South Africa's failure to nail down telecom policy is hurting it in the international arena. Will Hahn, principal research analyst at Gartner, told ITWeb at the 2014 Gartner Symposium in Cape Town that the outlook for telecom investment is becoming doubtful and needs urgent intervention and clarity.
On the face of it, South African telecoms has evolved along expected paths. New undersea links have driven speeds up and prices down, fibre infrastructure has grown rapidly, and service providers and customers alike have benefited. Although Hahn notes "backhaul still lags badly compared to the international connections".
With that expansion has come consolidation, a natural response to rapid expansion of infrastructure, Hahn says. Margins and prices drop, point solutions become harder to sustain, so ecosystems join forces to form vertically integrated organisations with higher-value services portfolios. Vodacom/Neotel and Telkom/BCX are good examples of this in action, with more to come.
Government hurdle
So far so good, but now that growth is facing a speedbump: government policy, Hahn says. A major concern among service providers is government involvement in some of the organisations competing for business. It is still unclear how the institutions with direct government support, both financial and policy, will develop in the future. Telkom and Broadband Infraco enjoy government support, but are unable to meet public demand, leaving a mess in their wake. Will they up their game and fill the gaps, or will the private sector be allowed to compete effectively to do so? No one is certain.
And uncertainty is the killer, Hahn says. "There is nothing wrong with government investment in telecom infrastructure - there are models elsewhere in the world where the government establishes a firm position as the infrastructure owner, allowing competitive service provision on top. But it must be a clearly understood model.
Unfortunately, the perception of SA's telecom policy is not getting any better, he says. Recent events like ICASA's dramatic strategic U-turn on mobile termination rate asymmetry highlight the need for an end to continuous readjustment and meddling.
Risky business
That uncertainty compounds other concerns to create a riskier outlook for the country. For foreign investors, South Africa is demonstrating a troublesome combination of weak economy, uncertain government telecom investment, and unsettled regulation and policies.
All of those are opportunities for other African states to exploit: Nigeria recently surpassed South Africa in gross domestic product, Kenya and others have put in place policies and strategies to attract ICT investment, and as the backhaul grows to extend the undersea cables' reach across the interior, many new markets are opening up.
It's not just foreign investors. "There are 600 licensed service providers ready to deliver services in South Africa, they just aren't because the market conditions are unfavourable and uncertain," Hahn says. Many of those may now be eyeing other African markets for possible growth.
However, don't underestimate South Africa's scale, Hahn adds. The risk is there, and other countries are flexing their competitive muscles, but in relative terms SA is still the heavyweight, with all the advantages on its side to exert its dominance as the natural gateway to Africa. "South Africa is falling behind, but it's not out of the race."
Hahn compares the telecom environment in SA to Teofilo Stevenson, the celebrated Cuban boxer who shot to stardom but turned down the opportunity (and the riches) to fight Muhammad Ali, because of the political conflict between Cuba and the US. "There were newspaper cartoons at the time, showing Stevenson in his corner, ready to fight, with Castro withholding his gloves. That's the situation South African telecoms is in right now - ready to fight and win, but with government intervening, preventing the fight from happening at all."
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