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Planning commission mulls ICT overhaul

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The National Planning Commission's (NPC's) growth plan for SA proposes less state intervention in the ICT space, a common carrier network, and open-access policies to encourage sharing of the backbone fibre network, without discouraging private long-term investment.

The plan suggests Telkom should be broken up into two businesses: a wholesale unit, focusing on backhaul operations, and a retail telecoms business. NPC chairman, minister Trevor Manuel, handed a copy of the revised plan to president Jacob Zuma, at a joint sitting of Parliament this week.

The commission was appointed by Zuma, in May 2010, and aims to trim unemployment and spur economic growth. Its final National Development Plan (NDP) says an immediate policy goal is to ensure national ICT structures adequately support the needs of the economy, allowing for parties beyond the public sector to participate.

The document says the state's future role will be to facilitate competition, ensure effective regulation and only intervene to meet specific goals. “Direct involvement will be limited to interventions to ensure universal access and to help marginalised communities develop the capacity to use ICTs effectively.”

Inhibiting growth

The NDP says a single cohesive strategy is needed to ensure the diffusion of ICTs in all areas of society and the economy, as ICT is an enabler and can speed up delivery, support analysis, build intelligence and create new ways to share, learn and engage. “But ineffective ICT can also disable economic and social activity.

“In the very short-term and well in advance of 2030, the state will need to re-establish the shape and nature of its participation in the sector. A new policy framework will be needed to realise the vision of a fully connected society.”

The report notes that most state interventions in the ICT sector have been disappointing and SA has lost its status as a continental leader in Internet and broadband connectivity.

It cites constraints such as poor returns from the state's investment in Telkom, little evidence of an effective strategy to ensure connectivity in SA keeps up with its peers, policy constraints, weaknesses in institutional arrangements, conflicting policies, regulatory failure and limited competition.

Unlocking the market

The plan says in the short-term, between now and 2015, market structures must be addressed and legal constraints removed to enable full competition. A strategy for the local loop also needs to be developed to ensure lower costs and expanded fixed-line penetration.

Access to low-cost, high-speed international bandwidth with open-access policies also needs to be ensured and the development of high-bandwidth backbone networks needs to be facilitated, notes the NDP.

The NDP also says state-owned enterprise and municipal performance in ICT provision must be assessed, and there needs to be a decision on the future role and configuration of the state's family of ICT enterprises, which includes Broadband Infraco, Sentech and Telkom.

It says alternatives to infrastructure competition through a structural separation of the national backbone from Telkom's services needs to be investigated to create a common carrier that offers open access to service competitors. The plan also calls for either encouraging or prescribing sharing “expensive” trenching infrastructure by creating common rights of way for competing operators to lay dedicated lines.

Domination

Currently, there is an effective duopoly in the mobile-phone market, and Telkom still controls the telecommunications backbone and telephony segments, it notes. “This dominance has been ineffectually regulated, resulting in high input costs for businesses, which has, in turn, resulted in an increase in the costs of services and products.”

In addition, the duopoly has inhibited investment in growth areas within ICT, such as business process outsourcing and offshore IT-enabled services. “Telkom's monopoly has seen deterioration in fixed-line connections that will further undermine SA's future competitiveness unless it is addressed.”

The price of services and equipment is still “a significant barrier” to expanding mobile and fixed-line use, and limited network competition further increases costs, it says.

A key issue will be to decide on the role of state infrastructure interventions, which will have to balance the priority goal of achieving affordable and truly universal access to communications services, while recognising the general efficiencies that may be derived from the application of private capital in economic activity.

Growth enabler

Marian Shinn, the Democratic Alliance's shadow minister of communications, says the document's emphatic language about introducing a market-friendly environment and loosening government control in the communications sector is to be welcomed.

“The final plan recognises that, for too long, SA's communication sector has been crippled by weaknesses in institutional arrangements, conflicting policies, regulatory failure and the incapacity of the Independent Communications Authority of SA to facilitate a more open market.”

Shinn notes that, “if Cabinet adopts the NDP's recommendation, without trying to manipulate the outcomes to protect its vested interests, SA may, for the first time, have a communications environment that supports economic growth”.

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