Business Day column: Spectrum policy will put telecom sector back in dark ages

He wants to subject you to a ghastly nationalised, socialised, incompetent, corrupt, patronage-driven, outdated, regressive, loss-making, apartheid-style telecommunications monopoly. He wants telecoms to resemble failed state enterprises such as South African Airways, Eskom, the SABC and Alexkor, the road network and healthcare and education systems. He calls closed access "open access".

Who might he be? Telecommunications Minister Siyabonga Cwele.

Few cellphone users know what "spectrum" is or why they should actively oppose the information and communications technology (ICT) policy White Paper.

If implemented, progress will be reversed. To that end, Cwele asked the courts to stop Icasa from allocating spectrum, and proposed a part-nationalised, part-monopolised mobile system. Deep in the White Paper lurks extreme intervention unlike anything seen in sophisticated markets. Unsupported by plausible evidence or argument, the proposals reject internationally proven models. Billions of rand, tens of thousands of jobs and millions of cellphone users will be jeopardised.

TechCentral editor Duncan McLeod reported that the new "radical plan" met with "universal derision by ICT analysts and experts". DA MP Marian Shinn deplored the policy as "monopolistic" and "unconstitutional". It would not "bridge the digital divide or bring affordable, ubiquitous communications to South Africans", she said. Dobek Pater, MD of Africa Analysis, said the policy hadn’t been "tested anywhere", not even in Mexico and Rwanda as alleged by the minister.

Operators will invest only if "spectrum is treated as private property" warned Macquarie Group’s Richard Majoor. Research ICT Africa said the policy would "threaten investment and innovation" and that spectrum should rather be "urgently released to operators".

Charley Lewis, a member of the ICT Policy Review Panel, called it a "far cry from what we recommended".

Network providers, who provide nearly all the network coverage, say they will not continue investing without relative freedom and security.

Vodacom’s Jannie van Zyl has said they would stop building base stations. MTN’s Mteto Nyati said they would have to "densify" at the expense of existing and expanded services. Cell C’s Jose dos Santos said consumers would be denied devices, products and services when launched globally.

Everyone will feel the impact, especially fixed line, fibre and mobile network operators, and tower providers. Even landlords hosting antennae will suffer. One of the worst proposals in effect turns profitable investment into nationalised assets, thereby undermining innovation, competition and investment. One of the few countries with a monopolised "wireless open access network", Rwanda, has one of the world’s worst mobile environments (30% coverage, 25,000 long-term evolution (LTE) customers and LTE wholesale prices exceeding 3G retail prices).

Recommendations made by the experts have been replaced by ill-considered policies including a mobile network monopoly, a state managed fund and the recall of all licences. It would be an investment deterrent.

We will be landed with yet another disastrous state-sponsored monopoly.

Louw is executive director of the Free Market Foundation.

This article was first published in Business Day on 26 October 2016

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