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2014 02-11 - South Africa ICT Policy Green Paper

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An analysis of the recent Green Paper on ICT policy by the Government of South Africa, in relation to its recent adoption of a broadband policy.

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2014 02-11 - South Africa ICT Policy Green Paper

  1. 1. Ewan Sutherland LINK Centre, Wits University
  2. 2.         First, find a scapegoat Some admissions of the truth Some truths not admitted Some political promises The interminable saga of unbundling The uncertainty of mobile adoption The delays in spectrum allocation Issues about empowerment Ewan Sutherland, 11 February 2012, LINK Centre 2
  3. 3.       ICT policy colloquium – April 2012 Appointment of Working Group – April 2012 A policy summit in Cape Town – June 2012 Framing paper – April 2013 Broadband policy – December 2013 Green paper – January 2014  Discussion paper – May 2014? White paper – August 2014? Legislation – 2015? 2016?  National cybersecurity policy – 2014?   Ewan Sutherland, 11 February 2012, LINK Centre 3
  4. 4.  Tough if you have been in office for two decades  However: ◦ In this case it is to be ICASA ◦ ANC ministers and officials:  Drafted the legislation  Made the directions  Owned several of the operators ◦ ANC MPs:  Enacted the legislation  Dominated the parliamentary oversight committee ◦ ANC cadres hold a great many positions in ICASA  Sacrificing the scapegoat will mean terrible delays: ◦ ◦ ◦ ◦ Drafting and enacting new legislation Finding new commissioners and senior staff Learning about markets Entrenched market interests benefit enormously Ewan Sutherland, 11 February 2012, LINK Centre 4
  5. 5.    South Africa effectively lost its status as continental leader (p. 19) Mobile prices are very high (p. 19) SA fell behind in e-government ranking: ◦ Lower levels of available ICT infrastructure Government's attempts to supply infrastructure directly have been expensive and not contributed adequately to achieving universal access objectives. However, public investment in state owned networks over decades has produced a considerable national asset available for broadband deployment. (p. 46) Ewan Sutherland, 11 February 2012, LINK Centre 5
  6. 6.   Telecommunications Regulatory Environment Methodology does not allow comparisons: ◦ Over time ◦ Between countries   Cannot draw conclusions from its “numbers” TRE is intended only for use in writing one-off country case studies Ewan Sutherland, 11 February 2012, LINK Centre 6
  7. 7. “Currently, there are no authoritative statistics on broadband penetration in South Africa. Estimates put broadband penetration at 2% for fixed-line broadband, around 4% for mobile PC broadband and 17% for broadband penetration using smartphones” Dina Pule, Cape Town ICT summit, 2012. ICASA is required to publish the minimum data set required by UN agencies. (Govt. Gaz. #37119 p. 27) Ewan Sutherland, 11 February 2012, LINK Centre 7
  8. 8.  Allegedly SA has 136% teledensity (p. 39) GSM Association says 2 SIM cards for 1 real person:  Those without:  Where is it between 68% and, say, 94%?  ◦ Consequently, only 68% teledensity ◦ ◦ ◦ ◦ ◦ Infants and children Elderly Very poor Very remote Many have a SIM card and only sometimes can afford to make calls – the precariat ◦ What are the geographic variations?  Limpopo? Western Cape? ◦ What are the socio-demographic variations?  Xhosa speakers? Zulu speakers? Rural poor? Urban poor?  How do you formulate policy without knowing details? Ewan Sutherland, 11 February 2012, LINK Centre 8
  9. 9. Year Fixed lines DSL % DSL 24.2% DSL growth 3.2% Fixed line growth -2.3% 2013 3,713,000 898,203 2013 3,800,000 870,505 22.9% 5.2% -4.9% 2012 3,995,000 827,091 20.7% 10.0% -3.8% 2011 4,152,000 751,625 18.1% 5.1% -2.8% 2010 4,273,000 715,221 16.7% 21.1% -4.0% 2009 4,451,000 590,590 13.3% 43.3% -1.8% 2008 4,532,000 412,190 9.1% 61.2% -2.4% 2007 4,642,000 255,633 5.5% 78.1% -1.4% 2006 4,708,000 143,509 3.0% 145.2% -0.4% 2005 4,726,000 58,532 1.2% 188.2% 1.0% 2004 4,680,000 20,313 0.4% 661.1% -0.6% 2003 4,709,000 2,669 0.1% - - Source: Telkom annual reports Ewan Sutherland, 11 February 2012, LINK Centre 9
  10. 10.  Liberalisation and the NP Copying the United Kingdom ANC modifications to the plan Vodacom:  M-Cell (later MTN):  Telkom:  Government was a shareholder in all three:    ◦ Vodafone as minority investor ◦ Cable & Wireless as a minority investor ◦ Later replaced by SBC ◦ Monopoly infrastructure provider to MTN and Vodacom ◦ SBC and Telekom Malaysia as minority investors ◦ No mechanism to deal with conflicts of interest Ewan Sutherland, 11 February 2012, LINK Centre 10
