The National Planning Commission (NPC) recently released its National Development Plan (NDP) for 2030, under the tagline: “Our future – make it work.”
A plan for South Africa’s Information and Communication Technology (ICT) sector is discussed over 9 pages in the hefty 430-page document, and it reads like a summary of the pleas the industry has brought before government over the last decade or more.
The NPC lays in a few good punches on government’s role in the current state of ICT in South Africa, and one hopes that the recommendations, coming from Trevor Manuel and his commission, would be acted on this time.
To open the section on ICT, the NPC painted a stark picture of the ICT situation in SA:
- Despite the uptake of mobile phones, growth in South Africa’s ICT sector has not brought affordable, universal access to a full range of communications services;
- South Africa has lost its status as continental leader in Internet and broadband connectivity;
- Pricing of services and equipment remains a significant barrier to the expanded use of mobile phones and fixed lines, with limited network competition further increasing costs;
- Policy constraints, weaknesses in institutional arrangements, conflicting policies between responsible departments, regulatory failure and limited competition all contribute to this issue;
- The ability of the regulator, the Independent Communications Authority of South Africa (ICASA), to enable a more open market has been hampered by legal bottlenecks, limited capacity and expertise;
- At present, there are effective duopolies in the mobile phone market [MTN, Vodacom] and the overwhelming dominance of Telkom, the historical incumbent in the backbone and local access markets;
- This dominance has been relatively ineffectually regulated, and has resulted in very high input costs for business, increasing the costs of services.
What should be done
To address these problems, and bridge the divide between the digital “haves” and “have-nots”, the NPC made a number of suggestions.
This included the restructuring of Telkom, an open-access common carrier network, addressing the state’s conflict of interest through its majority stake in Telkom, smarter handling of spectrum, and “smart subsidies” for the poor.
To create sector growth and innovation through policy co-ordination that drives public and private investments in areas such as network upgrade and extension, particularly in broadband, the NPC suggested:
- A review of the market structure;
- Analysis of the benefits and costs of infrastructure duplication, facilities or service-based competition, and options for infrastructure sharing;
- A common carrier network, with possibilities of structural separation of the vertically integrated incumbent backbone operator [Telkom];
- Carefully applied open-access policies to possibly incentivise sharing and common use of certain layers of the network, without discouraging private long-term investment;
- Targeted public investment, possibly through public-private partnerships;
- South Africa needs to express an unambiguous commitment to intensifying competition. As one element of this, local loop unbundling needs to be speeded up.
Removing some of the tensions in the sector by clarifying the institutional arrangements will also be important, the NPC said:
Most fundamental is the structural conflict of interest that exists between the state’s role as a competitive player in the market (through its majority share in Telkom), and as a policy-maker for itself and its competitors.
Not only does government have a majority stake in Telkom, it is also the policy maker through the Department of Communications (DoC), and controls the regulator (despite the use of the word “independent” in ICASA’s name).
The NPC envisions that government will not directly participate in the industry, suggesting that the state will need to either get rid of its stake in Telkom, or somehow distance itself from the running of the company.
In future, the state’s primary role in the ICT sector will be to facilitate competition and private investment and to ensure effective regulation where market failure is apparent.
Direct involvement, the NPC states, will be limited to interventions needed to ensure universal access, such as the introduction of “smart subsidies”, and to help marginalised communities develop the capacity to use ICTs effectively.
These smart subsidies are a strategy of once-off intervention rather than requiring permanent subsidies, the NPC explains later in the document.
Spectrum allocation important
According to the NPC, spectrum allocation is perhaps the biggest regulatory bottleneck in the proliferation of rapidly deployable wireless technologies to meet the diverse needs of the society and economy.
They go on to make the following recommendations around the handling of frequency spectrum in SA:
- The digital dividend (spectrum that will become available with the shift from analogue terrestrial broadcasting to digital) should be swiftly allocated;
- Mechanisms for allocating radio frequency spectrum need to be smarter, with robust and transparent governance, for example;
- Spectrum auctions and reverse bids for underserviced areas;
- Spectrum should be fully tradable once allocated;
- Regulations should be crafted to discourage spectrum hoarding;
- Spectrum policy should favour competition, but incumbents should not be excluded from gaining access to bands they need to build networks using new technologies;
- Spectrum licences should be technology neutral.
The minimum definition of broadband
Another contentious issue tackled by the NPC is the definition of a broadband connection in South Africa.
This is relevant in the context of the DoC’s goal of 100% broadband penetration in SA by 2020, where the definition of “broadband” and “penetration” become important to measure whether the target has been met.
The NPC stated the following in their planning document:
Broadband is currently defined as a minimum connection speed of 256 kilobytes per second, but it is expected that by 2020 this will be at least 2 megabytes per second.
Use of the “kilobytes” and “megabytes” quantities are assumed to be a mistake commonly made, especially in light of the fact that South Africa’s National Broadband Policy sets the minimum definition of broadband at 256 kilobits per second.
Confusion over bits and bytes notwithstanding, the NPC goes on to say that South Africa’s performance in broadband penetration should be benchmarked against other countries, rather than against firm numerical targets.
Amendments to the Electronic Communications Act recently tabled by Minister of Communications, Dina Pule, allow the Minister to change the minimum definition of broadband “from time to time”.