[By Duncan McLeod] Sentech is in trouble. Communications minister Siphiwe Nyanda last week outlined the damning findings of a task team appointed to probe ongoing troubles at the state-owned broadcasting company. Here’s one way to fix it.
The task team, appointed by Nyanda shortly after he took office last year, finds in its 93-page report that Sentech is in urgent need of a turnaround strategy. It urges “drastic and immediate action if Sentech is to avoid lapsing into terminal decline”.
It wasn’t meant to be this way. About seven years ago, former communications minister Ivy Matsepe-Casaburri — acting on another report that had recommended that Sentech find ways of diversifying its revenues — had given the company two telecommunications licences in an attempt to set it up as a competitor to Telkom.
But through a lack of adequate funding and skills and an inability to serve retail consumers, coupled with innumerable strategic missteps, Sentech made a hash of it.
Having poured hundreds of millions of rand down the toilet, the company has all but exited the retail telecoms market.
However, it still has access to vast chunks of valuable radio spectrum in frequency bands ideally suited to providing next-generation wireless broadband services. Sentech is sitting on a veritable goldmine.
For years now, private-sector operators have argued that Sentech should be forced to hand back the spectrum it is not using so they can put it to better use.
But industry regulator, Independent Communications Authority of SA, has shown little inclination to take on Sentech and its political masters over the spectrum issue.
Sentech argues that it still has an important role to play in delivering telecoms services, particularly in underserviced areas. But it has never outlined how it will do this profitably, especially now that the market is open to all-comers.
Indeed, the inefficient Sentech appears unable to sustain itself unless it is protected from competition. One wonders what would have happened to its core business of signal distribution if it hadn’t been shielded from market forces by a mollycoddling government.
Being state owned has also hobbled Sentech. It’s been unable to go to the market to secure the funding it needs to build a network.
The solution may be to set Sentech free by privatising it.
There’s no reason, beyond blind ideology, to keep it state-owned. Freed of its government shackles, Sentech would be free to raise the cash it needs to take advantage of the valuable spectrum and licences it’s been given.
The argument that the company needs to be owned by the state to ensure it provides television and radio broadcasts into unprofitable rural areas doesn’t stand up to scrutiny.
Telecoms companies fork over hundreds of millions of rand in fees each year to the Universal Service Fund, which is meant to help pay for infrastructure in areas that are deemed not commercial viable.
All commercial telecoms companies, including Sentech (once privatised), should be allowed to tap into this fund to pay for the ongoing maintenance of unprofitable broadcast towers and other infrastructure.
The fund could also be used to allow Sentech and other operators to provide wireless Internet access to outlying schools and clinics.
What better way to provide services in unprofitable outlying areas than allowing the Universal Service and Access Agency of SA, which administers the fund, to award tenders to commercial operators that come up with the best solutions for maintaining and improving rural services.
Among several recommendations put forward by Nyanda’s task team is this clanger: Sentech, it says, should lobby government to develop legislation to guarantee its position as the preferred supplier of broadcast signal distribution to the SABC.
Government should allow nothing of the sort. Sentech has been cosseted for too long. Its best chance of survival — and success — is if it’s allowed to compete on an equal footing with commercial operators, unburdened by the dead hand of the state.
- Duncan McLeod is editor of TechCentral