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ICT Sector Performance ReviewDepartment of Communication Stratplan20 July 2011Alison GillwaldExecutive Director, RIAAdjunct Professor, Management of Infrastructure Infrastructure Reform and Regulation, Graduate School of Business, University of Cape Town
Outline
Role of sector in growth
Sector contribution to economy
Global benchmarking
Benchmarking Africa - access, usage, pricesFixed-lines
Mobile
Interconnection
Internet/Broadband
Leased lines
Regulation
AnalysisAbsence of policy/vision
Lack of co-ordination (cross cutting nature of ICTs)
Legal framework - Institutional arrangements
Market structure - concentration/ownership
Licensing - ahead and behind
Universal Access - over taken by events
Broadband Policy - absence of vision/strategy
R &D
Policy recommendations
SA national indicatorsGDP growth since 1994 3.3%, last quarter 1.3%
GDP per capita $10700 - high GINI co-efficient
Contribution of transport, communications and storage 4.7% (7% estimate for ICT) of which telecommunications is about 3%.
Technology BOP (2006) - US 1.6 bilion payments vs Us200m in receipts
Less than 100 patents p/a - 0.02% of global patents
Poor human development - Life expectancy & Education
.91% of GDP on R&D expenditure (2009
1.4 Researchers per 1000 population (2009)
.61% share of world ISI publications
300 engineers produced annually
Total telecom income in 2008 R150m
National Planning Commission
SA ICT SectorTwo fixed fixed network operators + state owned broadband company
Three mobile operators building competing backbones
5 first tier Internet access providers with hundreds of ISP (ICT) and electronics sector comprises more than 300 companies and in 2001 was ranked 22nd in total worldwide IT spend.
Ministry of
and Public Enterprise
National regulatory agency (ICASA)
Universal Service Agency of South Africa.
e-skills Institute/Meraka Institute/Nemisa
DOC Vision 2020
(Lack of)Macro-economic ICT indicators
2005 2006 2007 2008 2009
ICT expenditure (% of GDP)
Mobile communications investment (current LCU)
Revenue from fixed services (USD)
Revenue from mobile services (USD)
Telecommunications investment (% of revenue)
Total income for the post and telecommunication industry (2006)
Telecommunications revenue (% GDP)
Value added, transport, storage and communication (constant LCU)
9.436 9.73 -- -- --
-- -- -- -- --
23 076 millions -- -- -- --
10 718 millions -- -- -- --
-- -- -- -- --
136 859 millions (*)
6,38 7,43 -- -- --
109 037 millions
114 455 millions
120 445 millions
126 041 millions
--
Source:ITU Indicators 2011The World Bank Indicators 2011(*) StatsSA
ITU -IDI
IDI: Three stages in the evolution towards an information-society:
1. ICT Readiness (infrastructure, access)
2. ICT Use (intensity)
3. ICT Capability (Skills)
Tunisia:
2002: 94 2007: 83
Turkey:
2002: 63 2007: 59
SOUTH AFRICA
2002 rank 77th
2005: rank 91st
2007: rank 91st
2008: rank 92nd
(WEF) Network e-Readiness Index
South Africa stable at 61st place (138 participating countries)
Fallen from 34th in 2004, 37th in 2005, 47th in 2006, 51st in 2007, 52nd in 2008. Gained only a position from 2009, when it ranked 62nd
It is only ranked 95 in terms of usage componentMajor barriers to market growth:
Lack of competitive or affordable backbone infrastructure/ bandwidth
High costs of access to communications
Effective regulation
Source: Nokia 2011 in Lirneasia, 2011
“Internet: still a significant gap between the richest countries and all the rest, which have a mix of larger-country stars (VietNam, China) that punch above their category averages, and dogs (South Africa, India) that fall well below”.Global ICT Statistics on Internet Usage, Mobile, Broadband: 1998-2009 (17 September 2010) University of Manchester.
Telecom investment & economic growth
Correlations between telecom penetration and growth - fixed, mobile, broadband.
Causality?
Network effects
World Bank 2010 10% increase in broadband penetration a accelerates economic growth by 1.38% points.
2004 2005 2006 2007 2008
South Africa 5,17 6,38 7,43 .. ..
Senegal 6,84 7,81 8,96 9,75 ..
Brazil 3,37 4,15 4,62 4,61 ..
China 3,30 3,19 3,06 2,88 ..
India 2,28 2,42 2,02 .. ..
