the latter two came off a very low base). See previous article: A mole in SA telecoms policy
Matsepe-Casaburri told Parliament in June that she would announce a decision on the SNO before the end of this month. She has one week left.
But, even if the Minister were to surprise the market and license the SNO this week, the business case for the operator is not the same as it was three years ago when the process began and Telkom’s legal monopoly was just about to expire.
Pater says there is still a business case for the SNO, but it will not be another fully-fledged telecoms giant to take on Telkom, as had been envisaged by government. Instead, it will have to be a “cherry-picking, agile organisation” focussing on profits and competing only in certain sectors. Big business will be likely to benefit in the form of bundled voice and data services, but Pater says it is unlikely that consumers will benefit greatly from the introduction of the SNO.
NUS Consulting managing director George Rahr warned at the time of its survey earlier this year that the window of opportunity for the SNO was closing every day that its licensing was delayed.
If Matsepe-Casaburri is not ultimately to blame for the bungling that has characterised SA’s telecoms landscape and cost the country dearly, then who is?
<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">
]