BRIGHTER DAYS DRAW NIGH FOR TELECOMS
A further development, that of an investment by India’s Tata Group into
SA’s second network operator (SNO), is adding to the general air of
excitement. The Tata deal means the long-delayed infrastructure rival to
Telkom may finally begin offering services this year. Details of the
structure of the second operator should be announced within two weeks,
according to the department of communications (see page 32).
Of course, all of these things should have happened years ago. The FM
has been arguing since 1997 that granting Telkom a five-year exclusivity
period, which ended in 2002, was a mistake. And government bungling over
the licensing of the SNO simply made matters worse.
In the absence of competition, Telkom hiked its rates for call charges
and for Internet lines to such an extent that it is now one of the most
expensive fixed-line operators in the world. This has discouraged
foreign investment and curtailed the adoption of broadband. SA lags
behind many developing nations – not to mention the developed world – in
broadband penetration, simply because the services are grossly
overpriced.
It’s easy therefore to understand the excitement on the eve of February
1. Alas, as with most things, change cannot happen overnight. Consumers
shouldn’t expect the SNO to begin offering them a phone service
immediately – if ever. Nor should they expect broadband prices to be
slashed in half right away. But competition will drive down prices in
the long term, making it more affordable to do business in this country.
The Independent Communications Authority of SA (Icasa), which regulates
the industry, has a critical role to play in the opening up of the
market. It must create regulations that allow new entrants to compete on
an equitable basis with the incumbent operators – Telkom and the
cellphone networks. It must also stop the incumbents from abusing their
dominance. In short, it needs the resources to act in favour of the
market – and requisite support from government to enable it to do so.
Loading ...