Kenya 4,34 4,74 4,05 6,05 6,32
Turkey 2,78 2,60 2,27 2,51 2,27
Tunisia 4,08 4,28 4,17 4,20 4,33
Korea, Rep. 4,62 4,67 4,70 4,65 4,72
Telecommunications revenue as % of GDPSource: World Bank, IC4D database 2010http://databank.worldbank.org/ddp/home.do
Comparative investment in infrastructure
2001 2002 2003 2004 2005 2006 2007 2008
Kenya 9,13 10,47 23,28 12,72 18,93 21,56 16,60 19,21
Korea, Rep. of 134,55 193,69 108,01 112,32 117,89 137,70 141,17 128,65
Senegal 6,53 10,41 - 8,61 13,28 15,85 17,37 -
South Africa 31,10 15,74 19,02 - - - - -
Tunisia 22,00 31,26 41,20 41,56 26,83 29,55 22,35 29,32
Total annual CAPEX in telecommunications/population (in USD, including fixed, mobile and Internet services. It should include all operators) Source: ITU 2010, WB 2010.
Gaps in South African data reflect its failure to submit data over several years to
ITU for global indicator reports
Network Investment(CAPEX Rm)
Source: Operators Annual Reports
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Total: (including Neotel)R 95 875.02 millions
SA has a very concentrated market
result: high prices
The state remains a significant player in the telecoms market although it has sold its stake in some companies
Mobile market: dominated by MTN and Vodacom, CellC captures a small market share
Fixed market: dominate by Telkom, Neotel is a new entrant
Market Concentration
Herfindahl-Hirschman Index (using customer market share) Source: Vodacom & MTN Annual Reports, CellC press releases, authors’ own calculations
0
1 500
3 000
4 500
6 000
2001 2002 2003 2004 2005 2006 2007 2008 2009
The State is a significant player in the sector
Shareholdings in Telkom, Sentech and Infraco (through Eskom and Transtel)
New structure in state ownership
Sale of Telkom Media
Sale of IT company Aviria.com
Telkom sold a 15% stake in Vodacom to Vodafone; it distributed the remaining 35% to its shareholders
The Government continues to own 37,7% of Telkom and 14% direct shareholding in Vodacom
Market structureOwnership
Source: Research ICT Africa 2010 Sector Performance Review
Summary of SA telecom market
0
6 000 000
12 000 000
18 000 000
24 000 000
30 000 000
36 000 000
42 000 000
48 000 000
54 000 000
60 000 000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Estimated Internet Users (became obsolete in 2011)Mobile phone subscriptions (post-paid + prepaid)Fixed telephone lines
Source: ITU 2011
PerformanceFixed-lines | Access
2007 2008 2009 2010
Tunisia
South Africa
Botswana
Namibia
Senegal
Kenya
Cameroon
Benin
Cote d'Ivoire
Ghana
Ethiopia
Burkina FasoNigeria
Uganda
Zambia
Tanzania
Mozambique
Rwanda
12,57 12,09 12,34 12,30
9,28 8,97 8,68 8,43
7,10 7,28 6.93 6,85
6,40 6,61 6,63 6,66
2,35 2,01 2,30 2,75
1,24 1,68 1,68 1.14
1,03 1,36 2,27 2,53
1,37 1,38 1,48 1,51
1,32 1,88 1,46 1,13
1,66 0,62 1,12 1,14
1,13 1,13 1,13 1,10
0,78 0,95 0,95 0,871,07 0,87 0,96 0,66
0.55 0,54 0,72 0,98
0,76 0,73 0,71 0,69
0,40 0,29 0,40 0,39
0,36 0,35 0,36 0,38
0,24 0,17 0,32 0,37
The decline in Telkom’s fixed-line network has severe implications for the development of widespread affordable access to a comprehensive information infrastructure..
Number of fixed lines as a percentage of the population (Source: ITU 2011)
Does this household have a landline telephone in the dwelling?
2002
2003
2004
2005
2006
2007
2008
2009 16,90%
18,10%
18,40%
19,90%
21,50%
22,90%
23,70%
25,80%
Landlines 2002-2009
General Household Survey Data: Stats SA
PerformanceFixed-lines | AccessLess than 20% households have a fixed-line telephone
Large scale disconnection of subscribers unable to afford services60% of users are not interested in a fixed-line service even if prices were to come down
Negative consequences of timing and nature of privatisation:Sequencing - absence of competitionMaximisation of state asset came at some cost for development of a competitive sector.Anti-competitive practises chilling effect on competitive sector. Over the last 10 years, subscribers had been brought onto the fixed line market with the universal access targets set by Government as part of the privatisation. To-date they are unable to afford the service
Policy & regulatory bottlenecks:Delayed market entry, licensing delays, absence of competition enabling provisions in policy like LLU, absence of short term asymmetrical rates
The decline in Telkom’s fixed-line network has severe implications for the development of widespread affordable access to a comprehensive information infrastructure..
