Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Listed: All the MVNOs in South Africa – 2025 edition

      19 June 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      19 June 2025

      WhatsApp founders hated ads – Meta is adding them anyway

      19 June 2025

      China’s car factories run cold as price war masks deep overcapacity

      19 June 2025

      Yellow Card, Visa in deal to hasten stablecoin uptake in Africa

      19 June 2025
    • World

      Watch | Starship rocket explodes in setback to Musk’s Mars mission

      19 June 2025

      Trump Mobile dials into politics, profit and patriarchy

      17 June 2025

      Samsung plots health data hub to link users and doctors in real time

      17 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025
    • In-depth

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025
    • TCS

      TCS+ | AfriGIS’s Helen Hulett on how tech can help resolve South Africa’s water crisis

      18 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025
    • Opinion

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Duncan McLeod » Give the markets a proper chance

    Give the markets a proper chance

    By Duncan McLeod24 November 2013
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Duncan-McLeod-180-profileGovernment, well intentioned as might be, could be on the verge of committing a serious blunder in its attempts to sort out South Africa’s poor broadband penetration rates — one that could stunt and distort the telecommunications industry for years to come.

    Communications minister Yunus Carrim is expected to present a final draft broadband plan to cabinet soon for approval. This plan is expected to lead next to the national treasury directing taxpayers’ money — possibly billions of rand of it — into the construction of a national broadband network (NBN) of some shape or description.

    Much of this money will be used for infrastructure roll-out in rural and underserved areas.

    Already, Telkom is lobbying hard to be appointed as the company that rolls out the NBN. Its group CEO, Sipho Maseko, met with finance minister Pravin Gordhan this week, presumably to press home why he believes Telkom is best placed to do the job.

    This is troubling, for a number of reasons. At a debate this week, two analysts from telecommunications consultancy BMI-TechKnowledge argued the issue eloquently from opposing sides, setting out the pros and cons of having an NBN funded by national treasury and built by Telkom. But the flaws in the NBN model quickly became apparent — to me, at least — as the analysts set out their respective arguments.

    The most obvious problem is that creating a monopoly supplier immediately leads to the potential for abuse. Telecoms monopolies need to be policed by a strong regulator — and South Africa doesn’t have one of those. An efficient and competitive market is always preferable to bureaucratic interference. And are we to trust Telkom, which has a history of anticompetitive behaviour, with not taking advantage of the situation, even assuming the project is carefully policed?

    Even now, Telkom appears far from realising that its future success is intimately tied to close collaboration with the Internet service provider industry it’s spent so many years fighting.

    Before embarking on yet another misadventure in the telecoms industry, government should consider where the real successes in the sector have come from. It should realise that its involvement in the sector is the problem.

    Look at Sentech, which was granted a licence and a big chunk of spectrum in the mid-2000s to take on Telkom in the consumer market. It botched that, at huge cost to taxpayers. Broadband Infraco, also owned by the state, was licensed to compete with Telkom’s national long-distance network. It has not delivered on its mandate and, frankly, has no raison d’être. And does anyone remember former communications minister Ivy Matsepe-Casaburri’s underserviced-area licensee project? The Usals were set up to fail.

    The big successes have been in mobile. Despite a somewhat cosy duopoly between MTN and Vodacom — recently made much more uncomfortable by Cell C and its CEO Alan Knott-Craig (who, tragically, suffered a stroke this week) — South Africa’s mobile penetration, as measured by active Sim cards, is approaching 140%. Even if actual subscriber penetration is closer to two-thirds of the population, as some have estimated, the enormous success of the mobile industry cannot be denied. The fixed-line market, which should be growing strongly, too — on the back of demand for broadband in urban areas — is shrinking. That’s an indictment on Telkom.

    Telkom boss Sipho Maseko met last week with finance minister Pravin Gordhan
    Telkom boss Sipho Maseko met last week with finance minister Pravin Gordhan

    South Africans have a predilection for making things complicated, and debating the issues from every angle ad nauseam. This can be seen in the endless workshops and colloquia that achieve little.

    To get broadband to everyone, South Africa doesn’t need some complex, government-funded plan. What the country needs to do is facilitate competition by making it easier for anyone to enter the sector and for private capital to invest in building both fixed and wireless networks. In other words, get rid of the red tape.

    At the same time, grant access to spectrum that is in high demand to those that have the balance sheets to put it to good use. Then allow that spectrum to be traded freely. And craft regulations that encourage infrastructure sharing to reduce costs.

    This is far preferable than tapping an already-stretched national budget to fund what could turn out to be a white elephant.

    • Duncan McLeod is editor of TechCentral. Follow him on Twitter
    • This column was first published in the Sunday Times


    Alan Knott-Craig BMI-T BMI-TechKnowledge Broadband Infraco Cell C Ivy Matsepe-Casaburri MTN Sentech Sipho Maseko Telkom Vodacom
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleE-tolls billing system ‘ready’
    Next Article Nkandla: new hi-res aerial imagery revealed

    Related Posts

    Listed: All the MVNOs in South Africa – 2025 edition

    19 June 2025

    MTN CEO edges Vodacom rival in pay stakes – but just barely

    18 June 2025

    Vodacom CEO Joosub bags R71m in pay – but taxman will take a big cut

    17 June 2025
    Company News

    Why parents choose CambriLearn for online education

    19 June 2025

    Disrupt first, ask questions later – the uncomfortable truth about incident response

    18 June 2025

    Sage brings together HR leaders to explore the future of payroll and people management

    18 June 2025
    Opinion

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    AI and the future of ICT distribution

    16 June 2025

    Singapore soared – why can’t we? Lessons South Africa refuses to learn

    13 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.