The publication this week of the deeply problematic national integrated ICT policy white paper is just the latest episode in 22 years of ANC policy making that has left a rotten legacy for the sector.
The industry has made progress in the past two decades, but it’s happened largely in spite of government, not because of it.
The problems began soon after the first democratic election, when the state agreed to give Telkom a legislated monopoly of up to six years in return for a commitment to roll out infrastructure in underserviced areas and to ready itself for a competitive market by “rebalancing” its tariffs.
The impact of that policy was devastating. Although Telkom invested billions in a rural wireless voice network, it rode roughshod over a weak regulator, hiking prices astronomically and failing to rebalance its tariffs fully. The sky-high prices, coupled with the emergence of mobile — which grew beyond everyone’s expectations — meant that the millions of new lines it had rolled out were cut off. Today, South Africa’s fixed-line penetration is worse than it was at the dawn of democracy — and it’s by no means all due to the rise of mobile.
The late communications minister, Ivy Matsepe-Casaburri, staunchly defended government’s policy of “managed liberalisation”, despite mounting evidence that it was doing little more than protecting the state-controlled Telkom and keeping prices high.
Her counterpart at public enterprises, Alec Erwin, frustrated at Telkom’s high prices and his colleague’s inaction, hatched a plan to create another state-owned company, Broadband Infraco, in an effort to reduce national wholesale broadband prices. Infraco inherited state-owned fibre assets that had previously been earmarked for Neotel, undermining the latter’s chances of success from the start. Infraco never made a profit, with its impact on prices seen as marginal at best.
Attempting to address the mess she helped create, Matsepe-Casaburri licensed Sentech — another state-owned enterprise — to provide wireless Internet. Sentech proved to be incapable of the task of running a retail consumer-facing business, and it failed.
It was only when Altech challenged Matsepe-Casaburri’s dogged defence of managed liberalisation successfully in the courts that the sector began to make significant progress. Suddenly, the market had hundreds of licensees that could build their own networks. The result has been a decade of investment by private-sector players.
Wireless Internet service providers and, more recently, fibre-to-the-home broadband companies are helping drive down prices for consumers. Mobile operators can now build their own backhaul links independently of Telkom, in the process helping them reduce costs and spread 3G and 4G/LTE broadband to more South Africans.
Matsepe-Casaburri doesn’t deserve to shoulder the blame alone. Her successors, from Siphiwe Nyanda to Dina Pule, have crippled South Africa’s digital migration project, threatening investment by mobile operators, keeping broadband prices higher than they should be and robbing consumers of greater choice in television broadcasting.
It’s the mobile sector that has been most successful over the past 20 years, in spite of the challenges. Mobile operators continue to invest heavily in infrastructure, with the two biggest — MTN and Vodacom — spending more than R20-billion this year alone expanding their networks.
But continued investment is now threatened by the latest ANC policy folly. The ICT white paper is a populist document that risks undoing all that the sector has achieved in favour of an untested approach that wants to tear up the model that has successfully delivered connectivity to a majority of South Africans.
That model needs to be tweaked to encourage greater competition and bring down prices, not torn up as if it has failed. In attempting to bring down prices and create a more inclusive sector, the ANC risks destroying it all. — (c) 2016 NewsCentral Media