My state action plan
Last weekend, President Thabo Mbeki hosted Mark Shuttleworth, Esther Dyson and other technology industry luminaries at an annual get-together of his presidential international advisory council on information society and development.
The purpose of the closed-door meeting was to determine how best to use technology to eliminate poverty and stimulate economic growth.
The meeting, in its seventh year, is meant to advise government on policy development. In the spirit of open debate, I’d like to propose a programme of action of my own which I believe would have a positive and long-lasting impact not only on the technology industry but also on SA’s overall economic development.
This is what Mbeki’s administration should do:
* It should sell government’s controlling 38% stake in Telkom. The investment is a clear conflict of interest and muddies policy-making. The state’s role is to create a level playing field. It won’t do that if it has an economic interest in the sector.
* It should sell government’s other telecom interests. The telecom assets and licences owned by Sentech should be sold to the highest bidder. Sentech has proved it is incapable of building a telecom business. The new state-run telecom operator, InfraCo, should also be sold. The plan is for InfraCo to provide access to new undersea cables at prices that are not viable for private operators. This will bring down broadband prices but it will also chase away investors in new cables – and, ultimately, undermine the sector.
* It must provide the Independent Communications Authority of SA (Icasa) with more money so that it can pay for the skills – particularly lawyers and economists – that it needs to keep misbehaviour by dominant industry players in check. The regulator’s independence must also be strengthened. Parliament should have the sole right to hire and fire councillors. The present situation, where the minister handpicks the council, undermines Icasa’s independence and creates misplaced loyalties.
* It should realise that robust competition almost always achieves more than regulatory intervention. If telecom prices are too high, that’s because there is insufficient competition. Punitive regulations should be a last resort. The market is more effective at regulating prices. If there’s a problem, free up the market. If the problem persists, only then turn to regulation.
* That said, it should unbundle the local loop, Telkom’s “last mile” of copper cables that connect its customers to its network, allowing competitors to use the cables to provide services directly to consumers. This is one area where regulation is vital. Government has done good work in this regard already but it must know that Telkom will use every trick in the book to frustrate competitors from getting access to its network. Icasa, particularly, will need to be tough.
* It should reduce the barriers to investment. A recent proposal by the communications department that foreign investors in submarine cable systems sell majority equity stakes in their businesses to local companies before being allowed to operate here will chase away much-needed foreign investment and damage growth prospects.
* It should aggressively free up radio frequency spectrum and allow Internet service providers and other companies to provide wireless (and fixed-line) services. Competition in this area will force incumbent operators to reduce their prices. If operators don’t use spectrum allocated to them, they must forfeit it.
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