Govt to exit retail broadband

The Department of Communications will leave the retail broadband market to the private sector, it says.

ITWeb is in possession of an advance copy of the department's new draft broadband policy, which is expected to be gazetted in the next few days.

The new draft policy has realigned the state's role in the provision of broadband. It specifically states that “government should not operate directly in retail service provision, but leave these markets to the private sector players”.

This could have implications for government, since it has a stake in all the large local telecoms providers, not to mention its plans for Broadband Infraco.

The document does not clarify whether the department will pull its investment stakes in the operators; however, the role of Broadband Infraco may move back in line with industry expectations.

The new state-owned enterprise, born out of Esitel and Transtel, has been mandated to provide connectivity to underprivileged areas. However, many in the industry have been concerned that it would compete as a fully fledged operator.

The department's decision to step out of retail could calm fears that Infraco would be used by government as a broadband cash cow.

The new proposed policy document also looks extensively at boosting competition in the private sector. The long-standing policy of “managed liberalisation”, which has traditionally been the department's mantra, seems to have been scrapped.

One of the key priority areas listed in the policy is to look at lowering the cost of broadband. “Competition will be promoted in the market,” says the document, as a possible solution to the high costs.

The policy document adds that government wants to create an enabling environment for the private sector to develop infrastructure, services and applications.

However, while many in the private sector would like to see the hand of government removed from the telecoms industry entirely, the new policy document includes several areas where government is reserving the right to intervene.

“Where market forces fail, government will intervene to increase the availability of infrastructure and services.”

As part of the drive to increase competition and drive down costs, government is encouraging the operators to share physical infrastructure, which the department believes will lower the cost of communication, as well as reduce the environmental impact.

The department will also intervene in the services-based access market, where competition should be markedly better considering the 400 newly-licensed ECNS operators. At the same time, the department expects that broadband penetration growth will also drive skills development and employment in the industry.

It seems government plans to make access to broadband services a right for all South African citizens. It also appears that people who cannot afford broadband will be assisted by the department to gain access.

“The needy persons will be assisted to access broadband services through the appropriate means,” the policy explains.

To do this effectively, the department plans to drive broadband services into local, provincial and national government.

“Government will take the lead in uptake and usage of broadband and the promotion thereof in both urban and rural areas. This step would enable citizens to transact with government electronically and would enhance service delivery, especially in areas of education and health.”

Industry players will be given an opportunity to comment on the proposed policy once the document has been published in the Government Gazette.

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