Will govt set up its own Telkom competitor?

Managed liberalisation of the telecommunications sector seems to mean more government intervention rather than less, Ivy Matsepe-Casaburri`s budget speech yesterday clearly states.

In probably her most powerful and far-sighted delivery before Parliament in recent years, Matsepe-Casaburri gave a budget speech for her ministry and department that had a lot of meaningful content and seemed to cite the right laws, yet one senses something is still lacking.

Supported by her deputy minister Roy Padayachie and other African National Congress members of Parliament, Matsepe-Casaburri certainly took the wind out of the opposition parties` and other critics` sails somewhat, as she made some definite announcements about pending determinations.

However, she may find that once the usual critics have gone through what she has said with a fine-toothcomb and compared it with the Department of Communications` strategic plan presented to Parliament earlier this year, they will be finding a fresh breath. The reason for this is it raises the bar of expectations and falling short on delivery will mean erosion of business confidence in the sector.

Matsepe-Casaburri has reportedly told cabinet that should greater competition be allowed in the ICT sector, an extra two percentage points could be added to the country`s economic growth rate.

Paul Vecchiatto, Cape correspondent

In short, her speech lays out government`s ICT vision, including the establishment of a national broadband roll-out policy, plans for digital migration of the broadcasting signal network, pending determinations on the unbundling of the local loop, funding of Sentech and the fact that it can now sell voice services, and the creation of a consortium to manage the East African Submarine Cable System.

Of all the policy points, probably the most interesting is that of the national broadband policy roll-out. Why has this become such an important issue? Maybe it is because, as the minister says, the development of ICT can contribute to the 6% economic growth that government wants to achieve in its Accelerated Shared Growth Initiative for SA plan.

Matsepe-Casaburri has reportedly told cabinet that should greater competition be allowed in the ICT sector, an extra two percentage points could be added to the country`s economic growth rate.

Broadband and competition seem to be closely linked. The argument is Telkom, being in a monopolistic situation, has little real interest in rolling out broadband nationally. Recently, it said that it only expects about 20% of consumers to convert to ADSL services by 2010.

So looking at the broadband policy that is to be developed, the minister has also chosen to use the tools at hand. This includes expanding Sentech`s broadband wireless footprint, and secondly her particular fondness for developing committees.

The first is the Local Loop Unbundling Committee that will oversee the process of making Telkom`s last mile accessible to, presumably, the second national operator. The second committee is the Broadband Advisory Council that will have "African experts of international calibre" from Kenya, Senegal and Botswana.

What their relationship will be with the regulator is not quite clear, but these advisory bodies will make policy recommendations that could very well be turned into law.

So the structure for future policy determinations is being set up. But what could they be? The minister has stated that six months from the commencement of the Electronic Communications Act, value-added network services that have the correct licences will be able to self-provide - which really just corrects her last correction of last year.

The key to government`s thinking probably lies in the part of her speech that says: "Consistent with cabinet`s declaration that ours is a developmental state, we have decided to examine the contribution that the assets of state-owned enterprises can make to achieve affordable broadband access in our country. A policy decision on this matter will be announced soon."

I believe this means that government will set up another telecommunications-type operator that could easily become the real Telkom competitor.

Government wants more control and is determined to have a greater role in managing the economy. It has been stung by criticism of lack of delivery and it has conveniently pointed a finger at business, saying it has not done enough. For a long time there has been an element of pro-interventionist rhetoric creeping into politicians` and ministers` speeches that, if not an outright call for it, imply the state`s role should expand.

Whether such a route will bring down the cost of communications is not clear. Because even if such a national broadband operator should become operational, it will simply mean one state-owned enterprise will be competing with another (a la China), rather than true competition that brings down prices.