South Africans are currently enjoying the lowest ever ADSL and broadband prices, with a range of different products on offer. This is thanks to battles fought years ago by Internet Service Providers (ISPs) and other stakeholders.
Over the last decade ADSL data prices plummeted from over R70 per GB to the current R2 per GB.
Affordable uncapped ADSL services were also introduced, and users are spoiled for choice when it comes to broadband products.
The main reason for the wide range of ADSL and wireless broadband products is competition. This competition did not come easy – it was fought for against many powerful adversaries which included government, the ANC and Telkom.
Here are some of the prominent battles which resulted in increased competition, and better broadband services in South Africa.
ANC versus Vodacom, MTN: fighting for a competitive mobile market
In 1993 the ANC tried to stop the licensing of two new cellular operators, saying that it represented a unilateral restructuring of the telecoms industry – “a form of privatization through the back door”.
The battle was eventually won by Vodacom and MTN by giving unions a BEE shareholding in the newly licensed cellular operators.
More here: How the ANC nearly killed Vodacom, MTN
Telkom versus ISPA: fighting for a competitive Internet market in SA
In 1997 Telkom claimed exclusivity on Internet services in South Africa, arguing that it is an extension of its monopoly on basic telecommunication services, granted to it by the Telecommunications Act (103 of 1996).
The Internet Service Providers’ Association (ISPA), and ultimately won the battle to ensure that Internet services were supplied as a value added service rather than as part of Telkom’s PSTS license.
More here: Telkom versus ISPA on Internet in SA
ISPA versus Telkom: fighting for a competitive ADSL market
When Telkom launched ADSL services in 2002, an Internet Service Provider’s only option to play in this market was to become a SAIX reseller, and sell their customers connectivity to Telkom’s SAIX network.
ISPs were not happy about this, and the model did not allow for true competition in the ADSL market. ISPA subsequently lodged a complaint with Icasa in February 2003.
The regulator facilitated discussions between Telkom and ISPA, and to resolve the issue Telkom proposed the roll-out of IP Connect (IPC).
IPC would enable ISPs to provided competing ADSL offerings, because it provided for transit of ADSL traffic across the IP Connect service onto the networks of those ISPs.
Despite the prohibitive IPC pricing, ISPA accepted Telkom’s proposal, because rejecting it would have meant that ISPs would be left with no ability to offer ADSL services at all. A legal battle with Telkom was also not a productive option.
This victory paved the way for a more competitive ADSL ISP environment, and ultimately led to far cheaper ADSL data and affordable uncapped ADSL products.
Altech versus DoC, Icasa, Minister: fighting for self-provisioning
In 2008 Altech Autopage approached the courts to rule on whether Value-Added Network Service (VANS) licensees had the right to self-provide its own network.
The Department of Communications and the Independent Communications Authority of South Africa (Icasa) fought back, saying that value-added network service licensees were never given the right to provide their own networks.
Altech won the case, but communications minister Ivy Matsepe-Casaburri tried to appeal the ruling. The High Court refused Matsepe-Casaburri the right to appeal against its judgement, and she threw in the towel.
This ruling meant that most telecoms licensees can roll out their own telecoms networks instead of being forced to buy network access from the large operators.
More here: VANS can self provide
DoC vs. Seacom, EASSy: the right to land in SA, bring competition to international connectivity market
In 2008 the Department of Communications (DoC) tried to prevent Seacom and EASSy from landing in South Africa. The DoC altered its policy guidelines regarding the ‘Rapid Deployment of Electronic Communications Facilities’, stating that all undersea cables are to be landed or operated with the authorization by the Minister.
To get authorisation, these cable systems had to have an IECNS license, and have a South African shareholding of over 51%.
This fight was eventually won by the stakeholders who supported the landing of Seacom and EASSy.
Seacom’s launch in South Africa paved the way for far cheaper international bandwidth, which resulted in far lower ADSL data prices and affordable uncapped products.
Telkom versus ISPA and others at the Competition Commission
Telkom faced many Competition Commission battles, which resulted a large fines and increased separation between the company’s retail and wholesale divisions.
Apart from the eventual outcome which resulted in a more competitive telecoms environment, the constant pressure from ISPA and the scrutiny of the competition authorities was very effective in reigning in Telkom’s anti-competitive behaviour.
“Telkom began paying more attention to its wholesale division, and taking fair competition concerns into account many years before the Tribunal finally ruled against them,” said Ant Brooks.
More here: Telkom competition settlement
The war continues – this time mobile
While many battles have been won in the quest for better, cheaper broadband, there are more fights in the pipeline.
ISPA’s regulatory advisor Dominic Cull said that the most important competitive intervention required relates to opening up competition in the mobile broadband market.
“The impact of service competition in the fixed line environment – even within the scope of the limitations of an unbundled resale model – has unquestionably resulted in consumer benefits,” said Cull.
“But it is obvious that service competition is largely absent in the mobile services sector outside of the incumbents, notwithstanding that there are a substantial number of new entrants who would enter the mobile services resale market were the incumbents to create opportunities to do so.”
Cull said that the form of intervention to be made is relatively simple and, with sufficient political will, easy to implement.
“ISPA strongly suggests that the mobile network operators should be regulated to offer wholesale solutions on their networks to qualifying third parties at prices related to those which they effectively charge to their own retail arm,” said Cull.
ISPA referred to the settlement agreement entered into between the Competition Commission and Telkom as a model for the separation of wholesale and retail divisions at the MNOs.
“This will create a fully-competitive reseller market below the mobile network operators, in the same manner that such a market exists below Telkom. Properly regulated, we have no doubt that this will have a substantial impact on broadband penetration and usage in South Africa,” Cull said.