The regulatory environment in South Africa is one of the key issues preventing the general convergence of the telecommunications industry in this country.
That is the opinion of Dorothy Kang'oro, Corporate Legal Counsel to the GS Telecom Group of Companies, a leading supplier of wireless and satellite systems in Africa. "The regulatory environments in Nigeria and Malawi, for instance, are very open," comments Kang'oro.
"In fact, the trend across Africa, is that it is not the equipment that defines your licence; it is the service a company provides that determines the type of licence issued," explains Kang'oro. "This is the key differentiator between South Africa and the rest of the continent, because in this country, the issue still revolves around equipment."
This is despite the draft Convergence Bill, which seeks to draw telecoms, broadcasting and signal distribution into one, while promoting the growth and diversity of communication services and connectivity, and ensuring an open environment that encourages competition. The intention is to give telecoms regulator, ICASA, the power to be independent and autonomous, and to provide financing through licensing and other fees - with up to 50% able to be retained by the regulator.
"The draft bill is positive in that it acknowledges that convergence is key, and it provides legislation to deal with the changing telecoms environment within South Africa," says Kang'oro. "It also has a strong focus on equity and empowering women and the youth. On the negative side, the bill appears rushed and categories have not been clearly defined. It also maintains the duopoly of Telkom and the Second Network Operator (SNO)."
Another problem with the draft, according to Kang'oro, is that it does not provide adequately for the various services provided by the different players in this industry. Employment equity is also contentious with two dominant issues arising: the moral issue of trying to rectify the wrongs of the apartheid era, and the issue of ensuring international shareholder interests are met.
GS Telecom focuses on corporate customers, many of whom are in the mining industry. They require fast, efficient, reliable international connectivity that only a multimedia operator can offer. Landlines are not reliable and in many places, non-existent. Wireless and mobile technology is the way to go. Yet South African legislation permits only a limited number of players to participate. With regards to wireless technology, there are two players, namely Telkom and Sentech; while on the mobile front there are three participants in the industry. This means South Africa is still effectively a closed market, comments Kang'oro.
It could be several years before South Africa catches up with the rest of the continent and world. That is sad, says Kang'oro, because, in terms of technology, we are on a par with the rest of the world. "For instance, in Europe, SMS is used almost exclusively for entertainment, such as downloading ring tones. In South Africa it is far more advanced - it is used by businesses as part of an integrated communications strategy to address a need."
The cellular industry in Africa is the dominant form of telecommunication. The mobile phone - not the landline - is the norm. This is a prime example of how the customer dictates how technology will be used. If there is no need for technology, it is simply not used to its fullest capacity, as in the case of SMS in Europe. Or in the United States where landline calls are free within a certain radius, so mobiles are not as prevalent.
That is why Africa is the most exciting place in terms of telecommunications growth. In fact, some service providers have increased their prices dramatically in Africa to stem the growth for fear of not having the capacity to maintain their service delivery levels. Prices have also decreased with popularity. The price of bandwidth is down; one satellite dish is more cost-effective than installing metres of cable. Undersea cables are being installed around the African coast so that the cost of international and inter-Africa calls will decrease. Wireless solutions have become the key to communication in Africa. In this continent, Wi-Fi is the byword; V-SAT is the buzz-word.
Unfortunately the regulatory environment in South Africa has not yet recognised this, believes Kang'oro. In countries where the laws are less restrictive, the governments perceive licences as revenue opportunities. However, these fees are often prohibitive, with one V-SAT licence costing between $40 000 and $100 000 per year.
Open countries also view telecoms as a vital infrastructure for economic growth - without a good communications system, you cannot deliver. In fact, it generally regulates how fast a country can develop the rest of its infrastructure. If it is well developed, investors take note. This should be a message to the South African government, which hopes to attract ITC investors into this country. Everyone wants to operate efficient, profitable businesses but expensive or inefficient communications will prevent investors from investing.
Ultimately, you cannot stop the deregulation process within the telecommunications industry, concludes Kang'oro.
For more information contact Dorothy Kang'oro, GS Telecom, 011 234 0639, [email protected]
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