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 –
lets 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’s a strange schedule the SNO is keeping to, because
we’re pretty confident Neotel promised specialised domestic
and international telecommunications services for enterprise
in the third quarter of 2006.
That said, it’s a massive task for
Neotel to make a successful market entry with efficient, reliable
and competitive broad-based telecommunications services -
so it’s small wonder SNO 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 4mbps 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’s 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 on sell it 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 telecommunications
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’s 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.
*Quote: ITWeb |
