Gov't, not the market, has failed in broadband - TechCentral

Gov’t, not the market, has failed in broadband

Duncan-McLeod-180-profileThis week, telecommunications minister Siyabonga Cwele claimed there has been a “market failure” in the roll-out of broadband in South Africa. This, he said, is the reason the poor don’t have access.

The minister was defending government’s decision to intervene in the market, explaining why it chose the partially privatised Telkom as the “lead agency” to deliver high-speed Internet in underserviced parts of the country.

But the truth is that the market hasn’t failed — it is the government that has failed. Government has become the biggest impediment to the roll-out of broadband infrastructure in South Africa.

The failure by Cwele — and the long list of ministers that have led the department of telecoms (and the department of communications before it) — to make any substantive progress on pressing issues facing the industry is really what’s holding back roll-out.

The list is long, but let’s tackle a few of the things that are holding back the industry, and on which Cwele and his predecessors have made lamentably little progress.

The first and arguably most pressing issue is digital migration. If South Africa had met its original deadline, set by former minister Ivy Matsepe-Casaburri, this project would have been completed in 2011. As it stands, it’s likely that the June 2015 deadline government agreed to with the International Telecommunication Union to end analogue broadcasts will sail by without the country having even begun commercial digital broadcasts.

The department of communications (the new one, under Faith Muthambi) recently admitted that full migration may not happen before 2017.

This is a disaster for telecoms operators desperate for access to the “digital dividend” bands that television broadcasters are hogging. The digital dividend is ideal for bridging the digital divide, because the propagation characteristics of frequencies in those bands make it possible to deploy infrastructure profitably in outlying and poorer areas.

By messing up the digital migration project — and the delays are mostly government’s fault — government has shot itself in the foot. By not freeing up the digital dividend sooner, it has directly slowed the expansion of broadband services to poorer South Africans.

There are other spectrum bands that operators need access to. But here again, government has done nothing. Communications regulator Icasa was ready to license the high-demand 2,6GHz band — ideal for 4G broadband, especially in urban settings — many years ago.

But it’s been unable to move ahead while the telecoms department dawdles over a policy on how to allocate access. There seems to be no urgency. The question is, why? The delays, again, are inhibiting the roll-out by the private sector of much-needed infrastructure.

Then there is the much-vaunted policy meant to speed up the roll-out by operators of new infrastructure. Word is that’s been sitting on a shelf at the telecoms department gathering dust — goodness knows why. It is exceedingly difficult for operators to erect new base stations or run fibre links across cities and towns and nationwide. Government could have done much to help remove the red tape and make it easier to build networks. It hasn’t.

Telecoms minister Siyabonga Cwele

Telecoms minister Siyabonga Cwele

So, it’s now identified “market failure” as the problem that needs fixing. Its solution? More state involvement in the economy, in a sector where the private sector has done well, rolling out voice telephony to almost every corner of the country and doing a good job — increasingly against the odds — of deploying 3G and now 4G wireless broadband.

With the right policies and regulations in place, and ensuring a properly competitive market, there’s no reason the private sector won’t do the same for broadband as it’s done for voice telephony.

Government attempted to intervene once before, under the Thabo Mbeki administration, when former public enterprises minister Alec Erwin established the state-owned Broadband Infraco to compete with Telkom. Infraco failed in its mandate and talk is, after years of losses and failing to bring down prices, it might now be sold to … Telkom.

Fact is, government isn’t going to solve South Africa’s broadband challenges by intervening in a functioning market. Instead of blaming “market failure” and pointing fingers at private enterprise, the politicians should have a long, hard look in the mirror.

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

11 Comments

  1. David Robert Lewis on

    It is easy to see what is wrong with the home cable market. While competition in the mobile sector has resulted in enormous expansion and government has benefited via its stake in Vodacom, the same cannot be said for Telkom which is a monopoly dependent upon annual bailouts from treasury. Doctrinaire views on the “dirigiste” economy have retarded growth and prevented the roll-out of fibre to the home. Only by introducing competition can there ever be a hope of providing all South Africans with fibre broadband services.

  2. The Government of the day never seems to be responsible for anything. I’m just surprised that the Telecommunications Minister did not try to blame it on Apartheid, which has become the default excuse for the failures of the Zuma regime.

  3. Seems that the author is in the pockets of the mobile companies who would love everyone to believe that they’re the only game in town. They have invested billions into their technology and don’t want anyone to know that actually we don’t have to wait for digital migration to provide broadband to those who need it. We can do it right now by making better use of WiFi and sharing the virtually unused broadcast frequencies using dynamic spectrum tech like TV White Space. Intensive tests of TVWS were already done in Cape Town 2 years ago and no interference was identified. It will need a strong regulator to go up against the ITU and the vested interests of the mobile oligopoly though – something we don’t have. BUT we should have journalists who know better than to just spout off the position of the mobile operators. If we wait for digital migration and the so-called ‘mobile broadband solution’ we will be left even further behind, and will end up with a technology that is unaffordable for the general population.

  4. Aadil Lakhi on

    Government want connectivity they can control, communication they can monitor and information they can sensor.

  5. Greg Mahlknecht on

    >There seems to be no urgency. The question is, why?

    Educated citizens generally aren’t ANC voters. Access to the internet gives the populace access to more information – information which the government can’t control.

    >Government could have done much to help remove the red tape and make it easier to build networks. It hasn’t.

    This I have seen happen firsthand. In my area, mobile coverage is AWFUL – I did some digging, and it seems that we haven’t had a new base station within about 10km of me for about a decade, and it is all 100% because they can’t get the red tape sorted. I’ve seen one of the environmental reports, and it’s quite a publication, right down to the environmental impact of the nuts and bolts in the antenna’s mast.

    On the terrestrial side, it’s far easier to get permission for trenching (this is from speaking to the foremen and managers in my area, doing the trenches – always up for a chat if you stop and ask), and this is one area which the private sector I feel has failed – they’ve been able to do this for ages, but nobody’s had the guts to take the leap of faith. The race has kicked off now with the FTTH pushes, but it’s 10 years later than it should have happened.

  6. When all and sundry hit back over these absurd claims, the “Jan van Riebeeck” card will come out as a last resort.

    Poor ol’ Jan. Bet he’s regretting checking out the fair Cape.

  7. “Educated citizens generally aren’t ANC voters. Access to the internet gives the populace access to more information – information which the government can’t control.”
    100% correct!! And that’s why this cANCer will run this country “until Jesus comes”

  8. Abdul Thompson on

    Really, Greg. The masses are driving the market and that is important to note. educated or not. good article and food for thought Duncan.

  9. Its never their fault.

    And how was competition between to government owned entities ever going to improve pricing? How? I mean forget that politicians are not businessmen, but primarily interested in voter numbers – How does an organisation compete with itself?

    The problem is first and foremost that the ANC has a communist mindset – Especially the latest batch. And they are not willing enough to cede control of what to them are key assets to control to even give private business a chance.

    They cannot have their bread buttered on both ends. You cannot have the economic benefits of a free market (which benefits consumers and the economic power of a state) with the autocratic control of communism (which benefit only politicians and people who do not want to work). Their so called “state capitalism” policies are utter bullshit.