The staggering stupidity of the state
If this article is correct, it is quite shocking. Anyone who has followed the telecoms industry in South Africa will know that the government keeps claiming that the market has failed, yet the market has never been given much opportunity to succeed. During the last decade of “managed liberalisation”, a raft of telecoms services and infrastructure projects were simply illegal, and were either the exclusive domain of the incumbent monopoly, or limited to a few select licence-holders. Meanwhile, the government singularly failed to bring most telecoms services to the people, which was, it said, the purpose of its policy. One of the biggest hurdles for South Africa (as some who read this blog have already discovered) is the fact that only one major undersea cable supplies all of the country’s international bandwidth, and the southern tip of Africa is pretty far from the internet’s backbone.
The environment appeared to be thawing under a new legislative regime, so much so that I asked one industry speaker at a conference whether we could finally say that the market had been “liberalised”. He demurred, but did admit it would become more free and open in the next few years. The government itself is planning two undersea cables, to be operated under “open access” principles by a state-owned enterprise with the snappy brand name Infraco. At least two private consortia are also planning cables. Half a dozen or so companies are busily laying fibre and building network capacity, which until recently, they had not been legally allowed permitted to do.
This, we cannot have. An open telecoms market? In which people actually invest?
The Department of Communications is poised to make policy announcements aimed at severely curtailing [second fixed-line operator] Neotel’s ability to land the Seacom East Coast cable in SA, sources say.
Are you soft in the head?
At the time, [director general in the Department of Communications, Lyndall] Shope-Mafole said government did not believe commercial cables would bring down the cost of broadband in SA and government initiatives would be needed.
Believe whatever you want. The only way you can be certain commercial cables won’t bring down the cost of broadband in SA is by banning them before they even start. (Note that to date, there’s still only a single monopoly-owned cable in place. It’s not like competition has been permitted and has failed.) As I’ve written before, whenever someone in government talks about “market failure”, you can be sure they actually mean “government failure”.
Duncan McLeod reported this morning that the Neotel/Seacom partnership has offered the Tertiary Education Network a R30 per month per megabit deal on 10 Gbps worth of bandwidth. This, according to the ITWeb article, is “hundreds of times less than the price it is currently paying [incumbent] Telkom”
Discounting? Stop that immediately! Hundreds of times less? I demand that Shope-Mafole and her boss, Poison Ivy Matsepe-Casaburri take strong action. Who do these commercial profiteers think they are, crowding South Africa’s 2,798km of pristine coastline with landing stations? If Neotel is going to pull this sort of ridiculous stunt, I think its licence should be voided forthwith.
Who needs private investment? Let Alec Erwin, the proudly communist minister of public enterprises, provide cheap bandwidth for the people. After all, between The Bolt and Poison Ivy, they’ve been doing such a great job to date. We rank right up there with Colombia, Jordan, Venezuela and Saudi Arabia. Maybe Hugo Chavez could come visit and give them public service medals.
Edited 08:45 18 Aug 2007: Added “if this article is correct” qualification at the beginning. See comments.
This has got nothing to do with market anything. The government is the major shareholder in Telkom and they’ve been creaming off huge amounts of money. The last thing the want is to see their little earner threatened.
Indeed. In fact, the government is invested in a large chunk of the telecoms industry. One always has to wonder when they are both player and referee, where their interests really lie. With their own earnings and those of their fellow shareholders? Or with the people who elected them to serve?
After all, companies do not have to serve their customers when they have legislative power to prevent their competitors from doing so.
That is the difference in a really free market: companies might act only on behalf of their shareholders, but they have to do so by serving their customers, or someone else will eat their lunch.
I think the article may be slightly misleading. Shope-Mafole made comments that were specific to the Eassy cable, she never mentioned Seacom. If the journos concerned have specific information that indicates that government feels the same way about Seacom then that is a different issue.
The real point is that government need to publish regulations for landing submarine cables and it has yet to do this.
I wonder if any regulation that would prevent private entities from landing cables in SA would stand up to legal scrutiny, especially if it is partnering with a organisation (such as Neotel) which has a legal right to supply international bandwidth.
You’re not the first reporter to suggest to me the article may not be entirely accurate. The core of my objection is in this section:
There is speculative phrasing in this section, with weasel-words like “indicated…such as”. And it does make clear that no final decision has been made. That said, it would be entirely in character for government to restrict private telecoms firms in favour of public projects, however, which is why I was predisposed to take it at face value.
So let me recast the post: “If this article is true, then.
You know, this may mean that henceforth I’ll have called the Minister of Communications “Poison Ivy” once too often.
If this is true then the entire department should be dragged out into the town square for a public trial.
Maybe that wouldn’t be a bad idea anyway.