Deregulation: The well from which all progress springs

Spescom's Chief Technical Officer, Viv Crone, shares his thoughts on the latest developments in SA's telecoms arena.

The single most important word in the recent announcements regarding the telecommunications industry in SA, is 'deregulation'.

This is the driver for all progress in the industry and indeed even in SA's economy. Everything else is secondary to this development.

It is also the commencement of a journey that will take time to unfold the benefits to the country as a whole.

Deregulation removes a major roadblock to economic growth, namely - monopoly. It is a move that delivers SA's anti-monopoly message around the globe and hails an era of competition, which, in a capitalist society, is always good news for the business community and the consumer.

However, it should be noted that monopolies have their uses at certain times in the history of an industry sector or even in a country. This is particularly true in areas like telecommunications where the initial investment in structure and technology, is extremely high.

However, when the monopoly has reached it sell-by date - it must go.

The removal of a monopoly fosters creativity and provides a blueprint for entrepreneurial enterprise. Now SA will be truly capable of putting on its thinking cap and aspiring to meaningful economic growth.

So the inexorable movement has begun with the awarding of the SNO licence which in turn brings good news for all users, business and domestic, in the shape of competition.

If competitiveness, from the user's standpoint, is to be effective, the playing field needs to be levelled. This may not be the case for some time to come due to practical issues like available space on existing exchanges and how sharing of the access network will be made possible. These issues may hinder the SNO in providing a truly competitive service; however, in other areas there will be advantages to the second operator as it will not be encumbered by legacy technology.

Therefore, rules will be needed to clarify the parameters of operation and until that happens what will be seen will be silos of improvements and product offerings but not a complete picture.

For example in the US, long distance call cost was the among the first area to show relief following on the heels of the introduction of competition into the telecoms market.

In SA the cost of international calls has dropped, however, the local landline side of the issue is another matter.

On the subject of VOIP (voice over Internet Protocol) it is important not to confuse changes in technology with fundamental changes in industry structure.

Deregulation enables new technology to become effective in an economy. In such a climate it is not at all unrealistic to predict the demise of the normal circuit-based switching model in the marketplace, especially when voice is made readily available via broadband connections.

Companies will unquestionably go the VOIP route as a business decision based on cost and reliability. Cost savings of between 30% and 40% are being predicted for enterprises with a large number of calls to cellphones by implementing a change in the routing of calls over Internet lines to value-added network suppliers, who in turn will route them to the cellular networks.

International call costs are also expected to drop for the business as companies lease bandwidth from network suppliers as opposed to being billed per minute for call time.

The take-up volumes of VOIP will certainly be driven by business criteria. Business does not grow due to the implementation of technology centric strategies. Growth, or lack of it, is achieved because of commercial issues. Business is technology agnostic in that it doesn't care what the technology is, the questions are always - does it work? And how much does it cost? These same factors will determine the size of the VOIP market.

The promise of value-added features will also play a role and in turn spur entrepreneurs to devise competitive packages to attract customers.

Convergence is the bringing together of different services - typically voice and data - on a common bearer.

In the business environment convergence takes place at desktop level and companies leverage this facility to the full.

Now the ability to mix voice and data earlier, and transparently deliver it on a common bearer, to the home, for example, is fostered by the availability of broadband access. This in turn may be described as the manifestation of the death of distance.

Deregulation will foster the availability of bandwidth. There will be increased revenue from ADSL connections because enhanced services will be on offer than were available on a POTS line.

The revenue generated in this manner may also have a significant role to play in emerging economies like that of SA's.

Long-range education, such as the academic support currently being delivered by the St Alban's School in Gauteng to schools in the Mamelodi township. However, the cost of, and restrictions attached to, connectivity have been cited as obstructive.

Free, or reduced, connectivity fees and restrictions for long-distance learning or medical programmes may become encouraged by deregulation.

Change is inevitable. SA, like Solomon, resisted and sat on the beach for a long time with the possibility of not only getting wet, but possibly of being washed away.

However, change has arrived and we are about to discover that it may be better to surf the waves than try to fight them.