{"id":546583,"date":"2005-07-20T18:14:27","date_gmt":"2005-07-20T18:14:27","guid":{"rendered":"http:\/\/localhost:8888\/wordpress\/technology\/546583-fast-forward-please.html"},"modified":"2005-07-20T18:14:27","modified_gmt":"2005-07-20T18:14:27","slug":"fast-forward-please","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/technology\/546583-fast-forward-please.html","title":{"rendered":"FAST FORWARD, PLEASE"},"content":{"rendered":"

Sound impossible? It’s not. It’s offered by Free, a telecom operator that has taken full advantage of France’s liberalisation of its telecom industry. <\/font><\/p>\n

France has unbundled its local loop – the so-called last mile of telephone wires that connect consumers to their local telephone exchange. This means anyone can offer services on the lines previously controlled by France Telecom. <\/font><\/p>\n

France isn’t the only country where telecom prices have collapsed in recent years. In Japan and South Korea, consumers can order 100 Mbit\/s lines – that’s as fast as most corporate local-area networks – over which they can watch and transmit multiple streams of high-definition video broadcasts. <\/font><\/p>\n

For South Africans, it sounds too good to be true. Here, the fastest fixed-line Internet connection alone, which is 40 times slower than Free’s 20 Mbit\/s offering, costs four times as much. And SA consumers can forget about having free calls or television channels bundled with their broadband subscriptions. <\/font><\/p>\n

This situation could, however, be set to change. Government, which has long protected Telkom from full-scale competition, has signalled it is fed up with the high prices of telecom services. <\/font><\/p>\n

At a colloquium in Midrand last week, deputy communications minister Roy Padayachie did not mince his words: "The high costs of telecoms, as well as the inability to extend fixed-line services to the overwhelming majority of the people, are major barriers to achieving the necessary critical mass that would impact positively on our economic growth path." <\/font><\/p>\n

Padayachie also criticised the cellphone operators, saying SA’s cellular call tariffs were high by international standards. <\/font><\/p>\n

His message was clear – something drastic has to be done to bring down prices. He was backed up by Taylor Reynolds, a telecom policy expert from the Organisation for Economic Co-operation & Development, a 30-nation club of the world’s developed nations, who says fixed-line charges in SA are higher than any country in the OECD (SA is not a member state). <\/font><\/p>\n

Though Telkom’s monthly telephone rental charges are comparatively low, per-minute call charges are significantly higher than in OECD countries. In SA, the cost of a local call has shot up in recent years, far outstripping inflation. In the OECD, by contrast, operators have moved away from metered calls to flat-rate dialling as competition has intensified. France Telecom, for example, has introduced flat rates to all fixed lines and mobile phones anywhere in Europe and North America for R632\/month. For R63\/month, TeliaSonera, a Nordic operator, offers unlimited, unmetered calls for 59c each. <\/font><\/p>\n

Reynolds says the difference in broadband pricing between SA and OECD nations is even more pronounced. Both Japan and South Korea offer 100 Mbit\/s broadband into the home for R300\/month. Japan offers the highest access speeds in the OECD but has the lowest prices. <\/font><\/p>\n

It is only competition that forces the incumbent operator to improve access speeds and reduce prices, Reynolds says. "Effective competition should be the goal of the regulator and of the minister." <\/font><\/p>\n

Telkom executives attending the colloquium had to put on a brave face. "Telkom is not making super economic profits," the company’s chief sales and marketing officer, Nombulelo Moholi, told delegates. Though some of Telkom’s products, such as broadband, were more expensive than the norm, in other areas, such as line rental, the company’s prices were cheaper than the average. <\/font><\/p>\n

Moholi says a new regulatory regime, introduced recently, means Telkom has to revise its basket of average prices by no more than consumer inflation, minus a "productivity factor" of 3,5%. This means that when the company adjusts its rates in September, they will be reduced by an average 0,1%. (Previously, the productivity factor was set at CPI minus 1,5%.) <\/font><\/p>\n

But delegates attending the colloquium made it clear that price regulation should be only a short-term measure and that competition was ultimately the best way of keeping prices in check. There are a number of policy changes government must make if it is serious about reducing prices: <\/font><\/p>\n

