With the promise of an imminent second network operator, an apparent easing of telecommunications regulations, mobile number portability and renewed interest and vowed input from government, 2006 looked set to be a landmark year for telecommunications in South Africa.
Sadly, although on the face of it much seems to have been achieved, little real benefit trickled down to communications users last year. Perhaps promises and liberalisations will result in tangible benefits for users in 2007 - let us hope so!
The year 2006 promised to be a milestone year for South African telecommunications with the launch of the second network operator, Neotel. Unfortunately, the much-awaited promise of South African telecommunications competition seemed to arrive with a whimper rather than a bang.
A recent media statement indicates that the company is 'on schedule' to offer international and national leased lines to large enterprises from February. It is a strange schedule the SNO is keeping to, because we are pretty confident Neotel promised specialised domestic and international telecommunications services for enterprise in the third quarter of 2006.
That said, it is a massive task for Neotel to make a successful market entry with efficient, reliable and competitive broad-based telecommunications services - so it is small wonder SNO's promises in 2006 did not materialise.
Then again, some in the sector view the introduction of a second network operator as too little being done too late. Their view is that market liberalisation has allowed other players to deliver at least some services the SNO would need to provide large enterprise, in order to become profitable. To this mode of thinking, the barn door has swung open and all the clever horses have already bolted.
Another viewpoint is that even without offering a broad range of services last year, the arrival of Neotel lit something of a fire under the seats of Telkom's top management. Neotel's introduction, it is said, seems to coincide with the introduction of 4 MBPS ADSL, reductions in the cost of the fixed-line broadband service and most notably - more deals and offerings for telecommunications players such as VANS and ISPs through wholesale voice and data communications.
Seems like good news then? The cynical may take the view that Telkom is throwing the meaty bone at the toes of the SNO - hoping the larger dogs with big teeth take a chunk out of Neotel's young and tender feet.
Last year the cost of South African data and broadband eased a bit with ADSL services from Telkom being slightly reduced and regulations promising the scrapping of the infamous bandwidth 'cap'.
This apparently fantastic news for ADSL users turned out to be very grim for ISPs, which essentially buy horrendously overpriced (compared to international norms) bulk ADSL bandwidth from Telkom and sell it on for generally much slimmer margins to end-users. As ADSL regulations did nothing to alleviate the high cost of wholesale ADSL accounts at Telkom's SAIX, the result is that the regulations appear to punish the 'good guys' in the industry whilst leaving one fat glutton pigging alone at the telecoms table of plenty.
As it appears to be turning out, the bad joke is far more likely to be on South Africa's broadband users because an understanding of the regulations is that ‘ISPs can continue to charge for bandwidth on a usage-based fee; however, they may not set an upper limit (cap) on local bandwidth’, according to Greg Massel, co-chairman of the Internet Service Providers' Association. What this appears to mean, is that ADSL users will not be 'capped' but they will need to pay for more of South Africa's over-priced bandwidth. As South African ADSL users have always been able to purchase additional user accounts in order to secure more monthly bandwidth, the scrapping of the cap as stipulated in the ADSL regulations seems to amount to very little indeed.
Regardless of ADSL semantics, in 2006 South African fixed-line broadband remained a skorokoro technology. As we pointed out at the time, even Morocco, the African country with an economy less than one third the size of South Africa's GDP, offered a broadband solution roughly four times faster and 20% cheaper than Telkom's best solution.
Another aspect of South African broadband which continues to differ from the international norm is that high-speed mobile data services compete head-on with ADSL. In most, if not all other countries, high-speed mobile data services battle to compete with the pricing of fixed line data services. If there was ever proof that our ADSL remains overpriced, this is it!
At least one promise for 2006 was delivered, albeit a bit late - mobile number portability (MNP). Initial reports seem encouraging but overall it is not yet known whether the system implemented by the mobile networks will enable users to migrate mobile telephone numbers to different networks in a quick, efficient, seamless and cost-effective manner.
What is known is that despite investigations and recommendations by ICASA in 2006, South African mobile telephony remains excessively expensive when compared to international norms.
In telecommunications terms the challenges for 2007 look much like they did 12 months ago. South Africa still does not have a real and broad alternative to Telkom. As a result, communications in South Africa - from longer distance landline calls within the country right through to data and bandwidth remain priced at a premium. Even where there is at least an effort at competition - such as the mobile telephone sector, costs and options are still at a premium in terms of international norms.
The message is simple: much more needs to be done and far more quickly if South Africa is to compete effectively on the world stage. To a large extent the fat profits related to over-pricing of a few telecommunications giants are hindering the development of the country, its business in general and its people in particular. May 2007 be a year of telecommunications action, not broken promises.
For more information contact, CUASA, +27 (0)11 371 5454, [email protected]
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