Telecoms: let the market decide

[noxibox]

You guessed wrong. The Gov's plan has backfired on themselves. Yes they get oodles of cash from it, but the catch 22 is now how to put a noose on Telkom without curtailing the massive dividends that they have come to enjoy and scare off investors.
So they get another half arsed scheme going like making Sentech a broadband saviour for all (helps that they own 100% of that to)

A state-owned company can better provide services to poorer people because they have no profit motive. They can spend their entire income on providing more services rather than making excuses about obligations to shareholders. Imagine if Telkom took their R10 billion and dumped 100% into rolling out services across the country. However Telkom is not a state-owned company - they're acting as a private company without competition. That lack of competition is the government's fault. They turned Telkom from a public service company acting in the public interest to a private company acting in self-interest without also making way for competition. Telkom was rolling out services to underserviced areas and their customer service had become excellent - until they were allowed to start shoring up their coffers and were privatised without competition. From 2001 Telkom has been allowed to overcharge by ICASA, using the basket of services lie.

The Telkom debacle is not a failure of state ownership versus success through private ownership, it is a failure in the way that privatisation has been carried out.

It makes no sense to privatise any company that is the sole provider of an essential service. Any such company that can be run for profit can be better run purely in the public interest. Blanket privatisation is one of the IMF/World Bank's many failed ideas that have wreaked havoc across the globe.

 

[Tns]

Telecoms: let the market decide

The market has deceided.Prices are to high lower them by at least 50% right away!

 

[ejbengine]

Ditto and double and triple and ........ ditto!!!!

We don't live under a dictatorship.The president doesn't just dictate that something has to be done and then it gets done.He doesn't have the power to do that

 

[Oupoot]

Everyone is bashing govt for not allowing competition to Telkom when their monopoly ended. But it is so easy to forget that globally, nobody wanted to invest in fixed telecoms in 2002 and 2003, especially not in Africa. And only in 2004 did investors start looking towards SA, but then only in mining & resources.

The only way to bring competition to the SA telecoms market is to break Telkom's monopoly by splitting up the company. Splitting it up according to business sections and/or geographically into 4 to 8 different companies of approximately equal size is my first thought. Definitely not less than 4, otherwise we simply create a oligopoly to replace a monopoly. At the same time, allow other competitors to enter the market in each of the areas of the new companies. That way, instead of just having 1 big and 1 upstart telecoms, we have 10 to 15 of approximately equal size supplying various different products of telecommunication: international bandwith, voice, data, wholesale, retail, etc. Any mergers and/or acquisitions must then be approved by the competition commission, but not be allowed for the initial 3 years.

Forget lowering prices at Telkom - argue for Telkom to be split up.

 

[dominic]

welcome oupoot - that post makes a lot of sense

 

[Oupoot]

I implore anyone to explore the case of AT&T in the US (wikipedia is a good source). Though they had a long anti-trust battle in the US, it is the split up of the company in the 1980s that probably gave rise the internet a decade later. Though the direct short term benefits may be small, the long term direct and indirect benefits could be enormous.

 

[bwana]

I implore anyone to explore the case of AT&T in the US (wikipedia is a good source). Though they had a long anti-trust battle in the US, it is the split up of the company in the 1980s that probably gave rise the internet a decade later. Though the direct short term benefits may be small, the long term direct and indirect benefits could be enormous.

LOL - I remember the break up of Ma Bell and everyone wondering if there would even be a dial tone after they did it.

There was.