Number of fixed lines as a percentage of the population (Source: ITU 2010)
PerformanceFixed-lines | Price
Fixed-line prices of both voice and data are high
While not the most expensive by African standards based on OECD medium-user basket, SA has the highest priced basket.
Next five countries historically middle income comparators for South Africa.
Average monthly WTP for non-users that would be interested in getting a mobile phone - R 46.70 (USD 4.40)
Strategy of high installation/rental and lower usage prevent consumer uptake
South Africa
Poland
Czech Republic
Turkey
Hungary
Mexico
Finland
Greece
Belgium
France
Italy
OECD
Austria
Japan
Korea
Australia
New Zealand
Slovak Republic
Switzerland
Netherlands
Germany
Spain
Portugal
Sweden
United States
United Kingdom
Ireland
Denmark
Norway
Canada 41
76
89
111
122
137
182
198
199
200
207
227
253
270
277
285
286
288
300
302
311
313
348
355
428
447
504
540
556
830
OECD residential fixed-line basket: medium-usage
0
0,3
0,6
0,8
1,1
1997 1999 2001 2003 2005 2007
CPI increase Telkom price increase
Telkom 3 min call vs. Consumer Price Index in ZAR
Operators efficiency
179,00
181,75
184,50
187,25
190,00
2007 2008 2009 2010
Telkom ratio of fixed lines to number of employees
5100
5250
5400
5550
5700
2007 2008 2009 2010
Vodacom ratio of subscribers to number of employees
Is there a cellular telephone available to this household for regular use?
Source: General Household Survey Data: Stats SA
2002
2003
2004
2005
2006
2007
2008
2009 83,2%
77,3%
73,5%
67,7%
61,5%
49,6%
40,8%
35,4%
Mobiles 2002-2009
PerformanceMobile | Access
2006 2007 2008 2009
Botswana
Tunisia
South Africa
Ghana
Cote d'Ivoire
Benin
Namibia
Senegal
Kenya
Nigeria
Tanzania
Cameroon
Zambia
Uganda
Mozambique
Rwanda
Burkina Faso
Ethiopia
44,10 60,86 77,34 96,12
73,60 77,89 84,59 94,96
81,54 86,02 90,60 92,67
23,30 33,25 49,55 63,38
20,70 37,11 50,74 63,33
13,00 24,45 41,85 56,33
29,73 38,31 49,39 56,05
25,75 30,53 44,13 55,06
19,96 30,06 42,06 48,65
22,40 27,35 41,66 47,24
14,37 20,16 30,62 39,94
17,20 24,31 32,28 37,89
13,84 21,43 28,04 34,07
6,77 13,69 27,02 28,69
11,00 14,08 19,68 26,08
3,41 6,72 13,61 24,30
7,10 10,94 16,76 20,94
1,10 1,54 2,42 4,89
Total number 16+ with
mobile phone or active SIM
Share 16+ with mobile phone or active SIM
16+ own mobile phone/active SIM: lower 3 disposable
income quartile
16+ own mobile phone/active
SIM: top disposable
income
Nigeria 63 101 014 77.3% 74% 93%South Africa 20 185 135 62.1% 54% 84%Ghana 7 491 378 59.8% 53% 79%Botswana 645 737 59.5% 53% 83%Kenya 10 772 696 52.0% 42% 79%Namibia 625 707 49.3% 37% 86%Zambia 2 459 961 45.5% 36% 84%Cote d’Ivoire 5 042 524 41.8% 33% 63%Senegal 2 502 300 39.8% 29% 77%Cameroon 2 979 597 36.5% 28% 74%Benin 1 365 851 30.2% 20% 49%Burkina Faso 1 844 701 27.2% 19% 50%Mozambique 4 865 758 25.7% 17% 63%Tanzania 4 135 338 21.5% 14% 46%Uganda 2 924 095 20.7% 12% 46%Rwanda 520 259 9.9% 4% 26%Ethiopia 1 387 910 3.2% 1% 11%Mobile phone ownership (RIA Household survey 2007/2008)Mobile SIM cards as a percentage of the population (ITU 2010)
SA voice market is saturatingDisparities of access in relation to (income)Multiple SIMs (over count for 10% - 4.5 m)
PerformanceMobile | Access
Mobile penetration rates continue to be impressive
But in 2009 Tunisia and Botswana surpassed SA in terms of SIMs as a percentage of population
Supply-side data: penetration rate of 100%
Demand-side data: penetration rate of 62%Significant number of multiple SIMs (1.13 active SIMs per user) GDP per capita levels
high prices and control costs by not making off-net calls
Penetration levels for poorer people are still at only half the population
Majority of mobile phones in urban areas
RICA surveillance policy vs universal access policy
2009 -2010 Vodacom, declined nearly 5%
Major Urban
Other Urban
Rural
Urban 71%
49%
67%
75%
