The Department of Communications expects to see “substantive” reductions in mobile and fixed-line communications between January and March next year.
The department's target for the 2010/11 financial year was to trim the wholesale per-minute cost of mobile communication by 10%. In addition, the DOC wanted to reduce the cost of fixed telecommunications for public access by 10%.
However, this process has been “delayed to avoid litigation from the operators,” says the department. No clarity was provided as to what the potential litigation involved, or whether it related to interconnect rates.
This statement is made in the DOC's adjusted budget summary, which forms part of the National Treasury's medium-term budget policy statement. The mid-year update is being presented to Parliament by finance minister Pravin Gordhan this afternoon.
The DOC's planned reduction in the cost of communication forms part of its ICT Policy Development programme and is linked to government's aim of creating decent employment through inclusive economic growth.
In his state of the nation address earlier this year, president Jacob Zuma said government would cut the cost of communication and improve the speed and accessibility to the Internet.
However, the updated budget gave no indication of whether the DOC plans to reduce the cost of broadband or other forms of Internet access. According to a September report by Ovum, which researched 15 emerging markets, SA has the highest broadband costs of all the countries included in the survey.
Angel Dobardziev, Ovum practice leader, says: “The cost of broadband in some emerging countries is three times as high as in mature markets, which, when coupled with low wages, makes it an unaffordable luxury for all except a small group at the top of the socioeconomic pillar.”
The DOC also indicated the number of ICT small, micro and medium enterprise hubs that will be created in each province will be lower than the estimated two per province because of “human resource constraints in the department”.
According to the adjusted budget, the department has spent R560.5 million in the first half of the year, which is just more than a quarter of its allocated R2.1 billion. Last year, 30.8% of its full-year budget was spent in the first half of the year.
The DOC says the decline on year-on-year spending is due to capacity constraints and implementation of projects.
Revenue collection during the first six months was R1.1 billion, or 76.6% of estimated revenue of R1.4 billion. This is significantly lower than the R5.3 billion collected last year due to lower revenue generated by the Independent Communications Authority of SA and a decrease in special dividends declared by Telkom.
In addition, last year's figures were buoyed by Telkom's sale of Vodacom, which is not included in the 2010/11 figures.
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