In response to Alan Knott-Craig
A recent column penned by retired Vodacom Group CEO Alan Knott-Craig, in which he rallied to the defence of outgoing communications minister Ivy Matsepe-Casaburri, has sparked a wave of protest. What was he thinking?
In the column, published in Business Day, Knott-Craig wrote that “in our robust democracy we are quick to criticise members of government for failures or weak leadership, but the opposite should also be true”.
He added: “For instance, the telecommunications industry has been fortunate to benefit from the light but firm touch of … Matsepe-Casaburri and her team.”
Knott-Craig wrote that one of the minister’s most important tasks has been overseeing the promulgation of the Electronic Communications Act, effectively liberalising the industry and introducing more competition.
DA MP Dene Smuts says she is “extremely puzzled” by the article. “It was parliament, not the ministry, that wrote competition into the act… it is parliament’s law, and [the minister] has been frustrating its intention.”
Others have been harsher in their criticism. “Flatter away, Mr Knott-Craig,” wrote one commentator on FM Tech, a technology news website I edit. “Flatter the minister the industry can’t wait to see the back of, the minister who kept her job because of her servile loyalty to a disgraced ex-president. But please don’t insult the SA consumer and SA business with this feckless whitewash of a disastrous policy from a disastrous ministry.”
There is no doubt Vodacom benefited from government’s policy of managed liberalisation, which sought to protect operators from competition with the idea that they wouldn’t otherwise invest the billions of rand needed to bring telecom services to the masses.
There’s no question that Vodacom and its rival, MTN, have extended telecoms to most of the population — as many as eight in 10 South Africans now own a mobile phone.
But at what cost? Though prices have come down in recent years in real terms, the cost of communication in SA remains stubbornly high. Vodacom and MTN stand accused of profiting from a system closed to prospective rivals. The minister has actively sought to stop new players from establishing networks.
Knott-Craig has always professed to welcome competition. The record is less flattering — one only has to recall that MTN and Vodacom met in London in the early days of the cellular industry to collude on prices; or recall the two companies’ decision to hike call termination rates shortly before Cell C entered the market in a deliberately anticompetitive effort to undermine the new entrant.
Still, there’s no doubt that Knott-Craig did a good job in his 15 years at the helm of Vodacom, building it from nothing into SA’s market-leading cellular operator.
I asked Knott-Craig, who now spends his days pursuing his photography hobby, why he penned the Business Day piece. He denies he was defending Matsepe-Casaburri. “Rather, it was an attempt to highlight some positives in the telecom industry,” he says. It was intended indirectly to “illustrate how the free market can make things happen without unnecessary interference from government”.
To be fair, there have been a few positive developments on the minister’s watch — her recent decision to facilitate Telkom’s disposal of its stake in Vodacom is one of these. But for the most part, she has frustrated development in the sector by taking too long to make decisions, mollycoddling badly run state-owned companies, defending government’s continued shareholding in Telkom, issuing contradictory and confusing policy directives, and slowing liberalisation to a snail’s pace.
For a self-proclaimed free marketeer and someone who has always professed to want less government interference and greater certainty for investors, Knott-Craig’s column was disingenuous.
Vodacom CEO defending Ivy Matsepe-Casaburri – give your views
First published as the column Technology & You in the Financial Mail of December 12 2009
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