Telkom boss blasts Treasury’s view of SA's telecoms industry

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Sipho Maseko, Telkom group CEO.
Sipho Maseko, Telkom group CEO.

Telkom group CEO, Sipho Maseko, has slammed National Treasury’s view of the country’s telecommunications and ICT sectors as incoherent and chaotic.

Maseko wrote an opinion piece that was published in the Sunday Times. This after Treasury last week published an economic recovery plan to encourage growth and job creation in SA.

Treasury believes that modernising network industries such as transport, energy, water and communications can promote competitiveness and inclusive growth.

These industries are the backbone of the South African economy and key for long-term growth and global competitiveness, it says.

A 10% increase in fixed broadband penetration leads to a 1.35% increase in GDP growth in developing countries and a 1.19% increase in developed economies, Treasury notes.

The document also touches on issues such as spectrum allocation, saying spectrum should be allocated through an auction, with provisions for effective rivals, conditions for universal service and access, and a small set-aside for a wholesale open access network (WOAN).

However, Maseko is not happy with the document, saying: “It boggles the mind that the Treasury paper, published on August 27, reads as if the authors had never had sight of the July 26 government gazette on spectrum”.

The South African government recently issued the long-awaited policy and policy direction for the licensing of high-demand spectrum, paving the way for WOAN licensing.

In the policy document, communications minister Stella Ndabeni-Abrahams directs that a portion of unallocated high-demand spectrum must first be assigned to a network category of licensees, known as WOAN, and the remainder must then be assigned to other eligible licensees.

Below is Maseko’s opinion piece

Earlier this week, the National Treasury released the discussion paper, “Economic transformation, inclusive growth and competitiveness: Towards an economic strategy for South Africa”.

The paper purports to be a road map towards ending the economic stagnation our country has experienced over the past decade, and proposes a number of policy measures towards that goal.

This motivation can of course not be faulted. The major economic indicators show that our country is in a precarious economic situation, and bold ideas and steps are required to pull us out of the mire and set us on a course for shared and sustained prosperity.

Unemployment has risen to 29%, its highest peak since the founding of our democracy 20 years ago. The economy contracted by 3.2% in the first quarter of this year, and while we have avoided a technical recession, the gross domestic product growth forecast for 2019 stands at 0.6%, far below the levels required to absorb the millions who are unemployed, fill our government’s coffers, and deal with poverty.

The stagnation in economic growth is a lived reality for many South Africans. The 3.2% contraction has been felt across many sectors of the economy, so the Treasury is correct to call for “a series of deliberate and concerted actions across all fronts”.

These actions are aimed at transforming the economy and putting it on a trajectory of growth and inclusivity. But the gap between intent and action can be damagingly large, and this is unfortunately the case with the measures that the Treasury suggests in its position paper.

To start with, we are all in agreement that among the goals we should all pursue if we want to turn our situation around are inclusivity and policy certainty.

Perhaps in its haste to do something about a dire situation, the Treasury risks jeopardising both of these goals.

Both inclusivity and policy certainty are imperilled by a document that suggests the Treasury is either not aware of or wilfully disregards government policies already adopted in other departments.

It does not speak well of the government, nor our ability as a country to attract and retain investment, if the Treasury issues policy position papers that gainsay a government policy adopted only a month ago.

While our policies must continually evolve to take account of the changing economic landscape, it is important that we develop policy consistency across government.

When one department advocates for a policy which has already been withdrawn – sometimes even by another department entirely – it makes it difficult for business leaders to plan and prepare accordingly. Effective inter- and intra- government co-ordination is crucial for policy certainty. Policy certainty is crucial for investment.

On July 26, a month before the Treasury issued its discussion paper, the minister of communications & digital technologies gazetted the final policy on high-demand spectrum, and the policy direction to regulator ICASA [Independent Communications Authority of South Africa] on the licensing of spectrum for creating a wireless open-access network (WOAN).

It boggles the mind that the Treasury paper, published on August 27, reads as if the authors had never had sight of the July 26 government gazette on spectrum.

By way of example, the paper urges the state to speed up the auctioning of spectrum and adds that “a small amount should be set aside for a government-controlled network”.

By this presumably they mean the WOAN, but the policy direction said the WOAN should not be government-controlled (but could have public entities as shareholders), and the policy direction said that the WOAN should get enough spectrum to be competitive.

The question must be asked: if the Treasury has or had a different view on this matter than that adopted collaboratively by the government and other stakeholders, why have these views not been made known openly in the accepted policy-making processes that ultimately produced the July 26 gazette? Why wait a month until a final policy is adopted, and then effectively toss a grenade into the emergent calm of a critically important sector?

That is only the beginning of the paper's incoherent, ill-thought-out and ultimately chaotic intervention in the area of telecoms and ICT.

It goes on to contradict existing ICT policy and the regulatory framework, the outcome of the priority markets investigation by ICASA and the preliminary findings of the Competition Commission's inquiry into the data services market.

There is a duopoly in the mobile market, the pre-eminent mode of access to broadband. The paper's obsession with copper network harks back to the 1990s and suggests the authors are not at all familiar with the current state of the ICT market or the technologies driving it.

In a world where there are over-the-top services, cloud, platforms, the Internet and other technologies, the document is also silent at best and ignorant at worst.

This raises a more general and very worrying question: if the authors of the Treasury document can get telecoms and ICT so wrong, can their prescriptions for energy, infrastructure, agriculture, tourism or transport be trusted?

As a business, Telkom cannot comfortably invest in the future of SA when policies that affect our planning may be withdrawn or reintroduced at any time. That principle applies across companies and sectors.

This is an era of change for which we need to be as prepared and agile as we have never been before.

We need to be looking at policies and reforms which will make business easier, encourage entrepreneurship and distribute resources equitably. Only then will we find the growth and inclusivity we are looking for.

For instance, spectrum is a finite resource, and depending on how it is allocated, we can either shore up existing inequalities in the market or we can choose to open up competition and promote broadband access throughout our society.

We cannot pursue short-term gains at the expense of a transformed and competitive economy in the future.

Rather, what's needed is the will to tackle structural inequalities and to open up the economy for greater competition. The Treasury's intervention does not appear best suited to take us towards that future.


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