Just imagine that Telkom has a competitor! "What? How is this possible?" you ask. Well, let`s look to the telecommunications future about three years from now and what do we see - Telkom, Vodacom, MTN, possibly two additional cellular operator licences and yes, a fixed line competitor to Telkom.
With two operators, we will at least increase our choice by 100% and move from a monopoly to a duopoly.
We believe that some 18 to 24 months from now, the second fixed line operator or what will be known as the second network operator (SNO) licence will be issued, allowing the new operator to roll-out infrastructure during the dying phase of Telkom`s exclusivity.
This will allow the new operator to compete with Telkom from a deployed infrastructure position. If the new operator is not allowed to roll-out infrastructure, Telkom will effectively be given an additional one to two years exclusivity while the new operator sets up its infrastructure.
The issuing of a second fixed line operator licence has many benefits other than offering consumers a choice of two operators. Analysis has shown that a SNO stimulates demand for dialtone so much that the telecoms revenue cake grows in size; therefore Telkom does not see a drastic cut in revenues.
We can expect to see some R4 billion to R6 billion invested in infrastructure, boosting local telecommunications equipment and associated telecoms infrastructure industries. There will also be a large boost in ad spend as the new operator creates market presence through advertising strategies, and Telkom will probably aggressively market its products and services, further increasing ad spend.
And the winner is?
Who will be the SNO? Difficult to predict, other than to say that the SNO consortium will at least consist of a strategic equity partner, black business representation and a commercial investment by a company with the desire to diversify its business. Companies that traditionally have no ties to the telecoms industry have successfully entered the industry through a SNO. For example, companies have come from the oil, financial and tobacco industries. So Telkom`s customer of today may well be its competitor of tomorrow.
A common misconception about the second fixed line operator licence is that people will believe it to be a free-for-all in infrastructure deployment. Not true - under the new telecoms regulations you will still need a telecoms operator licence to deploy and operate your own public telecoms infrastructure. With two operators, we will at least increase our choice by 100% and move from a monopoly to a duopoly.
Please hold
Finally, will service improve? An important question especially as the new operator will draw human resources from a common pool stocked by Telkom. People and businesses will switch during the initial phase of the SNO`s commercial activity, but over time stability will be reached and the overall level of service will increase even if just to protect market share. Hopefully the SNO will outlaw the words: "Let me transfer you to someone else..."
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