How I became the news, unwittingly - TechCentral

How I became the news, unwittingly

Duncan McLeod

SA’s telecommunications industry is in such a poor state precisely because of secret deals done in smoke-filled rooms. So it’s troubling that the same thing is happening with talks over the critical issue of mobile interconnection fees.

I became the news in a small way last week when I was asked to leave a closed-door meeting between the Independent Communications Authority of SA (Icasa) and the country’s telecoms operators.

Icasa, under intense political pressure, had called last Tuesday’s meeting firstly to berate the mobile operators over high interconnection fees, and secondly to ask them to find a way of voluntarily bringing down the fees from February next year.

These rates, set at R1,25/minute during peak times, are the fees the mobile operators charge one another and other operators to carry calls on their networks. The operators have been accused of using the fees as a crude anticompetitive club to keep new competitors from emerging.

It was clear from the start that I was not welcome at the meeting. I had called Icasa that morning and asked for permission to attend, but had not received a response. Just as the meeting was about to start, I was told by an Icasa official that the media were not welcome.

But, as I settled down outside to wait for it to conclude, another Icasa official ushered me in to the back of the room. MTN SA CEO Karel Pienaar noticed my presence almost immediately and raised an objection with Icasa chairman Paris Mashile, who, in turn, asked me to leave the room. I asked what the legal basis was for asking me to leave and was told that the meeting was closed and by invitation only and that this was sufficient reason.

It’s not surprising that Pienaar — and some other operators represented in the room — didn’t want me there. For MTN and Vodacom, there are billions of rand at stake. Already, one brokerage, Barnard Jacobs Mellet Securities, has downgraded its price target on Vodacom from R84/share to R60/share because of fears over the impact of reduced interconnection fees.

My ejection from the Icasa meeting is problematic. Interconnection rates are a hugely contentious issue in SA. They affect every person who owns a cellphone — and that’s most of the population. Though the media weren’t expressly invited, the meeting was certainly in the public interest. Icasa has held a follow-up meeting with operators but no-one knows what was discussed, except that there will be a report-back by October.

These discussions should be held mostly in public. South Africans have the right to know what is being discussed as it affects their pockets directly. One has only to remember that the communications sector in SA is in the state it’s in — high prices, poor service and a lack of robust competition, especially in fixed-line services — because of cozy deals struck in secret.

Former Vodacom Group CEO Alan Knott-Craig has succinctly put these problems in perspective in his latest column for TechCentral. He says one of the former foreign investors in Telkom, SBC (now AT&T), “effectively drafted the 1996 Telecommunications Act after transferring its entire San Antonio corporate legislative team to SA ”. The then-new ANC administration, still wet behind the ears, sold the country’s telecoms industry up the proverbial river.

Knott-Craig blames this deal, done in secret, for the relatively high broadband prices we continue to pay. “When Telkom’s foreign investors were done, we were poorer and had irrevocably fallen behind the rest of the world in terms of cheap, high-speed bandwidth.”

Yet we permit the discussions around interconnection rates to take place behind closed doors. It appears we’ve learnt very little.

  • McLeod is editor of TechCentral. This column is also published in the Financial Mail.

3 Comments

  1. Was Alan Knott-Craig not CEO of Vodacom and therefore directly involved in setting the ever escalating interconnect rates between MTN and Vodacom when CellC arrived?

    And whilst Telkom and the ANC might have played a role in the broadband prices, they certainly had very little to do with the interconnect rates.

    The blame for that and all its associated impact on the economy lies firmly with MTN and Vodacom [and its former CEO.

    So when pointing fingers at SBC and the ANC, Mr Knott-Craig should remember that a few of those fingers are pointing straight back at himself and his associates.

  2. I’ve asked the same questions, and Mr Knott Craig has answered them in another article, cannot remember if it was here or ITWeb.

    Remember, he is dictated to by the board, and cannot simply follow his own beliefs. He does not own Vodacom, and as such cannot merely implement his own decisions.