Column: The brilliance of Alec Erwin
- This column was first published in ITWeb Brainstorm, a South African business technology magazine, on 1 May 2007. If you’d like to help them pay me, click here to subscribe. It looks better in print anyway.
Ever stared at a problem so long you just know the simple answer is right there, but you just can’t see it? That’s why we have politicians. To be brilliant for us dumb shmucks.
Take telecoms. I mean, here’s a conundrum. Despite all the hard work of Dr (don’t forget the Dr) Ivy Matsepe-Casaburri, telecoms prices are way high in South Africa. While the world raced ahead, South Africa went backwards. We’re stuck deep in the last decade, at 1997 or so.
Thabo Mbeki blames Telkom. After all, it didn’t bring down prices, and it could have. It’s only concern has been for profit. How evil. I mean, who among us is ever motivated by profit? You? Anyone? I’m not. I’m a journalist. But Telkom is. Bastards.
Whatever other reason they had for unceremoniously ditching Papi Molotsane, the lightweight CEO who was meant to do government’s bidding, his reprehensible insistence on doing his job in the interest of shareholders by pricing products as high as the market will bear must top the list. Besides, he’s expendable and makes a useful fall guy for Dr Dr’s stuffups.
Lyndall Shope-Mafole blames Neotel. A relatively fresh face in the director-general’s office at the Department of Communication, she was probably told that Neotel would solve all the problems, because there, in all its glory, war “competition”. She is, understandably, disappointed that the ill-fitting mishmash of interests, with a favoured foreign investor belatedly put in charge, hasn’t actually done much competing.
Poison Ivy… (Okay, maybe the Dr isn’t that important, since it’s just a Ph.D, and it’s only in sociology, not something useful like public service or telecoms or engineering.) Poison Ivy blames everyone in the private sector, because they’re just not working with her to implement government policy. I mean, how can we have a nice, effective command economy if nobody listens to the commander?
But Alec Erwin has the solution. And the idea is so simple, it’s brilliant.
Exclusivity! That’s when one company gets a special priviledge from government to rape and pillage. Now why didn’t I think of that?
Telkom got it in 1997. It managed to get ten years of mileage out of a meagre five-year exclusivity period, and 1997 is where SA is stuck. The foreign investor that got lucky with Telkom took its loot and ran, leaving a profiteering monopolist that needs no competence at all to pillage South African businesses and rape South African consumers.
Now Neotel will get four years of exclusive access to what was supposed to be a Neotel asset anyway: the Eskom backbone insfrastructure that Erwin confiscated and set up under the catchy brand Infraco. Since nobody else will have access to the cost-based wholesale prices Infraco will charge Neotel, there’s absolutely no reason for Neotel to pass those cost savings on to its customers. It’s already said that it doesn’t want a price war with Telkom. Obviously. Telkom would win, and and if there’s no other competition, a tacit nod is all you need to collude. Ask the cellular operators, who’ve played this cartel ripoff game for years, thanks to Poison Ivy’s insistence that she’s the best judge of how many operators the market can bear.
So as long as Neotel prices its products in line with (or slightly below) those of Telkom, the entire fat profit margin is theirs. It will flourish! And Tata, the Indian industrial conglomerate that must be good for South Africa because it’s not a rapacious American investor, will profit handsomely. No wonder its logo is popping up all over South Africa. With suckers like Poison Ivy and Alec Erwin to look out for it’s interests, it’s on a wicket the Indian cricket team could only dream of.
A recent forum on ITWeb asked the question whether the government should intervene to lower telecoms prices. Most respondents said yes.
People, think! Look where government intervention has got you. What makes you think more intervention will fix an interventionist disaster? What on earth makes you think exclusivity for Neotel or price controls on Telkom will make anything any better?
Big-bang deregulation is long overdue. Government should get the hell out of an economy about which it is clueless both in theory and in practice, licence all comers who want to offer telecom services, and legalise real competition rather than setting the stage for one cartel or monopoly after another.
“Exclusivity” is the latest in an endless string of daft government ideas. It’s counter-productive and immoral. It values the “dead hand” of government over the “invisible hand” of the market, and proves that government hasn’t a clue what these terms mean. But what can you expect from the motley crew of communists and central planners who think they know what’s good for us?
