SA risks return to telecoms monopoly: warning - TechCentral

SA risks return to telecoms monopoly: warning

Dobek Pater

Government’s national integrated ICT policy white paper, if implemented as it stands, will lead to the creation of an infrastructure monopoly that will ultimately harm both the industry and consumers.

That’s the view of Dobek Pater, MD of ICT consultancy Africa Analysis, who was speaking to TechCentral in a podcast interview on Tuesday.

He warned that although the white paper has aspects that will prove beneficial to the ICT industry, other sections of the document are highly problematic.

In particular, the plan to create a single national wholesale open-access network (Woan), and to give that network exclusive access to spectrum that can be used to build 4G/LTE networks, risks taking South Africa back to a telecommunications monopoly, Pater said.

“If you have only a single national network, a single infrastructure, then that’s a monopoly. And the tendency of monopolies is towards aggressive and arrogant behaviour, and normally increases in prices because there is no competition to keep them in check.”

No matter how well-intentioned government is with the white paper, creating a single national Woan, into which all operators are expected to invest, will leads to problems. For one thing, monopolies do not have an incentive to reduce their cost base and ensure they run the most efficient network possible, keeping prices artificially high.

Rivalry in infrastructure — even where that leads to duplication — is beneficial, Pater said. “You have two competitors selling the same product, bandwidth … and they will compete on price and service delivery… It’s normally healthy to have at least two infrastructures duplicated in a market.”

In a competitive market, there is also the option of “failover” — there’s always a backup available to consumers and businesses if one of the competitors fails, or chooses a sub-optimal technology.

On a practical level, just ensuring all the investors in the proposed Woan work together will prove difficult, Pater said. Consensus, for example, has to be reached on a technology platform — something which will not be easy to achieve. “Just that issue could delay things for a very long time.”

Worse, if the Woan monopoly makes the wrong technology decisions, the entire country will suffer as a result.

“If they persist with that technology, the users will be increasingly disadvantaged [compared to those]in other markets,” he said. This could ultimately affect the country’s competitiveness.

Pater also directed strong criticism at government over the white paper’s plan to issue all unassigned “high-demand” spectrum to the Woan and for raising the prospect of taking existing spectrum allocations away from the mobile operators.

He also took aim at the white paper’s provisions on network neutrality, warning that they could have the unintended effect of undermining investment in infrastructure and ultimately of harming consumers.

Listen to the full interview with Pater, or subscribe to the TechCentral Podcast in your favourite podcatcher (including iTunes or Pocket Casts), using the RSS feed.  — © 2017 NewsCentral Media

3 Comments

  1. How about the monopoly called Minister of Communications? You know, the monopoly that totally missed the INTERNATIONAL deadline to go full digital in the telecomms sector back in 2014/2015 resulting in not a single senior manager being disciplined for this national embarrassment much less dismissed. Yeah, THAT monopoly.

  2. We spend a lot of time shooting down ideas, but far less suggesting alternatives. what’s the point of simply arguing the white paper equates a monopoly when we are already in a monopoly market? Where’s the way out? What are the alternatives?

  3. I did not know that we were ever out of a monopoly! Telekom, Eskom, Transnet, SAB all are creaming it! Compare Samsung, Apple, Foreign vehicle prices outside SA. You can take off 30-40% for American car prices in the US. Telecommunications in SA is extorting everything from the consumer with the excuse they are building it. Fibre installation happened in California 1992.