  11. 11.   A sequence of confused and confusing ministers A random (or at least unexplained) pattern of interventions by government: ◦ ◦ ◦ ◦ ◦   Merging SATRA and IBA Merging consortia for the second network operator Creating Sentech and Infraco Failed reversal on the right to construct infrastructure Turning down the Korea Telecom offer The still unpublished government agreement with SBC/Telkom Malaysia Underserviced Area Licences (USALs) were a complete waste of time and money Ewan Sutherland, 11 February 2012, LINK Centre 11
  12. 12.    It is always convergence But never converged Several years of debate on Convergence Bills ◦ Before producing the unworkable Electronic Communications Act of 2005  The Green Paper does not address: ◦ Over The Top (OTT) services ◦ VoIP – Skype ◦ Video – YouTube and Netflix Ewan Sutherland, 11 February 2012, LINK Centre 12
  13. 13.  National Development Plan (NDP) 2030: ◦ “connected vibrant information society” ◦ “underpin nation-building” ◦ “strengthen social cohesion”  National Broadband Plan (December 2013): ◦ ◦ ◦ ◦ ◦ A national project – South Africa Connect A detailed implementation plan – Roadmap A coordination mechanism - Broadband Council An enabling environment for the rollout of infrastructure By 2030 to deliver services of:  80% at 100 Mbps  100% at 10 Mbps Govt. Gaz. #37119 Ewan Sutherland, 11 February 2012, LINK Centre 13
  14. 14.    “… the development of a predictable regulatory environment conducive to investment.” (p. 16) “The key to leveraging the benefits of broadband lies in the governance of the sector and in the ability of the State to coordinate activities across the ICT ecosystem.” (p. 16) “Develop the road map that guides the actions of the public and private sector players over the next 10 to 20 years” (p. 37) Ewan Sutherland, 11 February 2012, LINK Centre 14
  15. 15.   In future, the state’s primary role in the ICT sector will be to facilitate competition and private investment and to ensure effective regulation where market failure is apparent. (NDP p. 171) Redirecting investments away from duplicate urban infrastructure to unserved areas through incentives and subsidies, together with open access wholesale regulation to enable service based competition, appears to be a way of enabling affordable access to broadband for all. (Green Paper, p. 42) Ewan Sutherland, 11 February 2012, LINK Centre 15
  16. 16.   Presently, no open access to the networks of Infraco and Telkom Is government really going to merge? ◦ Infraco ◦ Sentech ◦ Telkom  Strong evidence of commercial deployment: ◦ Dark Fibre Africa ◦ Fibre Co ◦ Liquid Telecom Broadband Infraco Act s.4. (1) The main objects of Infraco are to expand the availability and affordability of access to electronic communications, including but not limited to underdeveloped and under serviced areas… Ewan Sutherland, 11 February 2012, LINK Centre 16
  17. 17.  Minister to evaluate: ◦ Open access wholesale fibre network ◦ Open access wholesale wireless network   Rationalising SOC investments Integrating into a single entity: ◦ Voluntarily incorporating public and private networks ◦ Offering third parties cost-oriented services ◦ Requiring infrastructure owners to offer costoriented services  The Broadband Policy creates uncertainty for investors Ewan Sutherland, 11 February 2012, LINK Centre 17
  18. 18.  Average household income: ◦ ZAR 119,542 per annum or 9,962 per month ◦ 2.5% would be ZAR 2,989 per annum or 249 per month ◦ However, that would be:  4.3% of the income of the average black household  Census found: ◦ 51,770,560 people in 14,450,161 households ◦ 3.58 persons per household   So, divide 249 by 3.58 to get ZAR 69.57 per month Green paper gives income as ZAR 64,000 which would give ZAR 133.33 for broadband “By 2020 100 per cent of South Africans will have access to broadband services at 2.5 per cent or less of the population’s average monthly income” Ewan Sutherland, 11 February 2012, LINK Centre 18
  19. 19. White Indian/Asian Coloured Black African Female head Male head South Africa 0 100,000 200,000 300,000 400,000 Source: StatsSA – IES 2010/11 Ewan Sutherland, 11 February 2012, LINK Centre 19
