Tech4Africa Broadband Discussion

So Tech4Africa kicked off today and I must say that it has been a phenomenal experience so far. The programme is outstanding and I picked up a couple of golden nuggets during some of the sessions.

However, I had a good giggle during the #bandwidth session - a panel discussion about the state of play of broadband.

There were some really good points made by some of the panel members. Already South Africa has seen a drop in wholesale broadband prices of some 60% - although this is sadly not always translated into savings for the end user.

A very interesting observation from Stafford Masie was that it is inevitable that we'll have a Pan African open access network focusing on content somewhere down the line. He also believe that there needs to be a shift in mindset from an operator perspective and that they need to look at diversifying their revenues and focus more on content.

He also made the point that there needs to be a lot more cooperation. Between the different players locally, with international players and with government. As an industry we need to move away from the silo approach and where regulatory issues are standing in the way of progress, this needs to be addressed as an industry rather than by individual organisations. Wireless is a crucial technology in providing connectivity to under-serviced areas and there are a number of issues standing in the way of rolling this out effectively, including spectrum allocation. But in order for private sector to play any roll in speeding up regulatory bottlenecks, the industry needs to ensure that there is a cohesive body that communicates back to government.

Masie refers to the South African government as being a vending machine - you deposit your money and expect to get something back (a service). If it doesn't come, you shake the machine to try and speed up delivery of what you have paid for (toy-toy) until you get it.

He does however insist that we remain far too focused on the physical connection rather than on content and the ARPUs are just not there. What SA operators need is a clear vision and strategy around content as this is where they were truly start adding value to their customers. One pitfall here, however is the way in which SA last mile providers are engaging with international content owners. Masie describes this as being predatory - we are so focused on getting exclusivity that we lose sight of the importance of having it and strip all benefits away from the content owners - and then we wonder why we are not getting the content we want.

What made me giggle however, was a comment from a mobile operator. Having been involved in the industry for let's say 10 years, I recall the discussion among operators moving to data a while ago. For years we have been talking about data being the core focus, data being the financial driver and voice being the breathing space for networks. The biggest joke is then when one of the biggest local mobile operators admit that mobile data has exceeded voice already but that the mobile networks are built for voice and that is why we have data issues and high data costs.

Funny - if the discussion started years ago, why did we not start preparing our networks for it sooner? Just asking...

Will the real puppet master please stand up?

It's been two weeks since my last post, and the industry has been racked by turmoil, changes, cancellations and terminations. Interesting times, I have to say.

So after much toing and froing, ICASA decided to cancel the spectrum auction. Why? Because it would not work. Now this has happened after the industry has made how many calls on the auction, the process and even the ITA?? (interestingly enough, it took the Minister of Communications saying that the process is flawed before the auction was cancelled - I'm sensing a serious puppet and string scenario playing out here)

That said, there was tremendous hope and excitement around the fact that the spectrum would finally be made available and that finally the smaller players would have the opportunity to finally facilitate more competition in the market. Now we have to sit and wait with bated breath to find out when exactly the opportunity will present itself to acquire more spectrum.

Then of course there is the whole DoC debacle. I am seriously beginning to wonder about the abilities of certain individuals within the department - surely you should put the industry's best interest first? Then again, that's probably my naive dream of a liberalised telecoms industry speaking.

What I find fascinating is the fact that all this controversy seems to revolve around tender processes. Now it's not like we have the best reputation in terms of transparent processes as it is, so it does raise some doubts as to whether the DG was possibly in the right place at the wrong time and is now paying for it. Definitely worth keeping an eye on this as it unfolds :-) - that whole where there's smoke there must be fire scenario.

Of course this debacle is just another stumbling block in our long journey towards liberalisation of the industry. Just imagine how different the country would be if we had actual competition, market-related pricing and true broadband available?

Now that's a dream worth having!

Curiosity prevails

It has been a while - can't believe that the FIFA 2010 World Cup has come and gone already! For 6 weeks all we saw and heard about was football - so much so that some interesting announcements were made that did not quite get the airtime they deserved.

So, let's take a step back and look at what's been happening. The telecoms industry was very excited about the opportunity to get their hands on much sought-after spectrum, but when ICASA released the ITA it was full of gaps. So, when this was pointed out by industry players, the deadline was extended. Then the Minister of Communications stepped in, pointing out that there are gaps and that he was not comfortable with the ITA - so we face the possibility of the entire process being delayed - AGAIN.

Speaking of ICASA and the Minister of Communications, very curious appointment this new chairperson of ICASA. While his CV shows that he clearly has the experience in the ICT sector, he is 70, which means he's now coming out of retirement to chair ICASA for 5 years. My personal belief is that this is a bit fishy - has he been appointment due to a relationship with the DoC? Will he just be another figure-head, to be ordered around at the whim of the DoC? I don't know - I sincerely hope my concerns are unfounded - I mean what is the point of having an independent regulatory body that is not independent. And it will really do a lot of damage to the work that has been done to date to liberalise the industry (yes, we all have our perceptions on what has been achieved to date and whether it has had any impact).

Anyway, enough rambling from me for the moment. Will be keeping a close eye on the spectrum auction process, because there are well-founded fears about what the outcome may be.

But more on that later...

Whoo - busy night tonight, but while the going's good, I might as well keep going.

So my last post was on electricity price hikes - another price sensitive issue which" has suddenly gone very quiet by undoubtedly has not disappeared is that of TV licencing.

How many of you have a valid TV licence? I've heard so many different arguments around payment of TV licences - "I don't watch the SABC stations", "I pay my DSTV subscription", "I don't have the time", "It's a waste of money" etc.

Guess what? They're on to you!

