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EEwan Sutherland LINK Centre, Wits University

First, find a scapegoat Some admissions of the truth Some truths not admitted Some political promises The interminable saga of unbundling The uncertainty of mobile adoption The delays in spectrum allocation Issues about empowerment

Ewan Sutherland, 11 February 2012, LINK Centre 2

ICT policy colloquium – April 2012 Appointment of Working Group – April 2012 A policy summit in Cape Town – June 2012 Framing paper – April 2013 Broadband policy – December 2013 Green paper – January 2014 Discussion paper – May 2014? White paper – August 2014? Legislation – 2015? 2016? National cybersecurity policy – 2014?


Tough if you have been in office for two decades ◦ In this case it is to be ICASA However: ◦ ANC ministers and officials:

Drafted the legislation Made the directions Owned several of the operators

◦ ANC MPs: Enacted the legislation Dominated the parliamentary oversight committee

◦ ANC cadres hold a great many positions in ICASA Sacrificing the scapegoat will mean terrible delays: ◦ Drafting and enacting new legislation ◦ Finding new commissioners and senior staff ◦ Learning about markets ◦ Entrenched market interests benefit enormously


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South Africa effectively lost its status as continental leader (p. 19) Mobile prices are very high (p. 19) SA fell behind in e-government ranking: ◦ Lower levels of available ICT infrastructure


Government's attempts to supply infrastructure directly have been expensive and not contributed adequately to achieving universal access objectives. However, public investment in state owned networks over decades has produced a considerable national asset available for broadband deployment. (p. 46)

Telecommunications Regulatory Environment Methodology does not allow comparisons: ◦ Over time ◦ Between countries Cannot draw conclusions from its “numbers” TRE is intended only for use in writing one-off country case studies



“Currently, there are no authoritative statistics on broadband penetration in South Africa. Estimates put broadband penetration at 2% for fixed-line broadband, around 4% for mobile PC broadband and 17% for broadband penetration using smartphones” Dina Pule, Cape Town ICT summit, 2012. ICASA is required to publish the minimum data set required by UN agencies. (Govt. Gaz. #37119 p. 27)

Allegedly SA has 136% teledensity (p. 39) GSM Association says 2 SIM cards for 1 real person: ◦ Consequently, only 68% teledensity Those without: ◦ Infants and children ◦ Elderly ◦ Very poor ◦ Very remote ◦ Many have a SIM card and only sometimes can afford to

make calls – the precariat Where is it between 68% and, say, 94%? ◦ What are the geographic variations?

Limpopo? Western Cape? ◦ What are the socio-demographic variations?

Xhosa speakers? Zulu speakers? Rural poor? Urban poor? How do you formulate policy without knowing details?


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Year Fixed lines DSL % DSL DSL growth

Fixed line growth

2013 3,713,000 898,203 24.2% 3.2% -2.3%

2013 3,800,000 870,505 22.9% 5.2% -4.9% 2012 3,995,000 827,091 20.7% 10.0% -3.8% 2011 4,152,000 751,625 18.1% 5.1% -2.8% 2010 4,273,000 715,221 16.7% 21.1% -4.0% 2009 4,451,000 590,590 13.3% 43.3% -1.8% 2008 4,532,000 412,190 9.1% 61.2% -2.4% 2007 4,642,000 255,633 5.5% 78.1% -1.4% 2006 4,708,000 143,509 3.0% 145.2% -0.4% 2005 4,726,000 58,532 1.2% 188.2% 1.0% 2004 4,680,000 20,313 0.4% 661.1% -0.6% 2003 4,709,000 2,669 0.1% - -

Ewan Sutherland, 11 February 2012, LINK Centre 9 Source: Telkom annual reports

Liberalisation and the NP Copying the United Kingdom ANC modifications to the plan Vodacom: ◦ Vodafone as minority investor M-Cell (later MTN): ◦ Cable & Wireless as a minority investor ◦ Later replaced by SBC Telkom: ◦ Monopoly infrastructure provider to MTN and Vodacom ◦ SBC and Telekom Malaysia as minority investors Government was a shareholder in all three: ◦ No mechanism to deal with conflicts of interest


A sequence of confused and confusing ministers A random (or at least unexplained) pattern of interventions by government: ◦ Merging SATRA and IBA ◦ Merging consortia for the second network operator ◦ Creating Sentech and Infraco ◦ Failed reversal on the right to construct infrastructure ◦ Turning down the Korea Telecom offer The still unpublished government agreement with SBC/Telkom Malaysia Underserviced Area Licences (USALs) were a complete waste of time and money


It is always convergence But never converged Several years of debate on Convergence Bills ◦ Before producing the unworkable Electronic

Communications Act of 2005 The Green Paper does not address: ◦ Over The Top (OTT) services ◦ VoIP – Skype ◦ Video – YouTube and Netflix


National Development Plan (NDP) 2030: ◦ “connected vibrant information society” ◦ “underpin nation-building” ◦ “strengthen social cohesion” National Broadband Plan (December 2013): ◦ A national project – South Africa Connect ◦ A detailed implementation plan – Roadmap ◦ A coordination mechanism - Broadband Council ◦ An enabling environment for the rollout of infrastructure ◦ By 2030 to deliver services of:

80% at 100 Mbps 100% at 10 Mbps


Govt. Gaz. #37119

“… the development of a predictable regulatory environment conducive to investment.” (p. 16) “The key to leveraging the benefits of broadband lies in the governance of the sector and in the ability of the State to coordinate activities across the ICT ecosystem.” (p. 16) “Develop the road map that guides the actions of the public and private sector players over the next 10 to 20 years” (p. 37)