Mobile phone ownership by geographic area
OECD Mobile low usage basket
DenmarkFinland
SwedenNorway
GermanyNetherlands
LuxembourgSwitzerland
IcelandNew Zealand
AustraliaBelgium
PolandAustriaIreland
PortugalUnited Kingdom
OECDJapan
ItalyCanadaGreeceFrance
HungaryTurkeyKorea
MexicoSlovak epublicCzech epublic
SpainUnited States
South Africa 352280
251244242
232227
223217216
202196195
168164
160154
150148148147
144142
118111
108105105
8778
6050
Usage prices remain high in South Africa compared to virtually every other comparable country in the world
High prices limit usage
High price of interconnection influences prices
High prices limit other innovations like airtime transfers and data use
PerformanceMobile | Price
ARPU has declined
The decline up to 2007 is anticipated with the saturation of the higher end of the market
Also the compulsory registration of SIMs from July 2009 might have contributed to the decline of new SIMS and ARPU
Wholesale - InterconnectionTermination rates and retail rates comparison
Comparison of mobile termination rates in ZAR
SenegalKenya
MauritiusGhana
NamibiaNigeriaTunisia
ZambiaBotswanaRawandaTanzania
MozambiqueUganda
Côte d’IvoireBurkina FasoSouth Africa
BeninCameroon 16,00
12,3011,30
9,908,90
8,207,807,50
7,006,50
5,905,90
5,404,10
3,402,802,702,30
March 2011 OECD Basket costs in USDMarch 2011 OECD Basket costs in USDMarch 2011 OECD Basket costs in USDMarch 2011 OECD Basket costs in USDMarch 2011 OECD Basket costs in USD
Country
Name
Cheapest
High User
USD
Dominant
High User
USD
%
cheaper
than
dominant
Cheapest in
Country In
terms of
January 2011
Egypt 7,63 7,63 0,00% 100,00%
Kenya 9,10 12,35 26% 100%
Uganda 10,42 21,24 51% 84%
Mauritius 13,15 13,15 0% 100%
Tanzania 13,35 21,59 38% 66%
Ghana 13,98 20,37 31% 85%
Ethiopia 15,67 15,67 0% 60%
Rwanda 21,37 28,45 25% 100%
Nigeria 26,58 36,47 27% 100%
Tunisia 34,98 37,81 7% 93%
Benin 35,70 46,12 23% 100%
Namibia 42,17 66,36 36% 93%
Cameroon 43,39 43,39 0% 100%
Botswana 44,44 44,44 0% 100%
Angola 45,67 56,64 19% 90%
Senegal 46,22 46,22 0% 100%
Côte d’Ivoire 46,74 46,74 0% 97%
Burkina Faso 49,50 49,50 0% 100%
Mozambique 50,51 50,51 0% 100%
South Africa 52,04 55,51 6% 108%
Zambia 59,73 65,23 8% 100%
Zimbabwe 61,84 61,84 0% 100%
Swaziland 77,42 77,42 0% 100%
Cape Verde 105,88 115,98 9% 100%
Morocco 114,93 114,93 0% 100%
Swaziland 77,42 77,42 0% 100%
Chad 97,34 97,34 0% 100%
Cape Verde 105,88 115,98 9% 100%
Morocco 114,93 114,93 0% 100%
Wholesale - InterconnectionTermination rates comparison
SA mobile termination rates are among some of the highest in the world
at least 2-3 times higher than a number of African countries
Interconnect rates have remained the same for the last seven years
High interconnection rates justify high prices
mobile operators currently pay each other R1.25 per peak time minute for terminating calls on their networks
India
Cyprus
Austria
Sweden
Finland
Kenya
Tanzania
Botswana
Slovenia
France
Uganda
UK
Namibia
South Africa Peak
South Africa Off peak 0,77
0,89
0,4
0,52
0,43
0,45
0,49
0,55
0,2
0,46
0,29
0,329
0,173
0,031
0,77
1,25
1,06
0,93
0,86
0,83
0,77
0,71
0,63
0,62
0,59
0,55
0,54
0,24
0,04
Comparison of mobile termination rates in ZAR
Wholesale/facilitiesLeased linesTelkom is dominant in this market and prices have not reached competitive levels
Telkom’s high prices have been one of the factors in encouraging Neotel and the mobile operators to invest in leased line infrastructure
The investment saw prices drop from 2007 to 2008
However, prices between 2008 and 2009 have remained constant
Why? Because MTN and Vodaom’s investments are not for general resale but for the benefits of their own networks
Diginet (64kb) Diginet + (128kb - 1198kb per second)
IcelandDenmark
SwedenNorway
LuxembourgAustria
NetherlandsNew Zealand
GermanyIrelandTurkey
BelgiumGreece
PortugalFrance
United KingdomOECD
