Ivy’s last act of defianc

Ivy Matsepe-Casaburri has shown she is prepared to protect vested interests to the detriment of the sector

By appealing against a recent high court judgment that opens the telecommunication industry to more robust competition, communications minister Ivy Matsepe-Casaburri has shown she is prepared to protect vested interests to the detriment of the sector.

Matsepe-Casaburri has set off a chain reaction of angry protest over her decision last Friday to appeal against the high court’s judgment.

Acting judge Norman Davis found in favour of telecom group Altech, allowing companies with value-added network service (Vans) licences — and this includes all Internet service providers - to build their own networks independently of Telkom, Neotel and other licensed infrastructure operators.

The outgoing minister’s decision — which she probably took after protests from at least some of the incumbent operators — will heighten uncertainty in the sector.

She has defended the decision, saying the court’s judgment undermines government’s policy of “managed liberalisation” of the sector. “If Vans licensees are allowed to obtain [network] licences… government’s managed liberalisation policy will be seriously undermined to the detriment of the information & communication technology industry.”

But part of the problem is that managed liberalisation has been badly mismanaged. Thanks in part to ministerial bungling, Neotel was licensed years after Telkom’s statutory monopoly expired. Commentators have already pointed out that government had originally planned to license a third national operator in 2005 — instead, second operator Neotel is starting to offer services only now.

But the bigger problem is that managed liberalisation doesn’t work. It’s meant to shield investors from the full force of competition in return for building expensive national telecom infrastructure but it has achieved the opposite. Telkom, which provided new lines into underserviced areas in return for a statutory, five-year monopoly, promptly cut off most of these lines when customers couldn’t afford the inflated tariffs for the services. Instead, mobile operators MTN and Vodacom, operating in a somewhat more competitive environment, stepped in where Telkom failed and today more than 80% of South Africans own a cellphone.

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