Still beating around the telecoms bush
Her speech touched on several issues vital to increasing competition and lowering the costs of voice and data services, which are vital to SA’s economic health. But each tantalising mention ended in the promise of more discussion, or more policy directives to be issued and implemented later.
A statement from the communications department proudly proclaimed that she had “announced a number of key policy decisions to fast track further liberalisation of the information and communications technology sector”. Actually, she did not. She simply articulated what is already housed in the long-awaited Electronic Communications Act. And when that will take effect is unknown.
Private companies offering voice and data services yearn for an end to Telkom’s monopoly over the local loop, so they can share the last mile of wiring that connects to homes and offices. Instead of setting it free, Matsepe-Casaburri announced the creation of a committee to oversee the process.
Internet service providers are desperate for the right to set up their own networks, so they are no longer forced to run their services over Telkom’s backbone and pay heavily for the privilege. The minister did not say private players could set up their own national backbones, but created a broadband advisory council to look at the issue. Private players will be able to source international bandwidth from suppliers other than Telkom, but only within six months of the promulgation of the new act.
Numerous players carrying voice and data traffic for SA’s largest companies are stifled by the exorbitant cost of international bandwidth. The simple solution is to grant them affordable access to the undersea Sat-3 cable, which is controlled by Telkom. Internet service providers claim that Telkom charges six or seven times more than can be justified, and that makes internet access artificially expensive for all consumers. Again, the minister tantalisingly promised cost-based access to Sat-3, but frustratingly gave no time frame.
Analysing all the steps that the sector needs to thrive always leads back to the need to curtail Telkom’s power. Its monopoly expired in 2002, but its dominance lingers as the arrival of a second network operator (SNO) was hampered by departmental dithering and bungling. The absence of the SNO increases the need for greater rights for private players. Which is exactly what the minister failed to deliver.
One confusing move is a plan to use state-owned Sentech as the core of a wireless broadband network to help SA’s socioeconomic development. Sentech’s network would be expanded to carry voice calls to end users, the minister said, theoretically making it a new consumer-oriented rival to Telkom. That is not what Sentech wants to be, nor something it has the skills to be.
“The second network operator is struggling to get off the ground, so I can’t see us serving end users,” said Sentech marketing executive Marcel Raath. He hopes Sentech will rather be allowed to offer international voice and data services to large corporate clients, not the average consumer, and certainly not rural consumers.
Andre Wills, of Africa Analysis, said the emphasis on Sentech was possibly ill-advised, as the government would be helping a state-owned entity to compete in the private sector by strengthening it with taxpayers’ cash. That might deter private companies from investing in more infrastructure.
“Just how long does government continue to play in the telecoms space instead of allowing free-market forces?” he asked.
Wills was also disappointed by the lack of instant action. “We have the most amazing ability to consult one another. It’s great to have committees — but it’s time to say thanks for the tea and coffee, now let’s roll up our sleeves and get on with the work.”
One of SA’s largest data carriers, Internet Solutions, is delighted with a promise that all players will be given equal and affordable access to bandwidth on a second undersea cable. The $200m Eastern Africa Submarine Cable System will link SA to Sudan and is backed by 22 countries.
Internet Solutions CEO Angus MacRobert interprets the minister’s statement to mean that any company can join the consortium to own a stake, and his company would happily invest $20m to take a meaningful share, he said. “We have a massive demand for bandwidth and it’s doubling every 18 months.”
The bad news is that the cable will only go live late next year, so no immediate relief is in sight.
MacRobert also warned that the minister’s broad, sweeping statements put a massive workload on the regulatory watchdog, Icasa. “It’s critical that Icasa is beefed up, otherwise things will get stalled again.”
Quite how the planned liberalisation affects the SNO is debatable. Wills warned that far from helping the SNO to make its debut as a forceful player, liberalisation was eroding its business case. The SNO expects to be selling wholesale international bandwidth by July, targeting the cellular operators and private networking companies now confined to dealing with Telkom. However, once they can access the Sat-3 bandwidth at reasonable prices, the business case for the SNO diminishes, Wills says.
SNO spokesman Angus Hay disagrees. Its Indian shareholder, VSNL, has massive global bandwidth and is one of the world’s leading voice and data carriers. No other player has the bulk buying power to negotiate better bandwidth rates than they could get from the SNO, Hays said. “If an (internet service provider) wants to buy international bandwidth, it will be available as soon as we switch on, probably in June or July,” he said.
The SNO will also sell national bandwidth on the backbone of its shareholders, Eskom and Transtel, making it a waste of money for government to expand Sentech’s network to rival existing infrastructure.
Hay is sceptical about Sentech’s potential as a voice carrier for consumers and is unsure what the minister is aiming at. But he doubts government would let Sentech “burn through R2bn of state money” to duplicate the SNO’s facilities.
“We are a month or two away from having something on the market, so it makes very little sense for a large commercial player to deploy their own assets if they can buy it from us,” Hay said.
The second network operator is more excited by the minister’s mention of CDMA, a spectrum used by the broadcasting industry, which is more efficient and cheaper than spectrums allocated to the telecoms sector. She said Icasa would be required to issue that spectrum to telecoms players, including small black companies granted underserviced area licences to serve rural areas.
“That is the spectrum we’ve asked for,” said Hay. “Icasa has been listening to the debate and there have been huge fights between the broadcasters and telecoms players. The (underserviced area licences) are saying hurry up and give us the spectrum before we go bankrupt. We are all waiting with baited breath.”
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