[By Duncan McLeod]
Sentech is dysfunctional. That’s the gloomy picture painted by the state-owned company’s board in a presentation it was meant to give to parliament last week, a copy of which TechCentral has in its possession.
But the company was prevented from delivering the presentation, entitled “Strategic Plan 2010 – 2011”, because it failed to supply supporting documentation, needed by members of parliament ahead of time, before the scheduled meeting.
Sentech has become the butt of jokes in the telecommunications industry. It’s now the oft-quoted example of how not to run a business.
But this no joke. One of the most important cogs in SA’s broadcasting industry — the company carries most of the country’s terrestrial television and radio signals — is in danger of collapse.
The board’s report makes for depressing reading. It demonstrates how a plan by former communications minister Ivy Matsepe-Casaburri to grant the company two licences meant to transform its fortunes failed hopelessly.
Sentech canned its wireless broadband network after squandering hundreds of millions of rand on the project; now its international “carrier-of-carrier” business, where it offers international connectivity to other operators, is failing.
None of the businesses Sentech operates outside its original mandate of broadcast signal distribution is profitable. And the signal distribution business probably only does relatively well because the SABC and e.tv are forced to buy services from the company.
Every attempt Sentech has made to branch into new business areas has failed miserably.
Perhaps the highest-profile collapse has been of the MyWireless business. Launched as a rival to Telkom in broadband, Sentech built a wireless data network but chose the wrong technology with which to do it. This mistake, coupled with stunningly poor execution and the arrival of third-generation wireless services from the mobile operators, doomed the business from the start.
To be fair, some of the problems at Sentech are not of its own doing. Too often, it’s the politicians, most of whom don’t have an ounce of business sense in their bodies, who instruct the company to do things without a proper understanding of the commercial issues and competitive landscape.
Matsepe-Casaburri probably had her heart in the right place when she instructed Sentech to build a wireless broadband network. But the company was structurally unable to deliver a winning product.
The company, used to dealing with only a handful of customers — the broadcasters — suddenly had to deal with thousands of unhappy customers. It was ill equipped to deal with the situation, and the MyWireless business imploded as angry customers deserted it.
Perhaps some good will come out of the board’s review of the company. Led by newly installed chairman Quraysh Patel, the company wants to focus on its core business of distributing broadcasting signals.
The board wants to close Sentech’s poorly performing operating divisions — and redouble its efforts on ensuring SA migrates successfully from analogue to digital terrestrial broadcasting.
That’s the correct approach. But digital migration on its own could prove a big challenge for Sentech given the department of communications’ bizarre decision to revisit the country’s commitment to the European standard for digital broadcasting and to consider a hybrid Japanese-Brazilian standard instead.
If government abandons its decision to deploy the European standard, Sentech will have its work cut out just ensuring the country meets the mid-2015 deadline for analogue switch-off agreed to with the International Telecommunication Union.
The real worry amid the dysfunction and malaise is that Sentech is losing some of its top skills. Most recent to leave is the highly regarded Brian Commerford, its chief engineer for radio frequency networks, who has taken early retirement.
If it loses too much engineering talent, the country could find itself in a situation where terrestrial broadcasts start failing. Though not as serious as Eskom’s 2008 rolling power cuts, millions of households do rely on these broadcasts for their television entertainment.
And SA can forget about migrating successfully from analogue to digital broadcasts if Sentech loses its top engineering talent.
The board has its work cut out. It needs to find a quality CEO who can clean up the mess that the organisation is in — and it’s a tough ask to find someone talented to lead a dysfunctional parastatal. Who in their right mind would want the job?
Then, in conjunction with communications minister Siphiwe Nyanda, the board needs to figure out what it wants Sentech to be.
Ideally, it will focus on its core business of broadcast signal distribution and end its abortive attempts to compete in the telecoms industry.
That will mean scrapping its much-ballyhooed rural broadband network, for which taxpayers have already handed over R500m (not spent yet, thank goodness) and leaving the private sector to get on with the job of building these networks.
Then it must — repeat, must — hand back the huge tracts of valuable spectrum that were handed to it by the Independent Communications Authority of SA (Icasa) under instruction from Matsepe-Casaburri.
It owns big chunks of spectrum in the 2,6GHz and 3,5GHz bands. Both frequency bands are ideally suited for providing the next generation of wireless broadband services.
Icasa, which recently postponed plans to auction off spectrum in the two bands, must insist on adding the Sentech allocations to the pot before reissuing invitations to apply to access the spectrum.
It is inexcusable that Nyanda and Icasa have allowed a dysfunctional state-owned company to hog this valuable spectrum for so long when it could have been given to incumbent or even new commercial operators eager to use it to provide bandwidth to consumers.
Both Nyanda and Icasa have failed SA consumers. It’s time for action to sort out this mess before Sentech’s shame becomes SA’s shame.
- Duncan McLeod is editor of TechCentral
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