ItalySpainJapan
United StatesAustralia
CanadaMexicoPoland
KoreaSouth Africa (2009) South Africa (2008)
Czech RepublicSouth Africa (2007) 74 115
67 01265 65165 651
55 69551 06450 745
38 22535 672
30 20028 817
27 05626 410
24 69522 748
22 04320 71020 507
18 90518 261
16 77715 71615 65215 415
11 66211 376
8 0295 143
4 1744 063
Leased line prices using OECD methodology (USD PPP)
PerformanceInternet | Usage
SA continues to dominate internet access within sub-Saharan African but with lower penetrations rates and high prices by other lower middle income country standards
Percentage of household with Internet access at home
Source: ITU 2011
Kenya
Senegal
Tunisia
South Africa 10,09
7,74
4,50
4,04
Does the Householdhave access to thefollowing?
Source: General Household Survey Data: StatsSA
2005 2009
8,80%
6,40%
Internet Services
Ethiopia
Rwanda
Tanzania
Uganda
Cote d’Ivoire
Burkina faso
Zambia
Benin
Mozambique
Cameroon
Senegal
Botswana
Nigeria
Ghana
Kenya
Namibia
South Africa 4,8
3,3
2,2
0,3
0,6
0,1
0,9
1,2
0,9
0,1
0,6
0
0,5
0
0
0
0,1
14,8
11,2
5,5
5,1
5,1
4,5
4,4
4,1
3,8
1,9
1,6
1,3
1,3
1,2
1,0
0,3
0,2
Households with computerHouseholds with working Internet connection
Households with a working computer and internet connection in AfricaSource: RIA ICT Access and Usage Household and Individual Survey 2007-2008
Extraordinarily high prices and low penetration compared to other middle income countries
2,8 subscribers per 100 inhabitantsICTs and broadband at centre of economic policies in leading countries and of African best performers - Algeria, Tunisia, Morocco, Mauritius, Kenya.
PerformanceBroadband | Access
Broadband subscribers per 100 inhabitants, in OECD graph 2009
DenmarkNetherlands
NorwaySwitzerland
IcelandKorea
SwedenFinland
LuxembourgCanada
UKBelgium
FranceGermany
USAustralia
JapanNew Zealand
AustriaSpain
IrelandItaly
Czech RepublicHungaryPortugal
GreeceSlovak Republic
PolandTurkey
MexicoSouth Africa 2,8
7,27,8
10,511,5
13,516,016,817,2
19,220,620,821,621,9
23,625,425,8
27,428,028,128,529,0
30,030,7
32,032,032,833,5
34,535,8
37,2
The lowest uncapped and unshaped bandwidth being offered in most countries exceeds the highest in South Africa
PerformanceBroadband | Price
Minimum Subscription Price, USD for OECD countries, October 2009, compared to SA
TurkeyUnited Kingdom
PolandHungary
Czech epublicSweden
Slovak epublicMexicoAustria
United StatesKorea
IcelandGermany
FinlandGreece
SwitzerlandCanada
NetherlandsAustralia
IrelandItaly
JapanSpain
New ZealandPortugalBelgium
DenmarkSouth Africa
FranceNorway
Luxembourg 36,935,3
32,432,131,7
29,629,629,529,529,1
28,328,2
27,126,7
25,425,024,424,324,3
21,720,320,0
19,115,114,614,214,013,813,7
8,16,3
South Africa's lowest (left of bar) & highest (right of bar) broadband prices compared to OECD
44,48 34,63 34,29 33,85 33,67 33,37 32,17
30,68 28,47 27,89 27,46 26,91 26,15 26,07 25,36 24,95
23,44 23,44 23,22 22,46
21,51 21,46 21,34 21,17 20,93 20,33
18,74 17,58 17,34
15,62 14,82 14,50 14,31
13,52 255,15
Spain Chile Korea New Zealand France Luxembourg
Ireland Italy
Canada Czech Republic Netherlands Portugal Australia Switzerland Norway United States
Mexico Germany Austria
United Kingdom Iceland Slovenia Sweden Greece Belgium Poland
Denmark Israel Finland
Hungary Japan Slovak Republic Turkey
Estonia South Africa
83,05 79,89
64,30 127,01
70,14 110,03
65,92 46,63
145,81 69,53
100,92 357,42
111,19 66,71
610,17 144,95
117,70 58,83
86,35 55,95
66,69 1319,26
116,69 35,63
109,63 65,07
109,49 204,44
44,33 91,25
49,44 575,81
155,12 50,89
12 721
1 10 100 1000 10000
Spain Chile
Korea New Zealand
France Luxembourg
Ireland Italy
Canada Czech Republic
Netherlands Portugal
Australia Switzerland
Norway United States
Mexico Germany
Austria United Kingdom
Iceland Slovenia Sweden Greece
Belgium Poland
Denmark Israel
Finland Hungary
Japan Slovak Republic
