Liberalization from a regulatory perspective refers to the relaxation of previous government restrictions, usually in areas of social or economic policy. [1]
Policy and Prevalent Politics
In support of the views substiated by Human Development Report commissioned by the United Nations Development Program (UNDP), most people feel that widescale deployment of Information and Communications Technology (ICT) "will make major contributions to reducing world poverty, because it can overcome barriers of social, economic and geographical isolation, increase access to information and education, and enable poor people to participate in more of the decisions that affect their lives." This generally accepted premise, should put us in a situation where policy making is focused towards providing these services at the lowest cost to the masses. In view of deployment, it has been argued that Liberalisation of the ICT sector has in most cases provided for the successful entry of competetion and thus let to benefits for the people. But for those who know the African economic environment, know just how far reality can be from being realised.
We focus on the Liberalization of South African ICT sector in this blog entry and I hope to depict the complexities that have lead to the digital divide between Africa and the rest of the globe.
The ICT Liberalisation Saga in South Africa
The roots of telecomunications history in South Africa reach back towards the 1500's, when the first letter was created. Lets take a brief look at the chronology of Telecommunications Development in South Africa, before delving further into the specifics.
Chronology of South African Telecommunications
1500-1900 - Postal and Telegraph System Existence
1928 - First Landline Communications between Johannesburg and Pretoria.
1949 - First South Africa - USA Voice Radio Service established.
1950-1969 - Solid PSTN Switching Architecture developments country wide.
1970 - Intallation of the millionth telephone in South Africa. SA ranked 5th in World Teledensity.
1976 - South Africa's first Television service.
Oct 1991 - Telkom SA Ltd Monopoly - Established.
May 1994 - The birth of the democratic "Rainbow" nation. - President Nelson Mandela
1993-1994- First SDH and SS7 Networks Installed
1996 - New Telecoms Act Established with Service Specific Stipulations on Telkom
The question that remains here is that why at the birth of democracy in 1994, when President Nelson Mandela lead the country, was the Telkom monopoly left to perpetuate high prices for its services to the public. The answer lies two-fold in the fact that during the apartheid regime when South Africa faced international sanctions, it bolstered its utility monopolies and after the transition, the pressures, that the still young goverment was facing from various corporate and political factions, did not allow it to make such radical changes early on. The government was in the process of rebuilding the nation, primarily establishing housing, providing electricity and other basic amenities to the previously disadvantaged communities of the apartheid era. "The Government was also concerned that if the state-owned utility utility monopolies were immediately privatiszed, the new owner would focus solely on making profits and low-population areas would be left out because of the costs of rolling out new infrastructure." [2]
Added to this was the fact that the trade union, COSATU, being socialist biased believed that privatization was a means of selling of state assets to foreigners who would profit excessively while cutting jobs. Basically, the country was in a state of expansion, trying to correct the mistakes of the past, they could not assume the risks of liberalisation at that early stage of development.
Telkom had been officially established in 1991 and survived through the transistion phase, ie. "the death of apartheid" in May 1994, when President Mandela took over from the former President F.W. De Klerk. In the 1996 Telecom Act, stated that Telkom would be a monopoly over fixed lines for five years but stipulated specific service delivery obligations, including the provision of 2.8 million new connections within the monopoly window. In retrospect, not all the service were met, but most were. Telkom were also subjected to tariff monitoring by the Independant Communications Authority of South Africa (ICASA), who have been instrumental in managing the economics of the ICT sector in South Africa.
A Reason for Change
By 2002, it became clear that even with strict regulation, Telkom still managed to perpetuate the high prices of telephone, Internet and other related services. For example, in comparison to the U.S., South Africans pay about $1000/month, for a 64Kbs line where in Los Angeles a line roughly 20 times as fast costs about $80/month. This was really hurt the businesses in the country and served to widen the digital divide between the rest of the world and South Africa. It is only in March 2002, forced by the pressures of corporates that the government who had been in a quandry through pressures from several parties, stood up and lifted the monopoly from Telkom. It first announced the introduction of a second operator for voice (SNO- 6 Primary Sharholders: VSNL, CommuniTel, Eskom Telecommunications, Nexus Connexion, Transnet and Two Consortium)(March 2002) and then followed it shortly by a third (July 2002). Soon after though, it reverted back to its initial decision of a duopoly, much to the discontentment of the industry at large. This short change was because MTN(the primarly wireless provider) threatened to withdraw its proposed investment in the Second National operator if a third operator was introduced.
So partial liberalization has hindered full liberalization, that would have allowe more competetion and lower prices. The primary goal is still to provide widescale deployment of voice followed by data services and speaking personally, I was involved in several projects to extent the physial footprint of several services to the South African community. One such project was the Mobile SMS Anti-Retro Viral (ARV) Management system, were cheap, simple cell phones were used to update and query the availability of ARV's between patient and dispenser.
Bridges.org
In recognition of their efforts, I would like to point out the contributions and goals of a small international NGO called Bridges.org that has served in bringing forward the fair deployment of ICT technologies for developing nations particularly in Africa and provide in verbatim, their goals.
"Bridges.org is a US 501(c)(3), international organization, with origins in Washington, DC and South Africa, with a mission to promote the effective use of information and communications technology (ICT) in the developing world for meaningful purposes, such as better healthcare, education and self-sustaining economic development. We seek to bring a practical vision to the realities of ICT-enabled socio-economic development, and an important aspect of our strategy is to apply basic business principles and processes in development projects. We conduct technology research, evaluations and policy analysis to inform civil society organizations, governments, development aid agencies and the business community and help them improve the way they integrate ICT into their activities. This in turn brings the benefits of technology to more people — students, small business owners, doctors and their patients and the general public — in more meaningful ways: not only to overcome the challenges and adversities they face, but to give them the tools to build their own solutions and manage their own affairs in more efficient ways." [2]
A Conclusion
I believe that the gradual transformation being made are signs of success, by nature the ethos of development in Africa has been slower and more disturbed than other parts of the planet, but I believe that the introduction of the second operator will impact in long reaching benefits for the people of South Africa. I believe this because the 6 Shareholders have had outstanding operational records in their respective industries to date, they possess significant amounts of financial inertia and will be able to fund the huge start up costs in order to compete with Telkom in the next 3-4 years and will only force the market price of services down. Go SOUTH AFRICA!
References
1. Wikipedia
2. Bridges.org
3. Telcom.co.za
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