ICT industry left hanging

Johannesburg, 09 Feb 2007

SA's ICT industry was hopeful president Thabo Mbeki would make firm statements around international connectivity, access and pricing of telecommunications in his annual State of the Nation address this morning.

However, Mbeki, addressing a joint sitting of Parliament on its first working day this year, disappointed the ICT sector by not providing clear indications of a way forward in reducing the cost of international connectivity.

Key telecoms players previously indicated they expected the president to outline how SA would meet 2010 bandwidth requirements and what role Infraco would play in this space.

Consumer activist Rudolph Muller says: "It would have been far more beneficial if the president mentioned he would like to see the cost of communications and international bandwidth lowered."

Delayed clarity

Mbeki only said government "will also take a variety of steps to improve competition in the economy, among others to lower the cost of doing business and promote investment ...including developing high-speed national and international broadband capacity".

BMI-TechKnowledge senior telecoms analyst Richard Hurst interprets this statement as referring to Infraco, but says SA will have to wait for more clarity on its exact role. "As much as it would like to be part of the information economy, it's not high in the minds of politicians."

He says industry was hoping for government to create an enabling environment through the reduction of international connectivity. "We would really like to see government playing an enabling role for private enterprise by cutting the cost of international connectivity."

The Department of Public Enterprises, the custodian of recently-formed broadband company Infraco, had indicated the president would make some pronouncements around what role it would play in the run up to 2010, and SA's bid for the Square Kilometre Array telescope project.

However, these have been delayed until Monday, says ministerial spokesperson Gaynor Kast. Public enterprises minister Alec Erwin will make the announcements at the economic cluster briefing.

Dismay, disappointment

Mbeki told the nation Telkom would "apply a special low rate for international bandwidth to 10 development call centres each employing 1 000 persons". This is part of government's plans to boost business process outsourcing as it gears up to grow the economy by 6% a year.

"These centres will be established in areas identified by government. The special rate will be directly comparable to those for the same service and capacity per month offered in any of the comparable countries," said Mbeki.

He also said steps were being taken to "address call termination rates this year for the benefit of all consumers". Mbeki said the Department of Communications, the mobile telephone companies and Telkom were finalising plans in this regard. The Independent Communication Authority of SA (ICASA) is conducting an inquiry into interconnection charges.

Muller says the speech was misleading as it gave the impression that ICASA, Telkom and the mobile operators were working together to lower wholesale call termination, when in fact that has not been the case.

Gateway Communications COO Mike van den Bergh says that while it is gratifying Mbeki sees telecoms as a growth enabler and seeks to lower costs, he is disappointed Telkom is still being singled out by government as a "special case".

Muller adds: "It is regrettable that Mbeki didn't announce that he'd like to see lower international bandwidth rates, and not just for a few selected call centres."

World Wide Worx MD Arthur Goldstuck says such call centres are a "drop in the ocean". "The highest priority project in the ICT space given any level of detail will benefit a very small segment of business and not SA as a whole."

Goldstuck also expressed dismay that Mbeki had not given clear details as to how access could be taken to a broader segment of the population at a more affordable cost. "The most disappointing thing is that there is no awareness of how important telecoms access and cost is for SA."

(Additional reporting by Bandile Sikwane)

You can read the complete State of the Nation address at:
http://www.info.gov.za/speeches/2007/07020911001001.htm