| South Africa: Telecommunications Policy Costs Users |
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| Tuesday, 29 August 2006 | |
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South Africa’s policy of managed liberalisation for the telecommunications sector meant that consumers have paid US$ 586 million more than they should have for services, and deprived the country of US$ 2.23 billion of social benefits in the course of just one year, says a report from telecoms consultant Paul Cole.
Consumers are paying 440 times more than they should for voice and data services and foreign investors are staying away because of South Africa’s slow and expensive communications, says Cole. The best way to improve the sector’s performance would be to eliminate the communications ministry and let the industry work out its own level of competition, Cole said at a conference hosted by the Universal Service and Access Agency of SA. The managed liberalisation policy favoured by Communications Minister Ivy Matsepe-Casaburri, he said, means people now have poorer access to a public telephone than to a national lottery terminal. The policy let Telkom wield a "monopolistic exploitation" of consumers at the expense of the economy in general, he said. Thirty foreign investors who visited South Africa to assess its potential as a base for their call centres chose not to invest because communications costs were too high, Cole said. In his report, commissioned by the agency, Cole highlighted 2002 as the year consumers were forced to pay US$ 586 million more than they would have paid in a competitive market. The lost US$ 2.23 billion was the "social drag" caused by lost foreign investments and extra expenditures on telecoms by consumers. When the research began, Telkom's Surfmore internet package was 55 times dearer than a similar service in the U.S. Cole's research is backed up by ITU reports on the availability, affordability and quality of telecoms services. South Africa dropped from 30 to 36 in the rankings over four years, even though Telkom's monopoly has officially expired. Cole’s report was presented to the communications department and the views discussed at the three-day conference would be relayed to the minister, said Chose Choeu, chair of the universal access agency. The research was commissioned to gauge the success of the agency, but the results showed it has been a failure. Cole said the communications department had failed to clarify its powers and goals, and had set broad targets that it had no hope of achieving on its modest budget. Source: Business Day - WDR/Intelecon Regulatory News |
