Between 1999 and 2004, Telkom’s monopoly of access to crucial international bandwidth and high-speed ADSL lines meant the company could freely charge Internet service providers excessive fees. And they did. Inevitably, this left ISPs — Internet Solutions included — with no choice but to pass costs on to their customers.
We demanded a competitive market, and aggressively lobbied to have Telkom’s wholesale and retail divisions separated to end its monopoly. Under those conditions, we believed that South Africa’s economy and its citizens could not fully realise the benefit of the Internet.
It was a long, tough battle, and it was a great day — I remember it very well — when in 2012 the Competition Commission ruled that Telkom was engaged in “bullying” and “anticompetitive” business practices.
Does industry not want a competitive, fair and level playing field?
To my frustration, both in and outside the context of the wholesale open-access network (Woan) debate, it appears that our local telecommunications industry is working against what should be the bedrock of our industry: a competitive, fair and level playing field. Companies with vested interests in their smaller monopolies are cocooning themselves in legal posturing, adopting a protectionist stance for short-term financial gain.
South Africa’s mobile network operators (MNOs) are nervous about the Woan model proposed by government and are vocal in their opposition. The irony is that they is starting to sound like and resemble our old fixed-line operator.
Arguably, what the mobile operators are trying to protect are new business models that establish themselves as ISPs. This is a natural evolution of a telecoms landscape once dominated by voice services that are history compared to the demand for Internet connectivity and data.
As we continue to communicate for work and play in a new era of wireless communications, the market must open up. Indeed, it is vital that Internet access is unbundled from other value-chain activities. It happened with Telkom, and now it must happen in the mobile space.
I have no doubt that this will stimulate opportunities for new competitors, deliver better pricing, and usher in a more competitive, fairer marketplace. The winners will be South Africa and South Africans.
Spectrum obsession
Let’s stop being side-tracked by the obsession with spectrum. In a country like South Africa, the communication needs of wide-spread rural communities and more densely populated cities means that newer technologies like 5G cannot simply take over from legacy wireless systems like 3G and even 2G. They will still exist alongside for many years to come.
Any qualified engineer in the industry will tell you that there’s enough spectrum. The key is how we use it — or indeed abuse it.
If more competition — to reduce the cost of data and services, increase access to the Internet and stimulate economic development — really is government’s aim, as stated in the 2016 ICT policy white paper, then a Woan is not the answer.
After all, no matter who or what kind of enterprise holds a monopoly, network monopolies bring high prices. This is a barrier to access for many South Africans, and negatively impacts the economy and society. The fundamentals of economics dictate that competition reduces abuse of market dominance and produces exactly the price and service results that government wants.
A Woan is not the answer, but many Woans may well be.
I propose that the mobile operators be compelled to separate their wholesale and retail businesses completely as a first step towards achieving the desired outcomes detailed in the policy white paper. This wholesale/retail divorce has sound precedence that should not be ignored. At a wholesale level, there’ll be full price transparency, and all ISPs will be able to compete fairly at a retail level.
By compelling the mobile providers to separate their wholesale and retail businesses fully, several positive outcomes will be achieved:
- Industry entrants and existing players that do not own their own infrastructure can build their businesses on the investments made by others, increasing the depth of the market and providing consumers — be they individuals who still want voice services or large enterprises wholly dependent on fibre — with all the benefits of more competition and choice.
- Entities that own infrastructure still profit from their investments, encouraging further development of the industry and maintenance of South Africa’s network, which, when compared to much of the continent, is far superior.
- A Woan controlled by government or an industry body could be launched in parallel with left over spectrum. This will create a comparative environment that allows all the industry to evaluate the viability of the model for our market.
- There is reduced opportunity for any industry player to ingratiate itself with the body managing the Woan for spectrum or any other market advantage.
- Allocation of spectrum to those operators that want it — through application or auction — will not be delayed because of a prolonged industry consultation that must precede any significant policy shift.
The commercial interests of South Africa’s mobile operators and ISPs are not at odds with government’s ideals of accessible, affordable, quality Internet connectivity and communications services for all citizens.
We all share these ideals, but they are only achievable in a commercially sound business environment. Regulation must be formulated in the interests of consumers and within a legislative framework that prevents market abuse and eliminates barriers to entry. It must embrace, encourage and stimulate competition, which gives local, even neighbourhood, operators an opportunity to thrive if they develop compelling product and service offerings that perhaps national service providers cannot.
Since its inception in 1993, Internet Solutions has been championing a fair and competitive market and we are not going to stop. We believe that it is not only our duty, but also the duty of the entire industry to fight for the right of South Africa to enjoy all the social and economic benefits of the Internet that come about when it is accessible and affordable to all.
I am not convinced that a single Woan can give South Africa these things, but multiple Woans can.
- Saki Missaikos is MD of Internet Solutions