Johannesburg, 19 May 2004
South Africa needs a more competitive telecommunications industry and the legislation governing it must be addressed to allow the industry to grow.
These were some of the issues raised at the Futurex conference in Sandton, as speakers presented their views on convergence and the local telecoms industry.
Delegates were critical of the Telkom monopoly, and promoted the idea of a more competitive telecoms industry. "Telkom has the broadest, most entrenched telecoms monopoly in the world," said Transtel CEO Karl Socikwa, who is also chairman of the second national operator interim board.
Free Market Foundation of SA council member Neil Emerick was critical of the lack of growth shown by Telkom, and added that government involvement was not aiding the situation. "Government involvement limits the amount of telephone penetration. Countries with minimal state involvement have a much higher penetration rate," Emerick said.
Socikwa reinforced this when he quoted findings from US research company, Yankee Group, which labelled SA as the only middle-income country in which the number of telephones lines has fallen for three years.
Taking a less critical view, Future Perfect Corporation director Alan Levin warned that people should not simply blame the government for all the problems inherent in the telecoms industry, and called on the public to get involved in rectifying the situation. "I don`t quite blame government. Everyone needs to take action, because government has an open public process."
However, Levin did point out certain "unhealthy incentives" with regards to government involvement. "Government has an interest in maximising the value of the state-owned telco, in order to get the most money from privatisation."
When covering the matter of convergence, Socikwa said it had happened before SA had legislation, and added that it would continue to happen. "The challenge we face is how to regulate convergence, and how much needs to be regulated."
Levin agreed, and pointed out that convergence was already prevalent in media organisations.
Targeting legislation
In his presentation, Emerick attacked telecoms legislation, which he said was creating an "illiberal economy".
"It is forming a massive gap between SA and the rest of the world." Emerick was also critical of the lack of competition, which he said resulted in poor infrastructure, and an expensive and slow service.
"Imagine it took the same amount of time to download X amount of information in Japan as it did to make a cheese sandwich. In SA, to download the same amount of information, I could make the cheese for that sandwich."
Socikwa agreed that a more competitive market situation was needed, and said that allowing equal access to facilities for all operators was one of the critical success factors in growing the industry. He also highlighted the need for regulatory certainty, and a less restrictive regulatory environment, "where innovators can grow and flourish. They will create the applications and solutions that will make it grow."
Levin added that bad legislation would create artificial barriers to technology, resulting in higher costs, and stressed the importance of an independent regulator, "because investors care a lot about regulatory risk".
Among the delegates there was overall agreement that the consumer must ultimately be the one to benefit. "We need to put the power in the consumers` hands," said Socikwa, "and enable them to move freely across the networks."
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