Telecommunications may have progressed considerably since the change of dispensation in 1994, but one company believes not enough is being done in the interests of the South African consumer.
That company is Orion Telecom, headed by managing director Don Tredoux. He says South Africans have the right to affordable telecommunications, yet are being forced to pay unreasonable rates for their connectivity.
"A recent figure in the Sunday Times notes that only one in 50 Africans will ever hear a ringtone. That is a thoroughly unacceptable figure that is brought about by the artificially high price of telecommunications in countries where regulation protects monopolies and stifles innovations that can reduce the cost of owning or using a telephone," he says.
Tredoux says that while the fiefdom of incumbent South African fixed-line operator has technically come to an end with its monopoly status falling away in 2002, glitches and snags in the introduction of the second national operator have left the consumer at the whim of the organisation.
"We`re in a situation where the incumbent operator is charging what the market will bear instead of a reasonable price - which would potentially give far more South Africans access to telecommunications, and would certainly contribute to a lower cost for conducting business for every company in the country," comments Tredoux.
He says it is quite reasonable for legislation and regulation to protect the investments made by telecommunications operators, but objects to prices that restrict access to vital services. "The cost of running and maintaining the fixed-line network in SA has always been shrouded in a veil of secrecy. Until we know what that cost is, consumers cannot gauge whether or not they are being charged reasonable rates for their telephony services."
But Tredoux says in cases where innovative telecommunications solutions have been introduced that reduce the cost of telephony, the incumbent has been able to dramatically slash prices to remain competitive - evidence of the fat margins it is making on its services.
"One of the biggest challenges that the local telecommunications industry is facing today is the legal issues that obfuscate the ability and inclination of innovative companies to introduce services to the market that will benefit the consumer," he states.
And Orion has spent a good deal of time fighting for its right to provide better services to the consumer. It was one of 13 respondents that won a landmark victory at the Pretoria High Court in 2003 which gave it the right to offer least-cost routing services (LCR), which reduce the cost of telephony by as much as 45%.
"The victory in terms of LCR went on to prove that if the industry can offer a consolidated front to the opposition of viable, safe and beneficial services to the public, we can make a difference," says Tredoux.
Another example of an innovative service that has pressured the fixed-line operator to reduce tariffs is the callback system. In essence, callback notifies an overseas operator that a call to an international destination is requested, and the call is connected by that operator. The pricing structure of such a service says volumes about the relative prices of telecommunications in SA: the service can cost the consumer far less that a direct call using the fixed-line, a third-party can make a profit and the overseas operator makes a profit.
"When there was pressure, however, the local fixed-line operator was suddenly in a position to throw away margin. The bottom line is that consumers continue to shoulder the burden of communication that is overpriced," says Tredoux.
He believes consumers should take more action in terms of demanding better pricing and even supporting the right of innovators to provide them with better services. "Businesses are the biggest users of fixed-line telephony, and some spend millions on the cost of such services. However, despite the efforts of some companies to provide services that can help them save considerable amounts and reduce operational expenditure, there is very little support from this quarter," he explains, noting that in countries like the UK, consumer watchdog organisations would not stand for artificially high prices.
"While necessary, regulation has to be judicious, and I believe it should be applied in the interests of the consumer. It`s an accepted fact that providing connectivity to people across the board improves their quality of life and opens a whole new world for them. Companies like Orion would like to get on with the work of providing affordable, realistically priced services to increase access to more people," Tredoux continues.
"Also, money spent on overpriced communication could be spent far more productively to help drive the economy, to create jobs, to develop businesses. But we have to get over fundamental argument every day of whether or not we can provide such services within the legal and regulatory environment of our country."
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