Turkey Estonia
South Africa
Comparison OECD/SA Broadband subscription price ranges, Sept. 2010 (SA July 2011), all platforms, logarithmic scale, including line charge (or 3G modem), USD PPP
Undersea cable developments
Capacity of Undersea Cables
Source: Steve Song, Shuttleworth Foundation 2010
Telecommunications Regulatory Environment Survey 2009
TRE 2009 Score (-2 = very inefficient, +2=very efficient)
South African TRE 2009/2006
Market Entry
Scarce Resources
Interconnection & facilities
Tariff Regulation
Regulation of Anti-Competitive Practices
Universal Service Obligation (USO)
Regulation of QoS
Average
-2 -1 0 1 2
2009 2006MozambiqueTanzania
BotswanaIvory Coast
TunisiaGhana
UgandaCameroon
SenegalKenya
NamibiaBenin
South AfricaEthiopia
NigeriaZambia
Rwanda
-2 -1 0 1 2
Overall TRE 2006/2009 Score
Policy outcomes after decade and half of reform
Overall sector growth but suboptimal - South Africa steadily slipping down international and African indices.
While phenomenal mobile growth fixed line growth for voice services, opportunity to extend customers up value chain, inhibited by access and usage high costs, low PC ownership and IT literacy.
Growth in sector supported by high end users able to pay high prices but quickly becomes saturated, not reaching critical mass for network effects of next generation ICTs.
Low penetration of fixed broadband and unlike mature economies, mobile broadband used as primary service rather than complementary services for many broadband users - new challenges of backhaul
High prices for all retail and wholesale services inhibit optimal usage.
High input costs for business, inflate costs of service sector and inhibit investment, location of regional business headquarters and BPO opportunities with associated negative consequences on job creation.
Dearth of competencies and capacity in state institutions, private sector and users.
Absence of official ICT statistics and indicators for evidence based policy or vision or co-ordination from Presidential National Commission on Information Society and Development.
Contradictory Policy Framework/Legal Framework
DOC - No major policy review since mid-nineties (White paper on telecommunications/1996: Telecommunications Act)
1997: partial privatisation of incumbent (Telkom)
2002: introduction of a third mobile operator
2000: Independent Communications Authority of South Africa(ICASA) Act
Merging of 2 authorities: Independent Broadcasting Authority and the South African Telecommunications Regulatory Authority
No prior policy or law on convergence. It resulted in a single institution informed by two different statutes on broadcasting and telecommunications
Electronic Communications Transactions Act One of the earliest countries in the world to introduce e-commerce measures, emulates UNCITRAL but large portions not implemented and not implementable.
2001: Telecommunications Amendment Fixed competition, further mobile competition 2004 - delivery of voice services using any protocol by VANS and self-provisioning (subsequently clawed back), network operators resale, public payphone deregulated, ‘e-rate’ to public schools.
DPE created uncertainty around SNO, investors compelled into licence with state set aside (Transnet and Eskom) and then withdrawn in final instance to establish Infraco and led to delays that undermined both Neotel and Infraco’s viability.INFRACO ACT 2007
No policy co-ordination, cut across ‘managed liberalisation’, ultimately turf war between DOC and DOE
Public utility approach failed to understand or acknowledge regulated competitive environment
Lack of evidence of ability of broadband champions (Infraco backbone and Sentech wireless access) to compete effectively
As a result licensing delays undermined any possibility of success as events overtook intended backbone roll-out.
