There is renewed vigour from government to improve local telecoms services and reduce costs – here is what should be done:
Over the last few months the Department of Communications (DoC) and parliament have made more noise about South Africa’s high telecommunications costs and poor broadband services than was seen for many years under the late communications minister Ivy Matsepe-Casaburri. Unfortunately the DoC and government are well known for making a noise and less so for delivering on their promises.
But assuming that the new minister of communications Siphiwe Nyanda is more effective than his predecessor – not a particularly difficult feat – things may start to look up in the local telecommunications market. There is strong political will behind the drive to reduce wholesale mobile termination rates and the minister has already issued a policy directive to drive this initiative.
The DoC has said that mobile termination rates are only the first step to cutting local telecoms prices, and that it is already planning further policy directives to reduce the cost of broadband in the country, make SMSs cheaper and ensure lower international call rates. While many consumers and businesses may welcome these steps by government to cut telecoms costs, it is debatable whether more government meddling is what is needed. Is government’s involvement in the telecommunications market not exactly why South Africa is in this mess in the first place?
Some regulatory interventions like lowering interconnect rates are welcome and necessary but the best way to ensure quality telecommunications services at affordable rates is – and always has been – competition. The DoC and the Independent Communications Authority of South Africa (ICASA) will be well advised to do everything possible to stimulate competition.
The best way to create a competitive telecommunications environment is to give current and new companies the tools to compete effectively against incumbent operators and create a regulatory environment which makes it easy to roll out new networks and services, thereby making it attractive to investors to put their money into this market.
A good start will be for ICASA to hand out the remaining spectrum in both the 2,6 GHz and 3,5 GHz bands to enable companies to bring more competition to the local broadband market through WiMAX and at a later stage LTE. The regulator may even win back some respect if it decides to re-allocate Sentech's spectrum to companies with the capital and willpower to do something with it.
Allocating spectrum to operators, who are keen to invest in infrastructure, will help to bring competition to Telkom’s ADSL services, but the best way to tackle the incumbent’s monopoly in the ADSL market is local loop unbundling (LLU). It will not be easy to convince Telkom to relinquish its control over the country's copper infrastructure, so ICASA may as well roll up its sleeves and start the process now because whichever way to slice it, it’s going to be a long and arduous process.
Carrier pre-selection, full number-portability and lower fixed termination rates are further methods to create a more competitive market, and the good news is that both the DoC and ICASA have indicated that all of these projects are on the cards. ICASA recently announced that it will tackle LLU, develop generic interconnection regulations, which will apply to all operators, and publish carrier pre-selection regulations while it is working on mobile termination rate cuts. The regulator even promised to finalise regulations on how it will hand out scarce spectrum by the end of the year.
Anyone who has followed the local telecoms market over the last few years will justifiably greet promises from the DoC and ICASA with the utmost scepticism, but maybe the new communications minister is exactly what is needed to create a more competitive telecoms environment.
