Siemens predicts boom after telecommunications deregulation

With a global footprint as a major player in the telecommunications markets in countries the world over, Siemens is well placed to understand the different forces that come into being when economies reduce regulatory barriers of entry in telecommunications markets.

Dr Jan Mrosik, chief executive officer of Siemens Communications, says the German multinational's experience worldwide shows that South Africans can look forward to much more than simply lower prices and faster service.

"The opening in February 2005 of the local telecommunications market to more competition is likely to spark a boom in private sector development, create more employment opportunities, usher in better education and training facilities, and attract substantial foreign direct investment," he predicts.

Last September, Communications Minister Ivy Matsepe-Casaburri announced six reforms that will encourage competition between the incumbent players, namely fixed-line network operator Telkom, the three cell phone networks as well as companies offering computer data lines. These reforms are to take effect from the beginning of February 2005, with the Independent Communications Authority of South Africa (Icasa) hard at work to meet this deadline.

Dr Mrosik says it will not take long for mobile and fixed line networks to compete against each other, or for voice and data carriers to enter each other's markets, because advances telecommunications equipment have blurred the lines between these services.

"Fixed-line networks already have a lot of wireless replacing copper lines, while the cell phone networks are now able to offer broadband Internet access thanks to the faster data transmission of third generation GSM," he says.

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Besides February's reforms to stimulate competition between the incumbent players, the way is being cleared for more players to enter the market. A second national network operator should start operating this year and smaller telephone companies are being allowed to start-up in regions where less than five percent of the population has access to a phone.

"Similar moves by other countries saw their telecommunications markets grow dramatically," adds Dr Mrosik. "In Egypt, for example, Siemens injected an additional $35-million into its local joint venture company to meet demand created by that government's drive to become the regional telecommunications hub, with the added work for Siemens' Egyptian manufacturing facility creating positions for 100 engineers and 150 technicians."

Dr Mrosik says that many industries besides equipment vendors will prosper from the explosive growth in telecommunications.

"Newspapers and other media, for example, will benefit from Telkom and the second network operator advertising as aggressively as the cell phone networks do," he says. "Consumers too will get to enjoy lower tariffs and quicker installation times thanks to the stimulation of competition, while dropping regulatory barriers will spur the adoption of more innovative technology."