Budgeting for trouble

The Independent Communications Authority of SA (ICASA) has a budget of R111 million for the next financial year.

If ICASA`s budget is not upped, and soon, my only suggestion is that Telkom be sold to the Congress of South African Trade Unions (Cosatu) for a nominal fee of R1.

Phillip de Wet, News editor, ITWeb

That`s it. This is not an institution that can make a buck on the side or even ask for donations. It is a government organ; it gets its government budget and has to make do.

Consider what it has to do with what on the face of it may sound like a lot of money. It has to pay the salaries of around 280 staff, some of whom are highly skilled technicians while others hold senior administrative positions. It has to keep an eye on some of the largest companies in the country - Telkom, Vodacom, MTN and more recently Eskom and Transtel - and slap them on the wrists if they step out of line. The line in question is rather fuzzily determined by legislation, leading to endless court cases such as the currently dormant rate battle with Telkom. And court cases don`t come cheap.

Add to this the more mundane overheads of an organisation with a national presence, and the small matter of broadcasting regulation. ICASA is also responsible for TV and radio regulation, something those in telecommunications often overlook.

In short, R111 million does not stretch as far as it used to in the good old days. Just listen to ICASA chairman Mandla Langa complain about the poaching of his (underpaid) staff if you need more convincing.

That a government body could be under-funded is liable to come as a shock to absolutely nobody. That the body should be ICASA and that it should be suffering a lack of funds right now should concern everybody.

The privatisation of State assets is one of those simple ideas that seem so blindingly obvious. Take the case of Telkom, for example. Government gets to sell the company and pocket a couple of billion rand, which it can use to fight off court orders enforcing it to provide anti-retroviral drugs. The buyers want their new plaything to be profitable, and as soon as they make it so the government gets to dip its fingers in the revenue stream by way of corporate taxes. Everybody is happy.

The most profitable companies are not always the most honest (think Enron) or the most socially aware (any tobacco company you care to name). But the miracle of modern politics again comes to the rescue. Companies can be forced into doing good, while only sacrificing a small portion of their ill-gotten gains. This is euphemistically called regulation, another simple and elegant idea.

Voters, and government, really only want two things from the telecommunications industry: cheap phone calls and universal service, or, to use a phrase that is fast catching on, "easy and affordable access" to a telephone.

A privatised telecommunications company is interested in neither. Putting telephones in rural villages does not pay. Keeping tariffs low does not pay. We have seen the evidence of both, with Telkom disconnecting 10% of its customers for non-payment, and more recently with its tariff increases.

When the second national operator (SNO) comes into play, probably early next year, things will suddenly get a whole lot worse. International experience has shown that, in a market such as ours, an incumbent and a newcomer will look like two bulls seeing red in a china shop, if you`ll excuse the mixed metaphor. The fallout will hit the little people, the consumers, first.

In theory, a strong regulator will make both companies play nice. Telkom counts its revenue by the billion. To recount, ICASA has R111 million at its disposal. It should be clear enough who will be keeping whom in line.

If ICASA`s budget is not upped, and soon, my only suggestion is that Telkom be sold to the Congress of South African Trade Unions (Cosatu) for a nominal fee of R1.

Cosatu would be a willing buyer; it has called for Telkom to remain government-owned before. It too fears the ravages of the free market.

Sure the unions will run the company into the ground, first destroying its value and then letting service deteriorate until the infrastructure looks similar to that of Nigeria. But at least it will force rural roll-outs and keep tariffs very affordable before the fall. The end result will be indistinguishable from what will happen in a poorly regulated market, but at least in the interim calls will be cheap.