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Bridging the digital divide between urban and rural SA and the country’s rich and poor is a key mission of the department of communications.
But like most of its policies, the strategies and institutions created to narrow the telecommunications gap have failed. Penetration of fixed-line telephony and Internet access via personal computers (PCs) in SA’s rural areas is low. Only the cellphone companies have made inroads into SA’s rural population.
Whereas cellphones have a 55% penetration rate in villages with fewer than 500 people, the comparative rate for land line phones and PCs is a low 6% and 2% respectively.
The Universal Service & Access Agency of SA (Usaasa), previously known as the Universal Service Agency, was established by the department of communications in 1996 as the main vehicle to oversee the expansion of telecoms services. The Universal Service & Access Fund (Usaf), funded by fees from all licensed telecoms players in the country, was created to finance Usaasa’s mission.
Until recently, Usaasa was an abject failure, with frequent management changes and the agency unable to spend the bulk of its funds. Of the rural telecoms providers it is supposed to fund, only 14 have been licensed (seven in December last year) and just three can report a measure of success. Only a handful of telecentres, digital community hubs and schools’ cyberlabs — another area of Usaasa’s responsibility — are up and running.
But Usaasa is gradually changing and is on a mission to convince government and stakeholders that it can play the role assigned it. James Theledi, who took over as CEO of the agency late last year, presented parliament with a new set of policies last week to make its mission a reality.
Theledi says the plan has three key ambitions: to convince government that Usaasa is finally on course to achieve its mission; to outline changes to the way it has been functioning; and, most important, to convince national treasury to grant it more funds.
The latter won’t be easy. For years Usaasa has failed to spend its funds and treasury insists on a solid business plan before funds are released.
For the 2008/2009 financial year, treasury allocated Usaasa R57m, an increase of 5,6%. Of this, R22m is for operations and R35m for Usaf. But over the past seven fiscal years, almost R400m of Usaf budgets have gone unspent; money which Theledi wants to get his hands on to improve the agency’s delivery.
He can point out that for the first time in almost a decade Usaf was actually spending more than its allocation in 2007/2008, compared with underspending of R88m as recently as fiscal 2003/2004.
Treasury and the telecoms companies, whose 0,2% of annual turnover funds Usaf, are not yet convinced and, at a recent hearing by industry regulator Icasa, asked for clearer definitions of what constitutes under serviced areas and estimates of the total cost it would take to bridge the digital divide.
Most of the funding is supposed to go to rural telecoms companies created to provide services in defined municipal district areas. But of the seven groups licensed before December, only three — Kingdom Communication in northern KwaZulu Natal, Bokone in central Limpopo and Amotole in the former Ciskei area of the Eastern Cape — have taken off and are not in financial difficulties.
Even these three have mainly used the three-year R15m Usaf subsidy to pay for operational costs rather than building a telecoms network. The other four licensees are either facing liquidation or battling to get off the ground.
“We have to analyse the actual cost of rolling out infrastructure in under serviced areas because the R5m/year subsidy is not based on any research. Maybe users need R30m, or even as little as R2m,” Theledi points out.
He proposes three regulatory changes to make the rural telecoms companies more viable. Firstly, the establishment of Provincial Underserviced Area Network Operators (Pusanos), which would group the rural telecoms firms under one provincial licence, thus making them more commercially and operationally practical. Icasa has given a provisional go-ahead and the four companies operating in rural KZN are already in discussions to form a Pusano.
Secondly, the Pusanos can form 49% strategic partnerships with established telecoms players such as MTN, Vodacom and Telkom. At the Icasa hearings this move was welcomed by the larger telecoms companies.
A third change to the legal environment, says Theledi, is that established telecoms companies will be invited to bid for rural telecoms licences through a reverse auction process. He says established telecoms companies will be eligible for the Usaf subsidy.
Another key policy change in providing rural telecoms services is that electronic broadcasters will have to contribute to Usaf, as the definition of an underserviced area has been widened to include access to broadcasting services as well as more traditional telecoms services.
“The original concept of Usaasa was based on fixed-line telephony services. This paradigm has clearly changed and we are now talking of fixed line, mobile, Internet and broadcasting functions under our umbrella,” Theledi says.
Broadcasters will be asked to contribute up to 1% of their revenue to Usaf in addition to their contribution to the Media Development & Diversity Agency, which is aimed at supporting smaller, community-based media organisations.
But Theledi believes fixing the contribution amount is the wrong way to go about it. “The [Electronic Communications] Act talks about up to 1%. We must be careful not to be fixated too much on percentages.
“Instead, we should be asking ourselves what the access gaps in the country are, and what it will take to close them. Though more revenue is coming in, the digital gap is widening.
“In other countries telecoms companies contribute between 1% and 2% of their revenue towards bridging the digital divide. On average, local firms pay 0,2% — I doubt that it is enough.”
Theledi sees the role of Usaasa as that of a facilitator, rather than implementing telecoms policy. As a first step, he wants to strengthen the agency’s research capacity to monitor and evaluate progress in achieving wider access to telecoms services.
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