In future, the state’s primary role in the ICT sector will be to facilitate competition and private investment and to ensure effective regulation where market failure is apparent. (NDP p. 171) Redirecting investments away from duplicate urban infrastructure to unserved areas through incentives and subsidies, together with open access wholesale regulation to enable service based competition, appears to be a way of enabling affordable access to broadband for all. (Green Paper, p. 42)


Presently, no open access to the networks of Infraco and Telkom Is government really going to merge? ◦ Infraco ◦ Sentech ◦ Telkom Strong evidence of commercial deployment: ◦ Dark Fibre Africa ◦ Fibre Co ◦ Liquid Telecom


Broadband Infraco Act s.4. (1) The main objects of Infraco are to expand the availability and affordability of access to electronic communications, including but not limited to underdeveloped and under serviced areas…

Minister to evaluate: ◦ Open access wholesale fibre network ◦ Open access wholesale wireless network Rationalising SOC investments Integrating into a single entity: ◦ Voluntarily incorporating public and private

networks ◦ Offering third parties cost-oriented services ◦ Requiring infrastructure owners to offer cost-

oriented services The Broadband Policy ccreates uncertainty for investors


Average household income: ◦ ZAR 119,542 per annum or 9,962 per month ◦ 2.5% would be ZAR 2,989 per annum or 249 per month ◦ However, that would be:

4.3% of the income of the average black household Census found: ◦ 51,770,560 people in 14,450,161 households ◦ 3.58 persons per household So, divide 249 by 3.58 to get ZAR 69.57 per month Green paper gives income as ZAR 64,000 which would give ZAR 133.33 for broadband


“By 2020 100 per cent of South Africans will have access to broadband services at 2.5 per cent or less of the population’s average monthly income”

0 100,000 200,000 300,000 400,000

South Africa

Male head

Female head

Black African

Coloured

Indian/Asian

White


Source: StatsSA – IES 2010/11

Rapidly expand access to and use of ICT infrastructure

We will invest in a comprehensive plan to expand broadband access throughout the country and substantially reduce the cost of communication. We aim to connect all schools, public health and other government facilities through broadband by 2020, and at least 90% of our communities should have substantial and superfast broadband capacity by 2020. Government will support and develop free-WiFi areas in cities, towns and rural areas. The local electronics sector and emerging entrepreneurs will be stimulated as part of our efforts to support the manufacturing industry.


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http://www.anc.org.za/2014/wp-content/themes/anc/downloads/Manifesto_Booklet.pdf


Provided by statute in 2005 Still at it, after all these years Why? Who would lease a line from Telkom? Where are the lines? Who would want ICASA to oversee the lease? Who can keep it out of the courts? What about fibre?


The market is said to be highly concentrated? Which market? ◦ Fixed? ◦ Mobile? ICASA and CC/CT had powers to deal with that Government could have intervened Government ddid intervene over licences for: ◦ Cell-C ◦ Telkom Mobile ◦ Neotel ◦ Infraco Government is also a very big player: ◦ Telkom ◦ Infraco ◦ Sentech ◦ Consolidated these would be truly dominant


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Many years of complaints against Telkom Dominance was undeniable: ◦ Domestic leased lines ◦ International leased lines It litigated and lied that it did not abuse its dominance Finally, it admitted abuse to Competition Tribunal Throughout, government owned a large slice of Telkom SA SOC


Where does the: ◦ Private sector end? ◦ Public sector begin? What are the roles of the municipalities? How do we provide certainty for investors? Is broadband access to be predominantly wireless?


No comparisons with other countries How much spectrum compared to: ◦ UK ◦ Brasil ◦ Nigeria South Africa could open up 700 or 800 MHz bands to a new player: ◦ Airtel ◦ Etisalat ◦ Orange ◦ America Movil Logical response to excessive market concentration


Separation of powers: ◦ Minister ◦ ICASA ◦ USAASA USAASA has had severe problems Transferring money from mobile operators seems: ◦ Highly problematic and ◦ Wasteful Spending it on set-top boxes is: ◦ Extremely wasteful ◦ Possibly ultra vires


Need to push markets further Intensifying competition to reduce prices Also increase spending power of the poor Ultimately likely to be a gap: ◦ Costs too high ◦ Individuals too poor Can be funded: ◦ By tax payers (social equity argument) ◦ By cross-subsidies (network externalities argument)


Where are the data? Where is the analysis? Where were the KPIs? Who was empowered? ◦ The many? ◦ The few? Where did the money come from? ◦ Poor South Africans ◦ In the case of MTN, from poor Africans


Dominant players benefit from delays Pule was right in pointing to lack of data: ◦ Evidence-based policy is and will be impossible ◦ Need for a massive upgrade in statistics Need to end random government interventions: ◦ Processes need to be transparent Implausible to argue government can create a 10-20 year ICT sector plan Decide which services are to be delivered: ◦ Leave the market to provide infrastructure services ◦ Support service providers in rural areas ◦ Support those too poor to afford services ◦ Support the disabled to access services


Surveys of regular and intermittent users, and non-users of ICTs Identification of patterns of use and non-use: ◦ Geographic ◦ Ethnic and linguistic Explaining the procrastination and tergiversation in policy-making Identifying the flows of investment monies Developing crowdsourced data for policy analysis


Ewan Sutherland http://3wan.net/ Ewan.Sutherland [@] Wits.ac.za +44 141 649 4040 +27 skype://sutherla sutherla http:// www.ssrn.com/author=927092


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