How is this for a new method of collecting licence fees - if you don't pay your TV licence, we'll just force you by imposing a new tax. And this means that you cannot shy away from it - if you're a registered Tax payer of course.

So the new licencing option is to impose a 1% tax on all registered tax payers' salary. So let's look at this carefully:

You are the only income earner in your household and you earn R10 000 a month. You will now be taxed 1% on that salary, which equates to R100 - per month. You currently pay around R250 per annum for your TV licence - which if this tax is approved will increase to R1200 per annum. NICE! And if you have 2 income earners (let's say they earn the same salary, for the sake of simplicity) you pay R2400 per annum.

I suppose the SABC has to find some way of paying off it's debts. Pity the financial burden again lies on the shoulders of the responsible tax payer. And those that aren't tax payers - hey don't worry, the tax payers have got it covered!

I really wonder whether this concept is going to fly and long term what the impact is going to be. Would you be happy paying 6 times more for a TV licence that you don't actually use?

A bit off the mark from my usual topics, and I could probably put a techie slant on if I really wanted to, but not going to go there... :-)

As some South Africans are reeling with shock from Nersa's recent announcement on electricity price hikes (an average increase in excess of 20% over the next three years), others are giving a sigh of relief that the price hike is "not what they were asking for".

What is important to note however is that this is the rate at which Eskom makes electricity available to the municipalities who then redistribute (at a cost) to the consumer. These municipalities can then add up to 15.33% to the price that the consumer is then charged in 2010, 16.03% in 2010 and 16.16% in 2012. So an increase that seemed to give the consumer a break, will still be increased in excess of 15% over and above Eskom's increase. The result?

Unless municipalities curb their portion of the increase, the consumer could face an increase almost 10% more than Eskom's original request. Will the municipalities come to the party? Jo'burg have apparently committed to keeping their part of the increase as low as possible - whether this will be the case is another story. And whether the other municipalities will follow suit is something I cannot answer. We will have to wait and see when the price increase actually kicks in. Bear in mind, however, that these are the same municipalities that jumped at the highest possible increase in the last round of price hikes.

It amazes me how we keep talking about making electricity available to the more rural areas as a basic human right, but then we make it so expensive that most people just cannot afford it.

New hero's? Or new ways of taking advantage of the consumer?

In the past week or so we've heard that ICASA has now approved the drop in interconnection fees put forward by the mobile operators - obviously sticking to their guns that further drops are in the pipeline.

What I find interesting however is that good old Telkom suddenly jumped on the bandwagon announcing that they will ensure that 100% of that drop will be passed on to the consumer. Now in the past Neotel was the one positioning themselves as the consumer champion stating that these savings must be passed on to the consumer and that they're ready as an organisation to ensure that this happens. But when the drop is approved they go dead quiet?

It almost makes you wonder if they are really planning on passing this saving on to the consumer. If it were me, I'd be putting it out there with detailed pricing, so that my customers know. But that's only if it were me...

Another interesting development (albeit not new) is the drop in bandwidth pricing in the market. When Neotel launched in 2008, their pricing was really good at 8c/MB. Considering you can now get ADSL connectivity at around R14/GB and you are seeing the emergence of really innovative ISPs providing affordable connectivity, Neotel better shake a leg and make a plan to truly bring in the competition it was created to bring, as was highlighted by Ben Kelly's recent plea on myBroadband - http://mybroadband.co.za/news/Broadband/11521.html.

And while we're on the topic of pricing - isn't it amazing how Telkom can now emerge as the hero for its customers by passing on this saving? Makes me think we have really been taken for a ride, considering that they own all their infrastructure and have been charging exorbitant rates...

And finally - one last gripe - it takes Neotel's entry into the market, building a fibre network to get Telkom to wake up and start building a proper network? Their so-called Next Generation Network will hopefully pave the way to real broadband - but why oh why have they waited so long???? We've been getting crappy connectivity at crappy prices for so long and now they wake up? My gut feel, they've got something up their sleeves - let's bring in the technology and then find ways to squeeze every last cent out of the consumer thereof. Who knows they might surprise me for a change...

Let's hope so....

Another run-around for the consumer

It's amazing - we get the news that finally cellular costs will go down only to be dealt another blow - delays, delays and more delays.

So, ICASA has announced that it will not accept the cellular providers' proposal on the lowering of interconnect fees by 29% by 1 March 2010. Now it would be very easy to get upset with ICASA here and say that they're delaying the process as they have done so many times in the past, but hang on! There's more to the story.

So the cellular operators agreed to a 29% reduction in interconnect rates by 1 March 2010, but as part of their proposal to ICASA insisted that ICASA agrees “to an undertaking not to review mobile termination rates until March 1 2013”. So, it's the cellular giants that are actually delaying the process by holding the regulatory body to ransom!

Why? Very simple. ICASA and the DoC have always said that interconnect rates need to come down dramatically as this is one of the reasons by telecommunications in South Africa is so expensive. So the initial discussions were around bringing these rates "dramatically".

My personal view - this scared the daylights out of the operators and their latest move is really their way of preventing sudden dramatic rate cuts.

From a business perspective one can understand as a large chunk of their revenues come from interconnect rates. So a sudden drop in this revenue will not make their shareholders very happy. But on the other hand, they have now played a very harsh card rather than trying to reach middle ground.

Will be interesting to see what ICASA's next step is. They remain “committed to releasing draft regulations on the effectiveness of competition in the wholesale call termination market in March”. So we wait with bated breath to see what the outcome will be.

I have to honestly say - hats off to ICASA for finally taking a stand against the giants. Let's hope there is a quick resolution on this however as we the consumer are still the losers at the end of the day!