No serous consideration of more viable options - structural separation of Telkom, into common carrier backbone
No public consultation
Primary client Neotel and MTN and Vodacom built out own competing network
2005: Electronic Communications Act
Introduction of horizontal licensing framework
ICASA is in the process of converting existing licences into the new framework (required to be finished by law by Oct. 2008 with a 6 months extension)
ICASA through regulations requires entities that want to provide licence-exempt services to nevertheless apply for permission -> practically, it created another licence category
Outcome
Market remains structured around vertically integrated incumbent operators (effective duopolies in both fixed and mobile market)
Fixed-line market: incumbent retains dominance over the backbone/competes downstream with its competitors
Mobile market: effective duopoly resulted in price matching, poor service quality and uncompetitive behaviour
Failure: regulator has not been able to regulate incumbent operators effectively and enable fair competition in the market
Impasse in interpretations of policy and licensing transfer resolved by courts in Altech vs. Minister of Communications, ICASA and others.
Policy & Regulatory Framework/Licensing
Institutional arrangements
Members of the Council are appointed directly by the Ministry
The Minister issues policy direction to the board in carrying out its oversight functions (e-rate policy)
Universal Access Fund
Minister required to make determinations on what constitutes universal service and accessUSAASA is required to manage the Fund, in accordance with the instructions of the Minister
ICASA is responsible for prescribing the basis and manner of contributions (unable to without definitions from Minister)
The Minister is responsible for determining the percentage of turnover
Output
No co-ordination between three entities responsible for different dimensions of implementation
Imperceptible impact, with double negative impact, first on investment and then on failure to use funds effectively
Market realities have overtaken universal service policy and strategies
Policy & Regulatory Framework/Universal Access
2009: DoC issued a draft broadband policy
failure to address investment strategies
no reference to institutional arrangements and market structure
no reference to the regulatory framework or agency
no reference to InfraCo
no reference to the necessary coordination of the DoC (responsible for the liberalisation of the market) and DPE (shareholder of Infraco - state broadband operator)
failure to address regulatory and policy requirements
rights of way, spectrum management
no discussion of services and infrastructure
no reference to open access regime
failure to address issues related to infrastructure sharing
no discussions on functional and structural separation
no opportunity for leveraging PPP funding in infrastructure
absence of demand side stimulation or of role in economic recovery
Policy & Regulatory Framework/Broadband Policy
Vision for ICT sector in 5 years (Africa)/15 years (globally)
For the South African to have the leading ICT sector on the African continent, with the highest penetration levels and lowest prices on the full range of services required for effective participation in the knowledge economy and society.
Targets:
To have broadband in all public institutions (clinics, schools, libraries by 2012.)
To increase Internet access up to 40% of the population by 2014
To have broadband penetration rates (to the home) of 25% by 2015
SEOUL DECLARATION (2009)
WE DECLARE that, to contribute to the development of the Internet Economy, we will:a) Facilitate the convergence of digital networks, devices, applications and services, through policies that:- Establish a regulatory environment that assures a level playing field for competition.- Uphold the open, decentralised and dynamic nature of the Internet and the development of technical standards that enable its ongoing expansion and contribute to innovation, interoperability, participation and ease of access.- Stimulate investment and competition in the development of high capacity information and communication infrastructures and the delivery of Internet-enabled services within and across borders.- Ensure that broadband networks and services are developed to attain the greatest practical national coverage and use.- Encourage a more efficient use of the radio frequency spectrum to facilitate access to the Internet and the introduction of new and innovative services, while taking into account public interest objectives.- Encourage the adoption of the new version of the Internet protocol (IPv6), in particular through its timely adoption by governments as well as large private sector users of IPv4 addresses, in view of the ongoing IPv4 depletion.- Ensure that convergence benefits consumers and businesses, providing them choices with respect to connectivity, access and use of Internet applications, terminal devices and content, as well as clear and accurate information about the quality and costs of services
Develop a vision for the sector through the development of a integrated policy framework to:
Remove protectionist strategies, open markets to competition to meet pent up demand, while developing strategies for backbone investment
co-ordination of state enterprises
targeted universal services strategy to deal not only with the gaps in the market, but focus on demand-side stimulation of the market
Clarify institutional arrangements and design for sector through role and rationale clarification:
Professionalise regulator, reduce decision-making council and increase staff
ensure adequate resources and capacity to enable effective regulation of sector
Review policy, law and regulation to:Correct legal contradictions and regulatory bottlenecks
Open access regime for optimal use of networks and facilities and spectrum to enable entrepreneurship and innovation
Create enabling regulatory environments through removal of barriers to entry, service neutral licensing,
Competitively value spectrum for optimal access and use.