  20. 20. Rapidly expand access to and use of ICT infrastructure     We will invest in a comprehensive plan to expand broadband access throughout the country and substantially reduce the cost of communication. We aim to connect all schools, public health and other government facilities through broadband by 2020, and at least 90% of our communities should have substantial and superfast broadband capacity by 2020. Government will support and develop free-WiFi areas in cities, towns and rural areas. The local electronics sector and emerging entrepreneurs will be stimulated as part of our efforts to support the manufacturing industry. http://www.anc.org.za/2014/wp-content/themes/anc/downloads/Manifesto_Booklet.pdf Ewan Sutherland, 11 February 2012, LINK Centre 20
  21. 21. Ewan Sutherland, 11 February 2012, LINK Centre 21
  22. 22.         Provided by statute in 2005 Still at it, after all these years Why? Who would lease a line from Telkom? Where are the lines? Who would want ICASA to oversee the lease? Who can keep it out of the courts? What about fibre? Ewan Sutherland, 11 February 2012, LINK Centre 22
  23. 23.   The market is said to be highly concentrated? Which market? ◦ Fixed? ◦ Mobile?  ICASA and CC/CT had powers to deal with that Government could have intervened Government did intervene over licences for:  Government is also a very big player:   ◦ ◦ ◦ ◦ Cell-C Telkom Mobile Neotel Infraco ◦ ◦ ◦ ◦ Telkom Infraco Sentech Consolidated these would be truly dominant Ewan Sutherland, 11 February 2012, LINK Centre 23
  24. 24.   Many years of complaints against Telkom Dominance was undeniable: ◦ Domestic leased lines ◦ International leased lines    It litigated and lied that it did not abuse its dominance Finally, it admitted abuse to Competition Tribunal Throughout, government owned a large slice of Telkom SA SOC Ewan Sutherland, 11 February 2012, LINK Centre 24
  25. 25.  Where does the: ◦ Private sector end? ◦ Public sector begin?    What are the roles of the municipalities? How do we provide certainty for investors? Is broadband access to be predominantly wireless? Ewan Sutherland, 11 February 2012, LINK Centre 25
  26. 26.    No comparisons with other countries How much spectrum compared to: ◦ UK ◦ Brasil ◦ Nigeria South Africa could open up 700 or 800 MHz bands to a new player: ◦ ◦ ◦ ◦  Airtel Etisalat Orange America Movil Logical response to excessive market concentration Ewan Sutherland, 11 February 2012, LINK Centre 26
  27. 27.  Separation of powers: ◦ Minister ◦ ICASA ◦ USAASA   USAASA has had severe problems Transferring money from mobile operators seems: ◦ Highly problematic and ◦ Wasteful  Spending it on set-top boxes is: ◦ Extremely wasteful ◦ Possibly ultra vires Ewan Sutherland, 11 February 2012, LINK Centre 27
  28. 28.     Need to push markets further Intensifying competition to reduce prices Also increase spending power of the poor Ultimately likely to be a gap: ◦ Costs too high ◦ Individuals too poor  Can be funded: ◦ By tax payers (social equity argument) ◦ By cross-subsidies (network externalities argument) Ewan Sutherland, 11 February 2012, LINK Centre 28
  29. 29.     Where are the data? Where is the analysis? Where were the KPIs? Who was empowered? ◦ The many? ◦ The few?  Where did the money come from? ◦ Poor South Africans ◦ In the case of MTN, from poor Africans Ewan Sutherland, 11 February 2012, LINK Centre 29
  30. 30.  Dominant players benefit from delays Pule was right in pointing to lack of data:  Need to end random government interventions:    ◦ Evidence-based policy is and will be impossible ◦ Need for a massive upgrade in statistics ◦ Processes need to be transparent Implausible to argue government can create a 10-20 year ICT sector plan Decide which services are to be delivered: ◦ ◦ ◦ ◦ Leave the market to provide infrastructure services Support service providers in rural areas Support those too poor to afford services Support the disabled to access services Ewan Sutherland, 11 February 2012, LINK Centre 30
  31. 31.   Surveys of regular and intermittent users, and non-users of ICTs Identification of patterns of use and non-use: ◦ Geographic ◦ Ethnic and linguistic    Explaining the procrastination and tergiversation in policy-making Identifying the flows of investment monies Developing crowdsourced data for policy analysis Ewan Sutherland, 11 February 2012, LINK Centre 31
  32. 32. Ewan Sutherland http://3wan.net/ Ewan.Sutherland [@] Wits.ac.za +44 141 649 4040 +27 skype://sutherla sutherla http:// www.ssrn.com/author=927092 Ewan Sutherland, 11 February 2014, LINK Centre 32

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