The national ICT policy white paper does not pass constitutional muster said Leon Louw, executive director of the Free Market Foundation.
Louw, speaking at a press conference on Wednesday, slammed the white paper, saying it proposes creating a new monopoly in telecommunications in South Africa, which he described as “a very bad idea”.
The white paper has come under widespread industry fire, particularly over its proposal to create a national wholesale wireless open-access network (Woan) and to give all unallocated high-demand spectrum (4G spectrum, in essence) to the single provider in which all industry players will be expected to participate.
The policy document has also mooted the idea of taking away existing spectrum allocations from the mobile operators, though it’s understood from sources close to government that the plan is to remove this clause from final legislation.
What we have here is a proposal to do to ICT what we inherited from the apartheid regime with Eskom,” Louw said.
He described Eskom as a “dinosaur” and the company’s virtual monopoly over electricity generation and supply as “not how it’s done anywhere else in the world”.
He said the ICT white paper, if implemented, would be a retrogressive step that would ultimately harm consumers.
ICT has been one of the big post-1994 successes for South Africa, with more than one active telephone per citizen on average, he said. The private sector has been responsible for rolling out coverage to as much as 98% of the population.
Government hopes the white paper, once implemented, will bring down the cost to communicate. But Louw said that, as it stands, “that is extremely unlikely” to happen.
South Africa has failed to do a number of things, which is in fact impeding the market and harming consumers.
“First, you allocate spectrum, which we have not done, despite [communications regulator] Icasa’s valiant efforts,” Louw said. Icasa want to auction access to the operators, but telecoms & postal services minister Siyabonga Cwele has put a stop to that — at least temporarily — by seeking and winning an urgent court interdict. Icasa and Cwele are set to face each in court over the matter later this year.
ISPs assume there will be an allocation that will benefit them personally. There is no basis for making such an assumption
Louw said that an auction is the best way to allocate spectrum. “Market pricing is the best way to allocate scarce resources,” he said.
He slammed government’s plan to create an infrastructure monopoly in the form of the Woan. He also criticised Internet service providers for their cautious welcome of the white paper’s proposals.
“The long-term consequence … is the slowdown of technological advancement… ISPs assume there will be an allocation that will benefit them personally. There is no basis for making such an assumption,” Louw said.
Corruption, favouritism and incompetence could ultimately work against all industry players. “There is no suggestion it will be an improvement on a market-based approach.”
The white paper, he said, fails on several grounds legally.
For one thing, no socioeconomic impact assessment — a requirement of cabinet — was done. Given this, it is strange that cabinet decided to approve the policy document anyway.
Also, the constitution requires that government policy must be reasonable and fair. “There must be public participation, which must inform policy,” Louw said. Yet there are sections of the white paper that were not subjected to such consultation.
At the same presentation, Africa Analysis MD Dobek Pater said there are many troubling aspects to the white paper that could have a negative impact on industry investment and development.
For one thing, government will wield more power over the sector, including regulators, a move that goes against international best practice. “It’s a move against the grain of the direction we have been going and the rest of the world is going. This is not good for the market.”
Also, the white paper’s policies on spectrum and the Woan are reason for “considerable concern”. The Woan should not have a monopoly over spectrum, Pater said. Though such a network is “not necessarily bad”, competition in infrastructure is imperative.
He warned that the policy, even before it is turned into law, could have a negative impact on perceptions among investors, which could lead to a run on the share prices of listed telecoms operators.
“It will probably take only one large investor to start pulling out to send a negative signal to the market and you have a run on a company’s share price,” he said.
“The telecoms market in South Africa is not perfect, but it is functioning fairly well. Why turn it on its head, when we don’t know what the policy’s impact will be on the market? It could turn out [that it makes South Africa] a leader in the world, but that is highly unlikely.”
Ultimately, unless there are big changes to the white paper, it could damage the sector, Pater said.
“If there is no further discussion to modify the content of [the policy], there may be legal challenges from the operators, who will challenge it on constitutional and other legal grounds to try and force the government to abandon or modify it. But this will protract the process and we are already very far behind.” — © 2017 NewsCentral Media