Recommendations toachieve this
Complete competitive entry regulation such as:
Carrier pre-select
Essential facilities regulations
Local Loop Unbundling
Determine rights of way for new entrants
Apply wholesale and retail price regulation, including:Determining glide path toward cost-based termination rates
Implement mechanism to value spectrum for competitive access and efficient use
Ensure access to essential facilities (cost with favourable terms for access and co-location)
Demand side stimulation for PCs, Internet broadband
Cross cutting: capacity building at institutional and individual level to exploit ICT enabled efficiencies and productivity gains.
Co-ordination between National Planning Commission and line departments and across departments and public sector
Create conditions conducive to investment through accountable capacitated institutions, certain regulatory environments and flexible policy frameworks
ICT R&D
"... infinite computational power, infinite bandwidth and infinite data capability...", former Minister Mosibudi
Mangena; Southern African Telecommunications Network and Applications Conference, September 2008
R&D
Limited basic and advanced skills in ICT,
- Low levels of ICT R&D investment. South Africa invests only 10.5%, in comparison with leading OECD countries which spend about 30% of their expenditure on ICT R&D,
- Lack of a critical mass of high quality research to enhance innovation and grow the economy,
- High telecommunications costs, especially broadband,
- Unresolved barriers to entry into the telecommunications markets, especially for Small Medium and Micro Enterprises (SMMEs), and
- Lack of proper economic models for providing connectivity to the marginalised rural communities where telecommunication network operators are reluctant to invest in infrastructure.
www.ist-africa.org
R&D research networksFour activities have been put in place to support the creation of R&D research network activities in South Africa and internationally.
South African National Research Network (SANReN) - high speed network designed to provide the research community in SA/SADC and the rest of Africa, with a very high capacity Next Generation Network.
will connect most research institutions nationally (100+ sites) through a 10-20 gigabyte national connect these centres at high speed to global research networks via connections to GÉANT in Europe, and possibly to Internet2's Abilene network in the United States.
South Africa has been connected to the GÉANT2 network since October 2004. GÉANT's initial 155Mbit/s connection is managed by the TENET on behalf of DST in South Africa.
TENET & CHPCTENET established in 2000 now managed by Higher Education South Africa
TENET's main purpose to secure Internet and information technology services for the benefit of universities - management of contracts with service providers, additional support services.
Centre for High Performance Computing (CHPC) - computational hub, initiated by the Department of Science and Technology, hosted by the University of Cape Town and managed by the Meraka Institute of the CSIR launched in May 2007.
In pursuit of excellence in world class science, engineering and technology research, the CPHC and SANReN, will operate in tandem to provide computational power and high bandwidth
interconnection in support of other science and engineering branches -molecular biology, medical and health science, astronomy, astrophysics, bioinformatics, advanced manufacturing and accelerate the research agenda of the 10 groups.
support infrastructure required for SKA, the NBN and the Global Earth Observation System of Systems (GEOSS) for weather, climate, water, disasters, health, energy, biodiversity and ecosystems.
National Advisory Council on Innovation (NACI)
created by legislation to advise the Minister of Science and Technology of South Africa, and through the Minister, the Cabinet, on the role and contribution of science, mathematics, innovation and technology, including indigenous technologies, in promoting and achieving national objectives.
improve and sustain the quality of life of all South Africans
develop human resources for science and technology
build the economy
strengthen the country’s competitiveness in the international sphere.
CSIR - Meraka Institute
I-hub - Innovation hubs and m-labs (infoDev)
NGO - e-Translate
Getting ICT back on national agenda
With a clear vision of e-Africa promote the development of an integrated and co-ordinated e-strategy for the country including:
Co-ordination with state with cross cutting nature of ICTs and integration of S&T, innovation and ICT policies.
Seamless, ubiquitous and affordable infostructure as necessary base of enhanced services underpinning modern economy
Robust, transparent and progressive political, legal and institutional framework for sector development as key contributor to economic growth and development, including job creation
Demand side stimulation for more equitable participation in economy and society and to create necessary critical mass for realisation of knowledge economy and society
Development of specialised competencies required for policy formulation, regulation and operation of sector and wider information literacy skills to stimulate uptake and effective use - e-workers, e-consumers, e-citizens.