Clever, Trevor

The revised National Development Plan, handed to President Jacob Zuma last week by planning minister Trevor Manuel, makes refreshing proposals for improving SA’s abysmal broadband penetration. The broadly pro-markets approach would do wonders, if adopted. By Duncan McLeod.

It’s not often I find myself cheering when reading through government documents, but I did just that last week as I took in the plan’s revised proposals for the information and communications technology sector.

Here, in black and white, a government commission has laid out many of the problems that have plagued the sector for the better part of the past two decades. The main ones are Telkom’s market dominance (and the ineffective regulation thereof) and the conflict of interest between government’s role as a competitive player in the market through its investments in Broadband Infraco, Sentech and Telkom and its role as policy maker.

Apart from SA’s failing public education system, these two issues go to the core of what’s wrong with the communications technology sector and why SA is sinking down the global and African connectedness rankings.

Earlier this year, the World Economic Forum’s Global Information and Technology Report found that SA was only the third most capable African country when it came to leveraging the benefits of technology to improve the lives of its citizens and grow its economy. Ahead of SA were Mauritius and Tunisia. Worldwide, SA was in an unimpressive 72nd place. Worse, in terms of quality of education, SA placed 133rd out of 142 countries and a dismal 138th in terms of the quality of maths and science education.

It’s crucial the education system is fixed. Without a technology-savvy skills base, SA has no hope of competing effectively in the global knowledge economy. It’s our most pressing challenge.

However, we also aren’t going to be competitive without the affordable and high-speed communications infrastructure that underpins the modern global economy.

Though the mobile operators continue to grow, the situation in fixed lines is going from bad to worse. This year, the number of landlines in service declined to below 4m for the first time in decades. Only a fraction of those are enabled for broadband.

There are many reasons for how we got into this mess — they’ve been discussed in detail in this column and by commentators elsewhere for years. The question is how to fix it.

The National Development Plan has mooted a controversial but interesting idea: the structural separation of Telkom into backbone and retail companies. This will be highly contentious because it would almost certainly require the renationalisation of the company — just under half of Telkom’s shares are in private hands. But, if handled right — and that would mean once again privatising Telkom’s retail arm as quickly as possible — it could have a beneficial impact and bring down the cost of accessing the company’s widespread infrastructure.

But, as the plan notes, the performance of “most state interventions in the ICT sector has been disappointing”. What guarantee do we have that a state-owned backbone company, derived from Telkom’s infrastructure, would not simply be as ineffective as Sentech and Broadband Infraco have been in the past?

One suggestion, advanced by TechCentral columnist Dirk de Vos, could be for Telkom to sell its local loop of telephone exchanges and copper wires to a broad industry consortium made up of Internet service providers. Telkom could continue as an investor, but one of many with an interest in improving and developing the local loop. The more I think about it, the more this approach makes sense.

Convincing government it should sell an asset like this is another story altogether. But maybe it’s time for more radical policy thinking, using Manuel’s superb plan as the starting point.  — (c) 2012 NewsCentral Media

• Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail