SA telecoms lag behind

The state monopoly of the telecoms sector in the form of Telkom has seen SA's broadband development rate lag behind similar-sized economies in the rest of the world, says Steve Briggs, CEO of Arc Telecoms.

“There are several reasons for the slow broadband development in SA, but chief among them is the fact that the country lacked a competitive telecoms industry until very recently,” he notes. “Even today, the state has a heavy hand in some key assets.”

Briggs says the industry only started to see positive broadband developments during the past 12 to 18 months with the opening up of competition in the ADSL and 3G segments of the consumer markets.

“Competition has increased on all fronts as infrastructure has improved, notably the international cables which have recently been installed. This is evidenced by the aggressive competition in the ADSL and 3G segments of the consumer market,” explains Briggs.

“On the wholesale front, networks including Neotel, Vodacom, MTN and Telkom are also more ready to resell both directly and via channel partners,” he adds. “However, these dynamics have only been evident for the past 12 to 18 months.”

Nonetheless, Briggs says in comparison with its peers, SA's telecoms industry is lagging behind as the country has not implemented key aspects to expand the sector.

“We certainly lag, even among our African peers. For example, telecoms vendors in Nigeria already offer fibre to the home. Even similar-sized economies like Brazil and Turkey are ahead of us”, he notes.

Briggs adds that competition is also lacking because SA's telecoms industry structure does not promote fair provision of services.

“From a regulatory and state investment perspective, the approach to solving SA's broadband or telecoms 'digital divide' has been a 'supply side' one,” he states. This is because the state has attempted to bring products to market through its own assets, like Sentech and Infraco, explains Briggs. “The regulator has also taken this approach when handing out licences and spectrum.”

To promote fair provision of services, Briggs says the state should focus more on the demand side.

“My suggestion is to turn this on its head and do a 'demand side' or market-driven approach whereby the state can take a portion of its investment, and implement a voucher system,” he says.

“In this way, each potential consumer can allocate their vouchers to private sector providers, who can respond to investment opportunities and profit opportunities.”

Opening up the telecoms sector, notes Briggs, would boost the market by bringing a reduction in costs while services would improve drastically.

“True competition will drive broadband prices down, and ensure the market is able to adequately supply the country's broadband needs. I would suggest that industry structures would need to be modernised to achieve this.”

He also recommends that the state completely exit its shareholding in Telkom, Sentech and Infraco, and instead focus on incentivising the private sector in rolling out various services to urban and rural customers.

The best thing the government can do is to ensure SA has a well-resourced and knowledgeable telecoms regulator, like the FCC in the US or Ofcom in the UK, who will promote competition, innovation and transparency, he says.

Briggs is one of the keynote speakers at the ITWeb Broadband Conference, taking place on 5 and 6 October at the Forum, Bryanston.