Abolish the Department of Communications

• This column was first published in ITWeb Brainstorm, a South African business technology magazine, on 1 October 2007. Do subscribe, if you prefer to read it the way it was intended to be read: in print.

In March 2003, this column was headlined Root out Poison Ivy. It wasn’t the first call for her dismissal, but it did coin the now-famous nickname for our Minister of Communications. It’s time for an escalation.

This magazine has documented every step in the failed politics of telecommunications reform in South Africa. Now the entire sorry saga is retold in a paper co-authored by Willie Currie of the Association for Progressive Communications and Robert B. Horwitz of the Department of Communication at the University of California in San Diego.

The ten-year retrospective makes for sobering and intensely depressing reading. The authors interviewed everybody who was anybody during this time. In its 44 pages are collected, with academic rigour, failure upon failure, which makes the most cogent case yet for the dismissal of the current Minister of Communications, Ivy Matsepe-Casaburri.

Moreover, I contend that it justifies the abolition of the ministry itself.

The headline of the report, “Another instance where privatisation trumped liberalisation,” perceptively highlights the core philosophical error underlying the policy of “managed liberalisation” that South Africa followed since Telkom was first granted its monopoly in 1997.

It outlines what little is known about the secret shareholder agreement, under which 30 percent of the incumbent monopoly, Telkom, was sold to Thintana Communications. It explains the intentions behind the deal, the most important of which was to fund network expansion to under-serviced areas. It also documents the complete failure of this policy.

It describes how SBC Communications, now part of AT&T and then majority shareholder of Thintana, in effect wrote the Telecommunications Act that governed the sector until 2005. It tells of the profiteering by SBC, with implicit government acquiescence, and at massive cost to the South African people and economy.

It documents the under-resourcing of the regulator and illustrates the many attempts by the current minister and her predecessors to control and undermine the supposedly independent body.

It illustrates the obstructionist, litigious character SBC instilled in Telkom, and the powerlessness of the regulator in the face of Telkom’s attempts to extend its monopoly both in time and reach – especially in its predatory attempts to encroach on the relatively healthy, private and competitive ISP market.

It explains how prices in South Africa came to exceed even the worst among its peers in the developing world, why the tariff regime under which the state-protected monopoly was fatally flawed, and why South Africa’s ranking among the most connected countries in the world collapsed from 14^th to 37^th in ten years.

It recounts the long history of mismanagement, delays, litigation and inappropriate ministerial intervention in the awards of licences for both the third mobile operator, Cell C, and the second network operator, Neotel.

It places this complex and extended tale of woe in its proper context, both politically and economically. It shows how telecommunications policy failed to achieve the aims of the government’s macro-economic policies, and how the sector is a microcosm of the growing centralism of the ANC’s rule.

But most clearly, it shows that by blaming “the market” for its failure to deliver, the government confused privatisation with liberalisation. Instead of encouraging and incentivising competition, the government thought that a private monopoly would be any better than a state-owned bureaucracy. In fact, a private monopoly is better only at exploiting its state protection to profiteer from customers who have no choice.

Competition for customers by mobile operators has been a dramatic success, putting cellphones into the hands of a substantial majority of even poor households. This did nothing to convince the government that liberalisation, not government control, is the answer.

On the contrary, in recent months, officials have moved to restrict or bar “so-called private investors” (to use Poison Ivy’s term) from building new infrastructure such as undersea cables in South Africa, and have announced new monopolies, such as for mobile broadcasting. Centralised government control with its attendant failures looms larger than ever in our telecommunications future.

The “managed liberalisation” policy failed years ago. The sector needs big-bang liberalisation, and the Department of Trade and Industry is adequate to give effect to this. Let the regulator operate with true independence, as the Constitution provides, and limit it to a minimal set of essential tasks, such as policing spectrum use.

It is time to abolish the Department of Communications altogether.