ForgeAhead evaluates Telecoms Act

The majority of objectives to be accomplished through the Telecommunications Act of 1996 were achieved, Adrian Schofield, head of research at ForgeAhead, told delegates at a briefing at Microsoft`s Bryanston offices yesterday.

Schofield was presenting a preliminary report on a study to determine whether the Act`s objectives were achieved in the period 1997-2004. The study was commissioned by the Universal Service Agency (USA) and is one of six studies the USA has undertaken.

ForgeAhead researchers grouped the objectives of the Act into four areas: universal access, investment and innovation, the competitive environment and broad-based black economic empowerment.

Schofield said it was difficult to determine whether an objective such as providing universal access has been met, as targets have not been quantified. Also, the people involved in drafting the Telecoms Act focused on fixed-line services, he noted.

It was not expected that the mobile market would overshadow the fixed-line market with penetration levels of 16.8 million for mobile and 4.3 million for fixed-line (in 2004).

Schofield said there is therefore a danger that the fixed-line operator could invest in telephone lines for universal access (required by the Act) in areas already covered by the mobile providers. The key issue would then be affordability among users in that region: can they make calls on the mobile phones, or do they have to wait for the rich cousin in the city to call?

Still on the difficulty of quantifying when success has been achieved, Schofield said that as Telkom had invested R50 billion in infrastructure in the period, missing its target by 2.1 million lines, could one argue that the objectives of the Act were not met?

The challenge with regard to encouraging competition and innovation is that prices are perceived to be high, he said.

The extension of the Telkom monopoly by more than three years has resulted in the lack of competition in the fixed-line arena. However, there have been innovations on products, services as well as pricing in the mobile sector, Schofield noted.

"This has influenced the way Telkom does business," he said.

There have also been accomplishments in achieving some of the broad-based black economic empowerment goals. An example of transactions that aimed to encourage ownership by previously disadvantaged people is Khulisa`s offer for 30% of Telkom, Schofield said.

In addition, companies` investment in skills development exceeds the skills development levy they pay.

Research also indicated there are 49.9% black board members in the telecoms sector, with 19.2% of them females. However, employment equity in the sector dropped from 68% to 52%, largely due to Telkom`s retrenchment of 2 000 staff members during the review period.

Service providers have engaged in training programmes for small and medium enterprises, and now procure a significant amount of telecoms services from them, Schofield noted.

Vodacom provided speakerphones for the blind, a loopset for the deaf, a special needs call centre and an interactive billing system.

Schofield said the results of the research must be reviewed before President Thabo Mbeki signs the Electronic Communications (EC) Bill into an Act. He said it would be inappropriate to carry the objectives of the Telecoms Act into the EC Act, as the telecoms environment has changed since the goals were initially drafted.

One key recommendation the report makes is that the EC Act`s objectives be technology-neutral in order to accommodate the changes that have taken place since the Telecoms Act was drafted, as well as provide for future developments. Schofield also notes that the telecoms sector demonstrates a willingness to address outstanding goals.

Norman Munzhelele, chief director of policy at the Department of Communications, says as government has not read the report yet, he is unable to provide substantive comment on the report`s findings and recommendations.