Telecoms cost déjà vu
South African president Jacob Zuma delivered his State of the Nation Address in parliament recently, saying that that Government “will ensure that the cost of telecommunications is reduced through the projects underway to expand broadband capacity”.
A statement like this should typically be met with delight from consumers who have for years suffered due to high telecommunications prices and sub-par broadband services. This was however not the case.
Instead of congratulating Zuma for his willingness to tackle the issue of high telecommunication costs, many consumers greeted his promise with skepticism and even ridicule.
Comments like ‘Imminent’, ‘previous president said exactly the same thing’ and ‘politicians say what you want to hear’; dominated online discussions about Zuma’s telecommunications promise.
Nothing new
Consumers should however not be blamed for the skepticism. As far back as 2003 President Thabo Mbeki was advised to consider measures aimed at lowering the cost of communications.
In February 2005 Mbeki said in his state of the nation address that that “Bold steps have been taken further to liberalise the telecommunications industry. We believe that the unacceptable situation in which some of our fixed line rates are 10 times those of developed (OECD) countries will soon become a thing of the past.”
The Department of Communications seemed to have taken Mbeki’s statements to heart, and organized a Colloquium on the cost of telecommunication services in July 2005. This was followed by a second round of discussions three months later, but to date these well attended and funded events have had little impact on the local telecoms environment.
Since then the high cost of telecommunications has been raised numerous times by both the Department of Communications and by Government, but despite the lip service very little has changed. The Department of Communications was in fact often blamed for stifling competition and hence keeping prices high rather than liberating the market to the benefit of consumers.
Expert view
World Wide Worx Managing Director Arthur Goldstuck says that the concern is not only the perception that we have heard it all before, but the reality that we have indeed heard exactly all of this before. “It is simply a reiteration of the policy pronouncements of the previous administration,” said Goldstuck.
“The original intention of the Infraco Broadband initiative was precisely to expand broadband capacity and bring down the cost of broadband. All the President is saying is that there is no change in the present policy direction. Saying that we must not leave rural areas behind without giving any indication of how the gap will be addressed will have no effect whatsoever,” Goldstuck continues.
“It will be seen as paying lip service, as was the case with the Mbeki government, and in fact condemns the rural areas to the certainty of being left behind. What is needed is the announcement of a major initiative to bring the rural areas on board the broadband revolution, as proposed by the National Broadband Forum.”
“We now have to wait for the first policy pronouncement from the Minister of Communications himself to see how seriously the Government is taking telecoms. Based on its status in the state of the nation report, however, we should not hold our breaths,” Goldstuck concluded.
Denis Smit, Managing Director of BMI-T is more hopeful: “I think the new ‘DOC’ will tackle costs vigorously as they depart from ‘Mbeki era’ politics. The only matter that concerns me is whether they have the political resolve to attack and reduce mobile termination rates as the ‘push back’ from the operators will be substantial.”
Lindsay McDonald, an ITC analyst at Frost and Sullivan, says that a certain level of skepticism should be expected, but that circumstances are in Zuma’s favour.
“The President’s promise should make the industry hopeful but it has indeed heard these statements before and it is to be expected that a certain level of scepticism exists. Circumstances are however in President Zuma’s favour though, as the arrival of the SEACOM cable will definitely contribute to reduced telecommunications costs,” McDonald says.
“But the industry is entitled to expect more than this and this will be the challenge for government. The new Communications Minister is as yet an unknown entity and could prove to be just the tonic that the industry needs to restore it to health. The mention of rural spending is certainly very important and if this commitment is honoured that will be great news for the country.”
Zuma and telecoms costs – give your views
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