International research firm Gartner has issued a downbeat analysis of the South African telecommunications sector, saying a lot of work has to be done before prices start falling and competition becomes a reality.
The analysis gives some insight into how potential foreign investors may see the local telecommunications market, which has battled to attract overseas investment - one of the key elements contributing to a delay in the creation of the second national operator (SNO).
Bill Hahn, author of the Gartner analysis, ranked SA at level four on the liberalisation scale, meaning the country is only beginning to open up its market. Level one means a fully liberalised market.
The report says the voice sector still dominates in SA, but opportunities are narrowing because of recent regulatory developments and ongoing growth in the mobile segment.
"Data will be the strategic opportunity and competitive segment for incumbent and new entrants, including mobile operators," Gartner says.
In his analysis, Hahn says the classification of voice over Internet Protocol (VOIP) as a data service by the regulator (the Independent Communications Authority of SA - ICASA) has created a "significant crack" in Telkom`s monopoly.
"Nimble competitors, some of which have experience with voice services from outside the country, can now offer internal calling services as well as their previous data services to business clients, at noticeable savings."
Hahn says this could set the business sector up for a variety of cost savings, although a great deal would depend on the SNO`s eventual strategy.
While Hahn expects the SNO to be licensed soon, he warns it will take at least 18 months before it is up and running.
Hahn was critical of Telkom`s preparations for a rival, even though it has stated that it is ready. "It is less clear how well it can compete against mobile (or even if it is trying)."
Hahn says South African consumers will have to wait for true competitive choice in broadband access for at least two years and voice prices will likely come down, but not as much as in the business sector.
"This would reverse the general trend of business pricing, which often effectively subsidises consumers in many other national regimes," he says.
A copy of the analysis has been sent to Telkom, ICASA and the Department of Communications for comment.
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