Mbeki’s telecoms statements disappoint

In his state of the nation address today President Thabo Mbeki mentioned telecoms, but his comments fail to directly tackle the real issues at hand.

In his State of the Nation Address the president mentioned lower interconnection costs, special rates for international bandwidth to some call centres and plans to develop broadband.

“With regard to communications, I am pleased to announce that the Department of Communications together with the mobile telephone companies and Telkom are finalising plans to address call termination rates this year for the benefit of all consumers, Mbeki said.

ICASA’s investigation of interconnection rates made headlines recently, and the authority may decide to impose a once-off price reduction. This may be what Mbeki’s statements refer to, but it is unlikely that Vodacom, MTN and Telkom will willingly lower these rates as it will mean that they may lose billions in revenue.

“In addition, Telkom will apply a special low rate for international bandwidth to 10 development call centres each employing 1000 persons, as part of the effort to expand the BPO sector. These centres will be established in areas identified by government. The special rate will be directly comparable to those for the same service and capacity per month offered in any of the comparable countries,” the president said.

While it is encouraging that a few selected call centres will get cheaper international bandwidth rates, it does not solve the bigger problem of exorbitant pricing of SAT3 access.

It is regrettable that Mbeki did not tackle the bigger issue of local and international bandwidth costs to ensure cheaper broadband services and improved telecoms services, but he did mention that government plans to develop ‘high-speed national and international broadband capacity’.

It is assumed that Mbeki is referring to InfraCo, the EASSy project and a possible international submarine cable under the InfraCo umbrella.

Not much changed since 2005 address

The high cost of telecoms made headlines recently with the Telecoms Action Group launching a consumer funded campaign to emphasize the problems which exist in the local Internet and telecommunications environment.

Various television, radio, print media and Internet reports highlighted the various problems which exist, including the lack of broadband penetration, Telkom’s continual exorbitant pricing and high interconnection fees.

In Mbeki’s 2005 State of the Nation Address he said that, “Bold steps have been taken further to liberalise the telecommunications industry. We believe that the unacceptable situation in which some of our fixed line rates are 10 times those of developed (OECD) countries will soon become a thing of the past.”

Since 2005 not much has changed, and despite the licensing of Neotel, Telkom still has a monopoly on most fixed line services with local consumers still paying multiple times more for services like ADSL than international standards.

It is encouraging that Mbeki mentioned telecoms related matters in his 2007 address to the nation, but far more than a few choice words will be needed to encourage more affordable and improved telecoms services for all South Africans.

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Mbeki’s telecoms statements disappoint