* License the second network operator (SNO). A shareholders’ agreement was expected to be signed on Wednesday, after the FM went to press, paving the way for the SNO to begin offering services – initially to corporations and wholesale to other licensed telecom entities – before the end of the year. However, Reynolds cautions that duopolies have not traditionally provided sufficient competition to bring down prices. He cites the UK and Australia as examples. "The UK is improving, but because of local-loop unbundling, not because of the introduction of a second operator."<\/font><\/p>\n

* Unbundle the local loop so that all licensed operators can offer fixed-line services directly to consumers without having to purchase access from Telkom. Telkom has argued, though, that maintaining the local loop is expensive. It suggests that if the local loop were unbundled, it might no longer be in its interests to maintain it.<\/font><\/p>\n

* Introduce competition to Telkom in international gateway services. Delegates proposed allowing other operators wholesale access to the high-speed Sat-3\/Wasc\/Safe submarine cables that link SA with Europe and Asia, a move that Telkom vigorously opposes as it would amount to the effective nationalisation of a private asset and discourage investment in other cable systems.<\/font><\/p>\n

* Allow value-added network services (Vans) providers to build their own networks, using any available technology, if they can do it more cost-effectively than infrastructure operators, such as Telkom and the SNO. Vans, such as M-Web, UUNet and Internet Solutions (IS), had hoped that policy determinations that took effect on February 1 would allow them to do this but a "clarification" by communications minister Ivy Matsepe-Casaburri scotched this. It’s understood that IS, for example, had to scrap plans to develop a wireless broadband network based on WiMax technology. Those in favour of allowing self-provision for Vans argue that it wouldn’t encourage Vans to dig up roads to lay fibre. Instead, its effectiveness would lie in the bargaining power it gave Vans in price negotiations with operators.<\/font><\/p>\n

* Remove restrictions in legislation that prevent private telecom network licensees from offering services across geographic boundaries. The restrictions mean that schools, hospitals and municipalities cannot develop wireless networks, even for nonprofit purposes.<\/font><\/p>\n

* Formulate a clear policy and regulatory framework for broadband that instils confidence in investors. Government, conference delegates said, should explore public-private partnerships to promote affordable broadband, particularly in poorer areas.<\/font><\/p>\n

* Lower the cost of entry to new operators by reducing licence fees<\/font><\/p>\n

* Create a policy that eases the entry of mobile virtual network operators, which will piggyback on the networks of the incumbent cellular providers. Experience in other markets has shown that these operators have the effect of reducing cellular tariffs and improving customer service. Virgin Mobile and Altech’s Autopage are planning to launch virtual network operators as soon as legislation permits them to – and possibly sooner.<\/font><\/p>\n

Whether the department of communications will implement these suggestions is another matter. Historically, government has been conservative in its approach to market liberalisation. Cynics argue that Matsepe-Casaburri – who was not present at
\n the colloquium – will simply crush any changes that her department’s policy makers come up with. Others say the department has taken a more enlightened approach since the appointment of Padayachie as Matsepe-Casaburri’s deputy and the hiring of Lyndall Shope-Mafole to replace former director-general Andile Ngcaba. <\/font><\/p>\n

Joe Mjwara, the department’s deputy director-general, who is in charge of policy formulation, is also understood to be in favour of creating a more competitive market. He chaired proceedings at the colloquium. <\/font><\/p>\n

The communications department will now produce a proposals document, which will be debated at another colloquium, set for mid-October. Policy changes could flow from that meeting and possibly, just possibly, SA’s telecom industry could be in for a major overhaul. <\/font><\/p>\n

\u00a9 Financial Mail<\/font><\/p>\n

Reproduced with the permission of the Financial Mail<\/font><\/p>\n

Original article: secure.financialmail.co.za\/05\/0722\/technology\/atech.htm<\/font><\/p>\n

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Imagine having an Internet connection in your home that is 40 times faster than anything Telkom offers now. Imagine unlimited, unmetered local and national telephone calls, with 80 television channels included free. Imagine getting all this for R240\/month.<\/p>\n","protected":false},"author":23,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[17],"tags":[],"class_list":["post-546583","post","type-post","status-publish","format-standard","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/546583"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=546583"}],"version-history":[{"count":0,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/546583\/revisions"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=546583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=546583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=546583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}