The release last week of Research ICT Africa’s report on mobile phone pricing in Africa has provoked a little controversy. The facts are quite damning. SA has some of the highest mobile costs on the continent. This is odd given the country’s comparative wealth and infrastructural advantages. By rights, SA ought to have the cheapest phone calls and the fastest bandwidth on the continent.
But we don’t. Why would that be? Well, in SA we are very good at finger pointing. Industry points to government and the regulator. The regulator points to industry and government. And the government points at the regulator and industry. And so this merry-go-round has gone on since the turn of the century.
So whose fault is it? Where does the blame lie? Lloyd Gedye of the Mail & Guardian interprets the report to mean that the Independent Communications Authority of SA (Icasa) has failed and indeed the report clearly states that:
The regulation in March 2011 by Icasa of the termination price that operators charge each other to terminate calls on each other’s networks has not had the intended outcome of creating a fairer competitive environment and a reduction in prices for consumers.
But for me this is like blaming a man with a wooden sword for failing to conquer a lion. Icasa is terribly mismatched in terms of its ability to go head to head with the telecommunications industry, both in terms of independence and resources. So, perhaps Icasa has failed — but whose fault is that?
Predictably, the Research ICT Africa report provoked a storm of obfuscation from industry. Vodacom spokesperson Richard Boorman says:
Mobile termination rates (MTRs) are not an industry-wide cost that the consumer bears — the net cost of MTRs to consumers is and always has been zero. MTRs are paid by operators to each other to terminate calls on the other’s network.
Err, what? So, it doesn’t matter what mobile operators pay each other, it is always the right price? Holy magical thinking, Batman! They also argue that call quality is higher in SA and that the country’s geography is more expensive to service than countries such as Kenya and Tanzania. Having travelled in Kenya and Tanzanian recently, I can say this does not bear out in my experience. And did I ask for higher call quality? Could I please have a cheaper, crappier call option?
There is some truth to the argument about geography but not nearly enough truth to explain the call-cost disparity revealed in the report. Really, this is just the standard litany of excuses that the likes of Vodacom and MTN trot out every time more evidence is presented of market failure in SA.
Is industry to blame? Well, yes, but it is like blaming the lion for eating the wildebeest. Companies are accountable to their shareholders. They employ all the tricks available to them to maximise their advantage, except they don’t have teeth, they have lawyers. Now, when government was a major shareholder in Vodacom, this got to be pretty muddy ground indeed. Happily, that is done with. You could wish for industry leaders with a little more vision who see both the social and economic benefits of driving down costs and increasing access but there we would need to blame the shareholders who opt for self-interest.
So, if it isn’t really Icasa’s fault or industry’s fault, where does the blame lie? The fault lies with government, and in SA the government of the past 18 years is the ANC. I hate saying negative things about the ANC. For such a long period in my life, the ANC has represented the spirit of justice, of resilience, of endurance in the face of overwhelming odds that it is hard to bring myself to criticise the ANC openly. But like William Shatner in a corset, sometimes you have to recognise that things have changed.
What has the ANC done wrong? It is quite simple. It has failed to take telecoms seriously. It has consistently relegated communications as a junior ministry and appointed ministers for reasons other than their competence and vision. The result has been the unhappy, bitter, finger-pointing environment that we have today. And, sure, I, too, am pointing the finger here squarely at the ANC. But the buck has to stop somewhere and I believe that we would be in a very different SA had someone with vision and leadership been given the helm of the department of communications some years ago.
And things are getting worse. Minister Dina Pule recently announced a full review of SA’s ICT policies, kicking off with a two-day colloquium, which started on Thursday in Midrand. On the surface, that sounds pretty good and about time. Well, it would be if it had not been outsourced to Deloitte. Outsourcing to large consulting firms is basically an announcement saying, “I have no idea what to do and will need someone else to blame if things go wrong.”
Government and industry alike find it hard to resist the siren call of the big-name consulting firm. Pay me. I have the answer you need.
So, all of the planning has been handled by Deloitte and some industry insiders. But perhaps that’s not so bad. The incumbents are forever making the point that they are the only one’s deserving of more spectrum because only they really have the capacity to roll out infrastructure nationally. There is a certain simple plausibility to this but really it is like saying money should only be given to the rich because only they know how to manage it properly.
More insight can be found in a new book by Daron Acemoglu and James Robinson called Why Nations Fail: The Origins of Power, Prosperity and Poverty. The book is an ambitious, sweeping look at history providing a theory of why some countries have prospered and other haven’t. They divide countries into those with inclusive versus those extractive governments. There is a good review of the book in The Economist and a good interview with Daron Acemoglu on Econtalk. I’ve only just started reading it but one story that has stood out for me is how Venice went from hugely influential city-state to tourist backwater. It is summarised well here:
Upward mobility drove the city-state’s wealth and power. Its innovative commenda, a partnership in which capital-poor sailors and rich Venetians shared the profits from voyages, allowed those of modest background to rise through the ranks. This fluidity threatened established wealth, however. From the late 13th century, the ducal council began restricting political and economic rights, banning the commenda and nationalising trade. By 1500, with a stagnant economy and falling population, Venice’s descent from great power was well under way.
When a wealthy elite stifles the rise of new players, bad things happen. That is a good description of where the telecoms industry is in SA at the moment. We need to create opportunities for new blood to enter and rise in the telecoms sector. It will be good for everyone in the end. And that’s why the incumbents are not best placed to implement SA’s broadband future, at least not on their own.
So, how can we make this happen? I believe it is simple. The ANC needs to appoint new leadership in the department of communications and elevate the ministry to frontline status. It probably needs to be a young minister who understands the potential of the sector and that the digital age is not just a Twitter account managed by a digital consultant. Stick that in your colloquium agenda!
- Steve Song is founder of Village Telco
- This piece was originally published on Song’s blog, Many Possibilities
