During the year March 2000 to March 2001, between 1.7 million and 1.9 million people were disconnected from the Telkom network when they couldn`t afford to pay for its services. That is almost a third of the total number of lines Telkom had in service at the time.
The downside of Telkom`s money-printing licence has always been a delay in the development of data infrastructure and Internet penetration.
Phillip de Wet, Journalist, ITWeb
The vast majority of these were private individuals, most of which would live in rural or township areas. The remainder were small businesses, probably entrepreneurial start-ups and one-man bands.
Not all of these people are necessarily cut off from telecommunications altogether. Telkom tells us it tried to convert defaulters into prepaid customers, which would eliminate them as a credit risk. Yet Telkom also says its prepaid user base grew by only 98 980 people. In the very unlikely event that all new users were cut off from the network previously, conservatively calculated that still represents less than 6% of the total defaulters.
Going to cell
A more likely scenario is that many of these defaulters would have turned to MTN or Vodacom prepaid packages which have become so popular among lower income earners. With permanently blackened credit records, they would have no access to reasonably tariffed long-term contract packages, but they would have the convenience of mobile phones.
The irony of it all. While Telkom disconnected 500 000 people more than it connected last year, Vodacom grew its subscriber base by almost 70% and now has more subscribers than the ancient State-owned monopoly that owns part of it. MTN and Vodacom combined have a subscriber base that easily doubles that of Telkom.
Yet MTN and Vodacom were done no favours to facilitate this feat of roll-out. They were allowed into the market with nobody anticipating their service to ever be more than a toy for the rich. They face competition from each other, and are soon to face what promises to be fierce competition from Cell C.
Telkom, on the other hand, was treated with all the kindness government could muster in 1996. It was given a minimum five-year exclusivity, a virtual licence to print money. It was given access to, and often total control over, the most valuable areas of telecommunications -- international access, providing data pipes and all Internet-related services.
The reasoning was simple: give Telkom a guaranteed stream of money and force it to use that money to provide telecoms services to the rural and township areas. The same areas where most of those 1.7 million disconnected people hail from.
Is Telkom to blame? A company planning to list on the New York Stock Exchange (NYSE) probably has little chance to attract investor confidence if it is seen to be pouring money down a black hole. It is not in the business of charity, after all.
Is government to blame? After all, it has shouldered the responsibility of ensuring universal access to telecommunications. Yet on the other hand, it also made a genuine attempt to ensure such access, even if mistakes were made along the way.
Idealists, cynics, pessimists
If there is to be a scapegoat, the most likely candidates are the bleeding heart liberals who in 1996 assured everyone that affordability would not be an insurmountable obstacle and the idealists who were eager to agree. And if there were anyone who foresaw this turn of events, it was the cynics who predicted that universal access would never be a reality, and who were labelled pessimists for their trouble.
It is far easier to spot the losers. They are the Internet industry and data providers, the ISPs, value-added network suppliers, any South African who has ever needed access to the Internet, and yes, the technology news Web sites.
The downside of Telkom`s money-printing licence has always been a delay in the development of data infrastructure and Internet penetration. To some, like me, it seemed a worthy sacrifice to make if it led to more basic services being available to those less lucky. Except it didn`t.
At least government got a shiny new Telkom out of the deal, which it can now play with for a while and then sell to foreigners. Too bad we won`t be able to follow the opening of trading in Telkom shares at the NYSE through broadband streaming video.
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