At the World Economic Forum on Africa in Durban, Minister Siyabonga Cwele launched #Internet4All, an effort to get 22 million unconnected South Africans connected to the internet.
What are the issues that block access?
Minister Cwele called specifically on Global Shapers to join work streams on the issue in the #Internet4All Campaign.
This past weekend Ineng’s Garreth Bloor participated in a second workshop on the matter, relaying some of the information given by entrepreneurs following Ineng’s own event on the cost of data, held several weeks before the Minister’s announcement of the campaign.
“Telkom and Icasa are two state agencies and they are distorting the market. Their involvement means prices are not being set by customer demand and companies serving the public.”
These were among the key issues identified at the Digital Inclusion workshop in Khayelitsha earlier this year, with SMME owners among those in government and the NGO world who were present. Bloor opened the workshop saying two themes appeared in the debate: that business was to primarily blame for high prices, while a second one pointed to government policy as fundamentally the issue.
“The problem in South Africa is that the relationship is destroyed by certain players given special privileges – Telkom is one of them,” explained first speaker Sihle Ngobese.
Ngobese is a regular commentator on issues affecting entrepreneurs, whose own experience includes serving in government.
“The infrastructure to lay down fiber optics has been dominated by a monopoly. Only recently have other players come in.”
“Telkom says to companies ‘you can’t set your price, you must buy from me’. That drives prices up, because the state is involved,” Ngobese added.
Sihle Ngobese (above)
Do not favour one business over another
Ngobese explained that it is not necessary true high prices are “all because the big players are colluding”. “If you simply had a free market approach, and one that did not favour any business, you would see lower prices.”
“Right now a third party, the regulator, favours Telkom, which is preventing prices being freely set via competition.” The sentiment was also expressed in reference to comment by Kerwin Lebone, a communications analyst at the IRR in comments made ahead of the workshop.
“What’s keeping prices up is uncompetitive behavior by Telkom. Most of the high data charges are because service providers have to ‘rent’ spectrum from Telkom’ which virtually owns all communications infrastructure in the country, explained Lebone.
“In August of this year’ Telkom threatened to sue Icasa (the Independent Communications Authority of South Africa) after the latter planned an auction of the spectrum so other service providers could offer affordable services to consumers’” explained Molefe.
The Regulator is hindering lower prices
“ICASA, the regulator, thinks they are looking after us by setting rules as a regulator, but they are not,” says Ngobese
Instead he arguess the situation has serious implications for people wanting to enter the digital economy: “If you don’t have a basic infrastructure that allows people to use infrastructure cheaply as happens in fellow African countries, where people plug in and compete on delivering best price to the consumer, it is very difficult to develop value-adds where we develop businesses”.
SMME owner Unathi Kwaza (above), an Ineng entrepreneur, says the opportunities missed due to the high prices are immense. “Remember when a SIM card cost R200. When Cell C entered the market, the price went down in a big way,” she added, voicing her support for more competition.
“Even knowing about Ineng was via Facebook and Twitter. If people don’t have access to data, we don’t know”.
Ngobese pointed out that “more people have cellphones in this country than a Telkom line”.
“Phones have not been regulated and they are affordable and abundant because one does not need a licence to sell them. The government doesn’t pick winners and losers and so you can buy a cellphone for R80.00.”
“If we are serious about change we must encourage competition and set in place a set or rules that do not pick winners or losers,” he warned, adding competition alone was not enough when government still remains overly involved.
“We must remove third parties formed by government. On what basis does ICASA exist? What purpose does it serve having a third party who would not be part of the contract between a customer and provider? Using simple contracts we set the rules with each other”.
Business must get rich by serving others
“The beauty of free market capitalism is to because rich, you need to serve others. If we get rid of ICASA and make sure companies must be subservient to the customers, then we must be serious and stop allowing regulators to pick winners and losers,” says Ngobese.
“We see in this country parastatals get preferential treatment. Because government owns a big stake, it will want an environment in which it can charge high prices”.
“If you give the state the power to pick winners and losers, politicians pick their friends and allies. Even where Telkom has done well to change, the fundamental problem is with the state being a major shareholder, rules risk being written for Telkom to benefit over other businesses”.
Serious work ahead
Temba Nolutshungu, a previous Ineng speaker, said he was impressed Ineng was taking its work so seriously. “The country is crying out for an organization like this one.”
“We all know that when someone has a stake in a business, they see it in their interests for the state to offer special protections,” he reminded participants.
“The state has the capacity to massage and manipulate, in terms of legislation and regulation, to protect established business.”
“It then takes money from tax payers to subsidize, wholly or partially, existing businesses”
Nolutshungu says there is a need for a course that demystifies government, looking at “Economics 101 for Entrepreneurs”.
“It should be a course that is accessible to everyone.”
Raybin Windvogel of the Western Cape Provincial Government’s Red Rape Reduction Unit who was in attendance said the advocacy role of Ineng was an important one. “I think the voice of the business sector, through Ineng and other institutions need to be heard in the right forums”.
CONCLUSION: PROPOSED RECOMMENDATIONS FOR PARLIAMENT BY CONCERNED ENTREPRENEURS:
Entrepreneurs are invited to comment on the following inputs to be made before Parliament:
- Government must take a pro-free market approach, not a pro-business one. To date the government has been pro-business, disallowing more licences in the country and thus picking winners and losers. Instead a free market must be allowed to bring in more competition and real choice for South African customers
- Eliminate State Owned Enterprises (SOEs) who don’t contribute to a free economy but distort it because they hold a monopoly. Telkom is still given preference when it comes down to laying cables and setting the price at which it sells spectrum, getting preferential access with some municipalities for laying down cabling.
- Government must stop distorting the market through excessive rules that undermine the relationship between sellers and customers. The customer must have a greater say
- SMME owners, their families and supporters must pro-actively offer a solid policy platform that creates a fair enabling environment. This must be done peacefully. Recent municipal elections show a maturing democracy in which politicians understand the need to act in favour of communities. Real people and their stories must be heard.
Contact Ineng to give your view or endorse these recommendations! firstname.lastname@example.org