The 2011 budget presented by South African finance minister Pravin Gordhan includes a R450 million item to implement a national broadband strategy. This money is misdirected. I explain why, and offer a compromise alternative, over at ITWeb: Throwing good money after bad.

I’ll be away most of this week, chairing some conference sessions. I have a few months’ worth of Brainstorm and Maverick columns stored up, though, so I’ll post a few of these for your reading pleasure when I get a chance.

• This column was first published in ITWeb Brainstorm magazine, December 2007. Brainstorm pays for these, so if you’d consider subscribing, I (and the magazine) would be in your debt.

Unfair, unreasonable and ludicrous

Those aren’t my words. Those are the words of members of the Security and Constitutional Affairs Select Committee in the National Council of Provinces.

Stupid. Imbecilic. Naïve. Batty. Those would be among the words I’d choose. Half-baked. Dim. Preposterous. Simple-minded. Goofy. Witless.

I’m talking about the recent amendment to the Regulation of Interception and Provision of Communication-Related Information Act, pushed through parliament by the Justice Department.

Let’s just call it the spy law, since that’s what it is, and many people must be familiar with the hoohah in the United States over similar “domestic wiretapping” provisions in anti-terrorism laws.

According to market researchers BMI TechKnowledge, there are somewhere north of 40 million cellular telephone users in South Africa. The majority of those are prepaid customers, who prefer, whether for creditworthiness or other reasons, to buy SIM cards and airtime as and when they need them.

This amendment requires everyone who uses a cellphone SIM card in South Africa to register their identity and residential details with their operators.

It’s loco. Pointless. Dense. Harebrained. Illogical. Bonkers.

The primary reason cited for the requirement is fighting crime. Organised crime, in particular.

Now I don’t know about you, but if I’m going to commit a crime, I’d go to some lengths not to identify myself to authorities. I’ll get an untraceable phone, or make it so. And if I can’t get a phone that’s untraceable, I’ll – I hope I’m not giving away any crime secrets here – meet my accomplices in person.

Criminals aren’t the sort of considerate people who obey the law. I’d have thought the definition of criminal would make this clear. This won’t curb any but the most petty crime, committed by the most incompetent criminals, against which I’d have thought the police don’t need all that much help.

Futile. Brainless. Ridiculous. Potty. Derisory. Lunatic.

This requirement is going to be tremendously impractical. It will create reams of data, most of it probably wrong. Many cellphone users don’t even have formal addresses, or they move regularly, or don’t have proper identity documents because Home Affairs hasn’t had its home affairs in order for years.

How are mobile operators supposed to ensure the information is accurate in the first place, and stays up to date in the second? I’ll bet that more than half of the information so gathered will be useless to law enforcement, and the other half won’t be needed.

It’s feebleminded. Doltish. Mindless. Dumb. Flaky. Absurd.

The cost of recording and maintaining all this data will be borne by whom? Mobile operators? You have to be kidding me. It will be passed on to consumers. Instead of reducing the cost of telecommunications, as the president mandated in a state of the nation speech some years ago now, this domestic spy law will significantly raise it.

Wacky. Foolish. Moronic. Dippy. Nonsensical. Dopy. Nuts.

It will undermine the spectacular success of low-cost prepaid telephony in South Africa. If cutting off half the people who’ve gained access to telephony thanks to prepaid is the government’s intention, the spy law is great.

Insane. Kooky. Irresponsible. Laughable. Half-witted. Ludicrous. (Oh, scratch that; the NCOP has that covered.) Retarded.

A government that has easy access to reams of private data is sure to abuse it. Even assuming that we trust the government in general, can we extend this trust to the bad apples within government? Can we trust private organisations that have no inherent need for the data, because they’re not, for example, providing us with credit? This extends the circle of organisations whose intent and competence we need to trust with private data even further. It’s a fundamental infringement on privacy and individual liberty. It’s how a police state operates.

Ill-advised. Nutty. Fruity. Fruity-and-nutty. Obtuse. Short-sighted. Barmy.

This law also requires all foreigners to register their cellphones when they’re in South Africa. Never mind the annoying impracticality of that, or that it doesn’t exactly say, “Welcome to the free South Africa”. If even one refuses, the measure is unenforceable, unless all international roaming is blocked. And if we do that, South Africans won’t be able to use their own phones internationally either. We’ll cut ourselves off from the global village. It’s that simple.

Rash. Mindless. Idiotic. Unthinking. Cockeyed. Thick. Irrational. Senseless. Ludicrous. Loony. Daft.

I’ve run out of words. Oh wait, no, I haven’t. There’s still cretinous. But I’ll save that word for a future column on the subject.

No synonyms were harmed in the production of this column.

After years of delays, restrictions, monopoly domination and a government that enforces a “managed liberalisation” policy that is neither managed nor liberal, there have been growing signs — despite government — of a sort of springtime in the South African telecommunications industry.

Russell Southwood, who runs the London-based Balancing Act Africa, covering telecoms and internet issues in Africa, agrees:

Almost unnoticed the rules of the game are changing and the South African market shows key developments that will transform how markets operate. DSL subscribers there look set to break through the “critical mass” barrier and there are irresistible pressures building up for low prices and no caps.

He says numbers of internet users (and in particular broadband users) are reaching levels that will begin to make an impact on traditional media, too. Competition is coming from newly licenced entrants, mobile operators, and ISPs that are able to compete under the new legal environment for telecoms.

