Government recently announced that it will build two undersea cable systems – one through the Department of Trade and Industry's InfraCo and the other through a Nepad-led ICT initiative.<\/p>\n
Prima facie evidence suggests that these are promising developments, especially since government keeps providing assurances that the projects will break Telkom's monopoly in the international bandwidth arena and drive prices down. But a closer inspection reveals a far less rosy scenario unfolding.<\/p>\n
For the past couple years all hope was pinned on EASSy – the East Africa Submarine System – to alleviate our international bandwidth woes. This project enjoyed support across the African continent, but things quickly turned sour when the South African government and Nepad tried to seize control of this project.<\/p>\n
The Department of Communications even bumped heads with Telkom – of which it is a 38 % shareholder – regarding the signing of an EASSy supplier contract with Alcatel-Lucent. This government interference clearly caused a great deal of friction within the EASSy project and the Department of Communications has since said that they are no longer involved. <\/p>\n
Government's reaction to this development was, however, not to enable a healthy competitive environment which will attract a variety of competing cable systems. Instead it wants to build its own tax-funded cable systems. Some reports suggest that government may even prohibit other cables like EASSy from landing in South Africa.<\/p>\n
One of these proposed government cables, on the east cost of Africa, will be a Nepad initiative while two others on the west coast of Africa will be built by InfraCo. All these systems promise high bandwidth capacity and low prices, but even if they all materialise, we will once again have a government-controlled telecoms industry rather than a healthy and competitive environment. <\/p>\n
Throughout the world it is competition that ensures fast broadband services at low rates, but government seems very reluctant to put their trust in a competitive capitalistic system. The Department of Communications continues with their failed "managed liberalisation" policies and InfraCo is already running into the standard political problems associated with government controlled entities.<\/p>\n
Neotel stuck in the middle<\/strong><\/p>\n Neotel, South Africa's second national operator, is stuck right in the middle of the InfraCo mess. Telkom's competitor is reliant on InfraCo for its national bandwidth needs. All the political wrangling and delays do not bode well for a company which desperately needs to make its move and gain the public's trust with good service and prices.<\/p>\n Neotel downplays the InfraCo situation, saying that the current "discussions" are not a show stopper for the continuous roll out of their network and planned launch of services. Neotel also this week announced a partnership with a private-equity funded cable system called SEACOM where the new telecoms company will land this cable in South Africa.<\/p>\n SEACOM promises to drastically reduce the current international bandwidth rates and Neotel will operate the facilities on an open access basis which will further stimulate competition.<\/p>\n Give competition a chance<\/strong><\/p>\n This is clearly what South Africa needs – privately-funded, for-profit initiatives where a company sees an opportunity to make money and is willing to invest in the local telecoms industry. <\/p>\n Skeptics may be concerned about prices remaining artificially high to satisfy investors, but competition always takes care of this problem, as long as the environment is truly open and liberalised.<\/p>\n Government however does not seem to trust the advice of a host of telecoms experts who all agree that low prices and high service levels are basically a consequence of competition. <\/p>\n Rather than building an inviting and competitive environment, government is creating another state funded company – possibly functioning outside of the current legislative framework – something South Africans are all too familiar with.<\/p>\n Let's hope that we are not seeing another Telkom in the making.<\/p>\n