It’s that time to press the reset button on the telecom industry in South Africa

Reset-button telecom SA

South Africa remains stuck in the telecommunication doldrums, a victim of its own apathy. There have been massive investments in unprecedented interconnectivity with the rest of world yet our internet speeds, cost and accessibility remain uncompetitive. The country is missing out for failing to hook into the high speed internet revolution, despite years of promises from the state to break a logjam largely of its own making.

South Africa presently has average internet speeds of 2.3 Mb per second, slightly above the African average of around 1.5Mb/s, much of this over cellular and wireless networks. However our average peak
speeds of 7Mb/s are well below the global average of 16Mb/s. We presently rank 120th in the global internet speed stakes, 25th in Africa.

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A study by the University of Munich showed that each 10% of extra broadband internet connectivity can increase personal GDP up to 1.5%. Broadband penetration can increase national productivity and GDP more than 5%. Instead of rolling out the IT revolution, South Africa has focussed on wringing as much money as possible from an extremely limited market. Consequently the core state responsibility to create tools capable of lifting the majority from poverty remains unmet.

Why has South Africa failed so miserably in this regard? We could retreat to the ready culpability of apartheid and its progeny, the monolithic Telkom, but that is a passive and barren response. Yes,
Telkom remains central to the problem but the underlying reasons are rather more complex.

Telkom has adapted, but only along the neo-liberal lines promoted by the Washington consensus in the last decades of the 20th century. Despite its monopoly position Telkom exhibits many attributes of a
failing company. It has utterly failed to engage in partnerships with competitive entities, its share price has plummeted below its listing price and it has just declared unprecedented losses. It has had poor
leadership, little strategic direction and major income streams are shrinking.

Most worryingly Telkom has proven incapable and unwilling to deliver anything resembling a world-class service to its customers, or to the nation at large. The new CEO, Sipho Maseko, promises change but this
song has been played to death.

Telkom’s failure cannot only be blamed on its rapid turnover of executives, some good, some bloody awful. The gorilla in the room remains the primary shareholder, the government, which together with the Public Investment Corporation exerts its majority stake. This effectively renders the board powerless to force through progressive change unless government is amenable.


Courtesy :The South African Civil Society Information Service