So everybody is now rushing into infrastructure and the vertical integrators … will offer triple and quad play. Telkom will probably now face nine competitors. The traditional contenders will be: MTN, Vodacom, Neotel, and Sentech (that has already decided to get out of the retail space). Possible insurgents contenders will include: MWeb, IS, Verizon and Datapro. Rumour has it that after the recent issue of Wi-MAX spectrum that there is enough remaining spectrum for 4 players Neotel’s retail launch will take place in March/April of next year and it is working on a triple/quad play product.

… The market is unlikely to sustain nine infrastructure players but this flurry of competition will open up the VoIP market, lower national prices and grow the user base for a wider range of services. And what’s not to like about that?

Lots of interesting detail in his article.

• 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.

Read the rest of this entry »

In this country, the notion of private companies risking their capital on infrastructure projects is a no-no. While it complains about “market failure” and high prices, Duncan McLeod reports that the government has just decided to spend $2 billion (!) on its own undersea cable project. It’s no surprise that foreign investors are being chased away. It’s no surprise the World Bank is perplexed.

Clearly, our government’s idea of a New Partnership for Africa’s Development is central control over all major projects. It is to crush private competition, and stubbornly forge ahead with state-led development. We don’t need neo-colonialist exploiters, we’ll lay our own damn cables, is what Poison Ivy, the communications minister, appears to be saying.

There’s a wealth of evidence that Keynesian or socialist state-led development has failed for decades to lift poor countries out of poverty. Those countries in which significant economic development occurred achieved this by encouraging private investment and free markets.

In addition to the statistical evidence, the theoretical problem is that state competition scares off private investors, without which there will be no competition, whether on service quality or price. The state can only solve problems in series, trying one possible solution after another. When it does appear to solve it, there is no way of knowing if it did stumble on the best solution, whether supply actually meets demand, or whether the price is right. Besides, to date the government’s record at telecoms development has been atrocious.

Read the rest of this entry »

Duncan McLeod, the Financial Mail’s technology editor, has an excellent column up on the nasty business of capping the bandwidth usage of “broadband” consumers.

Though the cost of broadband has been falling steadily over the past few years, telecommunications service providers in SA continue to impose severe restrictions on how much bandwidth consumers can use. It’s harming innovation and development.

He concludes:

Then there are plans, by both government and the private sector, to construct new international submarine cable systems to link SA with the rest of the world. Despite the feckless department of communications, which has threatened to block majority foreign-owned cable systems from landing in the country, it’s unlikely that the projects will be barred. After all, one has to believe that government ultimately has the interests of its citizens at heart and won’t chase away hundreds of millions of dollars in foreign investment in an area where investment is so critically needed. Right?

An incurable optimist, is Mr McLeod.

From ITWeb in South Africa, regarding the state-owned terrestrial broadcast signal distributor and wannabe broadband infrastructure provider, Sentech:

While Sentech has improved its financial performance, the state-owned institution says it is still hobbled by funding constraints, which are keeping it from reaching its full potential.

This is great news. The government has finally discovered that throwing good money after bad is not smart policy. Long may it continue failing to fund inefficient state-owned monopolies, since at full potential they’re a disease that hobbles everyone else.

Chris Barron of the Sunday Times went in search of meaningful answers from the director-general in the Deparment of Communications. He found none, but published what he heard anyway. (Hat tip: politics.za.)
What he heard is quite staggering. About new undersea cables, which South Africa desperately needs, Lyndall Shope-Mafole, the DG in question, is quoted as saying:

There are those who assume they can come, wholly foreign-owned, and land in South Africa. We are saying, ‘no’.

When she says “we”, she’s not speaking for South African citizens, of course. Nor for South African businesses. They would benefit greatly from cheap international bandwidth provided by ruthless foreign competitors.

It therefore follows that she’s speaking for the crony capitalists that get all the sweet deals from the Department of Communications. Companies such as Sentech (wholly government owned), iBurst (which got a sweet-deal no-bid licence a decade ago), Infraco (the latest communist boondoggle, tasked with competing the private sector out of business), Telkom (of which the government still owns more than a third), and Neotel (whose shareholders were carefully selected and approved by government). They are the only ones that would be harmed by competition, after all.

Of course, the facts fall apart, since most proposed cables actually do have local participation. But no. Apparently, richer companies can offer lower prices, because “the globe is basically based on a capitalist system”, which is unfair. Not to South Africa, but to Ethiopia, which since last week falls within the Department of Communinvasion’s ambit. Therefore, the government will tell private investors to take a hike, and spend billions belonging to South African taxpayers instead.

Socialised bandwidth for all, she cries, while failing to deliver even basic services. “Infraco is there to ensure that we are served, the country as a whole,” she says, while “the majority of South African taxpayers ,” who “are not served by these private companies,” riot in the streets because they are not served by government.

“It is our responsibility to promote our sector and make sure that our sector is globally competitive.”

Nobody would argue with that. But if this is her department’s responsibility why is the local sector still so uncompetitive?

“It is actually doing very well,” she said, sounding offended. “We can be very proud of our achievements.”

Excuse me while I wipe the coffee off my screen. Clearly, she’s been at the Department of Cool Aid too long. That she expects us to just swallow this propaganda comes as no surprise when you find that she’s busy with a third reading of Ronald Suresh Robert’s sycophantic paean to Thabo Mbeki, Fit to Govern.

The reasons for abolishing the Department of Collectivist Cretins are piling up fast.