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.

1. Ewan Sutherland
LINK Centre, Wits University

2. 
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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
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3. 
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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?
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
Ewan Sutherland, 11 February 2012, LINK Centre
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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
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Sacrificing the scapegoat will mean terrible delays:
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◦
◦
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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
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5. 
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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
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6. 
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Telecommunications Regulatory Environment
Methodology does not allow comparisons:
◦ Over time
◦ Between countries
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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
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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
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8. 
Allegedly SA has 136% teledensity (p. 39)
GSM Association says 2 SIM cards for 1 real person:
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Those without:
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Where is it between 68% and, say, 94%?
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◦ Consequently, only 68% teledensity
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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
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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
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10. 
Liberalisation and the NP
Copying the United Kingdom
ANC modifications to the plan
Vodacom:
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M-Cell (later MTN):
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Telkom:
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Government was a shareholder in all three:
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◦ 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
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11. 
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A sequence of confused and confusing ministers
A random (or at least unexplained) pattern of
interventions by government:
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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
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12. 
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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
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13. 
National Development Plan (NDP) 2030:
◦ “connected vibrant information society”
◦ “underpin nation-building”
◦ “strengthen social cohesion”
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National Broadband Plan (December 2013):
◦
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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
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14. 
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“… 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
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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
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16. 
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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
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17. 
Minister to evaluate:
◦ Open access wholesale fibre network
◦ Open access wholesale wireless network
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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
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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
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Census found:
◦ 51,770,560 people in 14,450,161 households
◦ 3.58 persons per household
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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
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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
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20. Rapidly expand access to and use of ICT infrastructure
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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
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21. Ewan Sutherland, 11 February 2012, LINK Centre
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22. 
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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
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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:
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◦
◦
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Cell-C
Telkom Mobile
Neotel
Infraco
◦
◦
◦
◦
Telkom
Infraco
Sentech
Consolidated these would be truly dominant
Ewan Sutherland, 11 February 2012, LINK Centre
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24. 
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Many years of complaints against Telkom
Dominance was undeniable:
◦ Domestic leased lines
◦ International leased lines
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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
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25. 
Where does the:
◦ Private sector end?
◦ Public sector begin?
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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
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26. 
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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
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27. 
Separation of powers:
◦ Minister
◦ ICASA
◦ USAASA

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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
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28. 
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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
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29. 
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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
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30. 
Dominant players benefit from delays
Pule was right in pointing to lack of data:

Need to end random government interventions:
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◦ 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:
◦
◦
◦
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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
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31. 
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Surveys of regular and intermittent users, and
non-users of ICTs
Identification of patterns of use and non-use:
◦ Geographic
◦ Ethnic and linguistic


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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
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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
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