Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Vodacom’s Maziv deal gets makeover ahead of crucial hearing

      18 July 2025

      Takealot taps Mr D to deliver toys, pet food and future growth

      18 July 2025

      Cut electricity prices for data centres: Andile Ngcaba

      18 July 2025

      ‘Oh, Ani!’: Elon’s edgy bot stirs ethical storm

      18 July 2025

      Trump U-turn on Nvidia spurs talk of grand bargain with China

      18 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Samsung’s bet on folding phones faces major test

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025
    • In-depth

      The 1940s visionary who imagined the Information Age

      14 July 2025

      MultiChoice is working on a wholesale overhaul of DStv

      10 July 2025

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025
    • TCS

      TCS+ | Samsung unveils significant new safety feature for Galaxy A-series phones

      16 July 2025

      TCS+ | MVNX on the opportunities in South Africa’s booming MVNO market

      11 July 2025

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025
    • Opinion

      A smarter approach to digital transformation in ICT distribution

      15 July 2025

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Ivo Vegter » Ntshavheni’s bias against the private sector

    Ntshavheni’s bias against the private sector

    By Ivo Vegter8 July 2022
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Communications minister Khumbudzo Ntshavheni

    Communications minister Khumbudzo Ntshavheni remains convinced that a state-owned network infrastructure company can trump the private sector. She is mistaken.

    “We accept the responsibility that we cannot leave our fate and the fate of the country in the hands of the telecommunications operators that are commercially driven,” Ntshavheni said at a media briefing last month.

    The government appeared to step back from the proposal to create a state-owned wholesale open-access network (Woan) when it was left out of the spectrum allocation auctioned earlier this year. Given the failure of every other such state-owned mobile wholesale network elsewhere in the world, most recently in Mexico where it went bankrupt, this would have been a wise decision.

    Only vigorous competition between profit-driven companies can produce better quality products at lower prices

    Undeterred, however, Ntshavheni has now pinned her hopes for state participation in the market on a long-awaited State Digital Infrastructure Company (SDIC), which is to be formed by combining the assets of the perennially loss-making Broadband Infraco (BBI) and signal distributor Sentech.

    It will, according to the minister, be allocated radio spectrum in the spectrum policy due to be released at the end of July.

    Yet government absolutely can, and indeed should, leave the fate of the country in the hands of commercially driven telecoms operators. Only vigorous competition between profit-driven companies can produce better quality products at lower prices.

    Lessons of the past

    Government’s experience with Telkom is instructive. Government had viewed mobile telephones as mere toys for the rich, with a potential market of perhaps a million subscribers. It gladly let mobile licences go to the private sector.

    By contrast, Telkom was given an “exclusivity period” (read: monopoly) of five years in 1997, before a second national fixed line operator would be licensed. In effect, it enjoyed a 10-year monopoly, since the second operator, Neotel, only got off the ground in 2007.

    By then, however, fixed lines were obsolete. The purpose of Telkom’s monopoly was to give millions of people in underserviced areas landline telephones. Although the lines were laid, as per law, most were promptly disconnected for non-payment.

    Meanwhile, the private sector companies offering mobile phones had been beavering away, as profit-driven private companies do, and managed to get cellphones into the hands of almost all South Africans. To cope with the problem of non-payment, they pioneered an innovative prepaid system, which enabled even the poor to enjoy mobile telephony.

    While the government was still tied up with copper wires and landline telephones for the poor, the market, and technological progress, had rapidly overtaken them.

    The author, Ivo Vegter, argues that South Africa needs fewer state-owned enterprises

    Government’s goal with the Woan was to stimulate competition in the mobile industry like that seen among fixed-line Internet service providers. But when ISPs were competing to get everyone connected to the Internet 20 years ago, their main complaint was the price and service levels from the government-owned wholesale bandwidth supplier.

    True progress in terms of data speeds and prices only came once more private sector companies became involved in laying fibre infrastructure.

    The Internet Service Providers’ Association has proposed an entirely different intervention in the market, by forcing major owners of mobile frequency spectrum to offer wholesale rates to smaller companies seeking to offer services to end users.

    Establishing wholesale and retail markets was fairly successful in stimulating competition among ISPs in the wired Internet market. It could be effective again, even if only as a counter to the original regulatory sin of limiting mobile operator licences to two, then three, and then only a few more companies.

    Doing so, however, does not require a state-owned wholesale network such as the proposed SDIC or a Woan. It will either be too inefficient to offer any competition in the market, or will use its government backing to distort the market by setting predatory wholesale prices.

    The plan to merge Sentech and Broadband Infraco was approved by cabinet almost five years ago. No progress was made

    This would infringe on the commercial rights of existing spectrum owners, as all government intervention in the market does.

    Even the process to combine Sentech with BBI demonstrates why the government shouldn’t be running a combined SDIC.

    The plan to merge the two companies was approved by cabinet almost five years ago, in December 2017. No progress was made on the merger, however.

    When it became apparent that new legislation would be needed to establish a new, merged entity – a realisation that took four years to dawn – the department in 2021 decided that it would be easier if BBI simply acquired Sentech, since the enabling legislation of the former entity gives it all the powers needed to perform the functions of the latter.

    It had hoped to complete this acquisition in the financial year that ended on 31 March 2021, but has again made little or no progress.

    What hope?

    If it takes five years or more just to establish the company, what hope does it have to be an efficient, effective organisation, under the aegis of the department of communications?

    In the digital communication space, one needs to move a lot quicker, lest technological progress and competition overtake you.

    The best strategy for stimulating competition in the market would be to privatise state assets and liberalise the sector. South Africa needs fewer state-owned enterprises, not new ones.

    • The author, Ivo Vegter, is a former technology journalist. A columnist for the Institute for Race Relations, he writes in defence of free markets and individual liberty. This article was commissioned by the Free Market Foundation. The views expressed in the article are the author’s and not necessarily shared by the members of the foundation or TechCentral


    BBI Broadband Infraco FMF Free Market Foundation Ivo Vegter Khumbudzo Ntshavheni Sentech Woan
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleWildcat strike hits Takealot warehouse
    Next Article Twitter workers brace for more ‘circus’ as Musk walks

    Related Posts

    South Africa loosens media ownership rules – but keeps one hand on the remote

    16 July 2025

    Solly Malatsi seeks out-of-court deal in TV migration fight

    15 July 2025

    Icasa publishes new draft regulations for digital TV

    8 July 2025
    Company News

    Vertiv to acquire custom rack solutions manufacturer

    18 July 2025

    SA businesses embrace gen AI – but strategy and skills are lagging

    17 July 2025

    Ransomware in South Africa: the human factor behind the growing crisis

    16 July 2025
    Opinion

    A smarter approach to digital transformation in ICT distribution

    15 July 2025

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.