The white paper made available by the South African government on the status and future of telecommunications in the nation holds many pertinent observations and actionable advice. Gartner differs little as to the "what" of the paper, but only about the "when".
The salient points of the paper concern the effects of various types of convergence, and the prospects for SA given its present regulatory and economic environment.
The teledensity projections in the paper seem slightly optimistic both on the fixed and mobile side. Gartner believes that without serious action, fixed-lines will continue to shrink until 2007, and that is symptomatic of the larger condition of the market. Clearly, strong regulatory moves are called for immediately.
This brings us to the timeline of the paper`s advice, the place where it most seriously errs. Recognising in various scattered points the gravity of the situation, the paper nevertheless installs an over-arching timeline for progress in which "phase one" would require relatively little structural change on the part of the government regulatory agencies.
This is perhaps less serious given the apparent publication date of the white paper (December 2003), but is made more serious by the date of its release (the beginning of October 2004, nearly 10 months later). More curious still, the government in the interim appears to have taken a smorgasbord approach to the timeline, presumably supported by the existence of this paper; it has chosen to adopt certain elements of phases one, two and three, while not addressing other moves.
The most radical instance of this is in the VOIP sector, where the government has apparently decided to shortcut the phased liberalisation of this technology, by allowing radical freedom to entrants for use and provisioning of VOIP and other aspects of service such as transport and connection, effective February 2005. Gartner approves. Yet absent a viable second national operator (called for in phase one), new entrants will have no alternative to Telkom for such critical support, unless it could be arranged through one of the mobile network operators.
Since Telkom is being given no viable reason to develop itself as a wholesale player, this scenario would only reinforce the growing dominance of the mobile carriers in SA, something which the paper seems to recognise in disparate portions but, again, never really names aloud.
Meanwhile, the SNO labours in near-anonymity, still waiting to sign its first customer while the government seeks to draw ever-more partners into the coalition guiding it. Those already on board appear to disagree in fundamental respects, and none of them will have majority control of the new entity. It is difficult to expect that this player, despite the potential for growth in the under-penetrated market and the crying need for a nationwide partner to assist smaller entrants, will have much effect in the next year or even two, without meaningful action and clarity in the regime.
More curious still, the government in the interim appears to have taken a smorgasbord approach to the timeline.
William Hahn, principal analyst for telecoms strategies and directions, Gartner
Getting the regulator sorted out and empowering it to arbitrate such issues is a first priority, recognised by the paper as an immediate aim, but largely ignored by the government to date. If the South African government continues to pick and choose the unrelated options that are less difficult from those facing it, this asymmetrical and illogical regulatory regime will continue and have the following effects:
* Increased dominance of the mobile carriers, with increasingly thin profit margins and eventually declining investment opportunity despite good growth in the short-term. There will be attendant effects on the universal service fund and the digital divide, both tending negative.
* The near-complete isolation of Telkom SA from the rest of the telecommunications world. It is presently provided with incentives to continue its circuit-switched offerings at the expense of next-generation upgrades or even mid-term solutions such as DSL, while on both sides of the national network the architecture is moving to IP, DWDM and Ethernet architectures. The incumbent will reap good margins in the short-term from an ever-shrinking market of captive customers, while most of the opportunity in the national market goes mobile, and takes voice-only service as "good enough" for the indefinite future.
* SA will continue to fall behind in broadband penetration and investment, and its hi-tech, high-potential business sector will suffer from the inability for any player to supply its needs.
*.Small gains for the SNO operator, when and if it is ever licensed, among a few business clients in the urban areas, with next to no impact on extending service to the underserved through a role as a facilitator for VOIP and/or USAL licence-holders.
Working within the recommendations of the government`s paper (for convenience), Gartner would advise the immediate combination of phases one and two, and their implementation with all possible speed. Telecoms market liberalisation, which in turn will catalyse growth in the national economy as a whole, should neither be delayed nor "managed" as only a means to an end.
Share