South Africa


India started in April 2015, when the regulator (TRAI) proposed rules for how application/content providers (Over the Top Players, or OTTs) should be regulated, taxed and treated (that  debate got sidelined in the battle over Facebook and FreeBasics, but that’s a different story). Now it’s South Africa’s turn.  It seems that two operators are pushing for the regulator (ICASA) for regulation of OTTs, specifically that WhatsApp should be subject to local tax.  These are two of the bigger telcos that are asking for this.  Supporting their point of view of course are the national security hawks, who possibly don’t care about the tax, but want access to the OTT content (in this case, the content of WhatApp messages), and see this as the opportunity for catch-all regulation.
Christoph Stork and Alison Gillwald have been engaged with the real-world problem of high mobile termination rates in Southern Africa for several years. Perhaps the earliest intervention was with the Namibian Communication Commission in 2009. Then there were repeated engagements in South Africa. We know, from our experience, that policy engagement does not leave a lot of time for academic publication. But it’s not that our colleagues did not try to publish in academic journals.
Cell C of South Africa argues that revenue, instead of subscribers, should be the yardstick to measure market share. Because, MTN and Vodacom lead with a combined 90% of total revenues while 10% belongs to Cell C. The mobile underdog blames the introduction of MTR and it has challenged the regulatory decree in the court. Cell C argued that revenue market share is a better indicator for sustainability in the mobile industry than subscriber market share ‘because operators require a significant upfront investment and ongoing investment for a network, IT billing systems, customer care, distribution points, sustainable channel partners, brand and customer retention’; these investments would only be recovered by a sustainable scale level, of approximately 20%-25% revenue market share, Cell C said. Full report.
From where I stand there is little doubt that the access network will be wireless, except perhaps in high-density housing in cities. But we have so many people going on about the necessity of fiber to the home, even from within government. But I never hear them talk about the need to liberalize the permission process for trenching in city streets. “One of the biggest issues within the market today is the movement of bandwidth – there are no routes available for fibre and companies in the business are really doing their own thing. In Cape Town there is a law now which dictates that trenches can only be opened once, and this is very difficult for a competing business.
Mobile termination prices have always been low in South Asia. S Asia also has among the lowest retail prices for mobile in the world. Therefore, the substance of the policy brief that had formed the basis of a successful intervention by our sister organization RIA to the Parliamentary Committee on Communication has little relevance to this region. However, the exemplary use of comparative data and analyses of company annual reports in relation to media pronouncements in this policy brief is worth a look. Congratulations to RIA on a job well done.
If the ETNO and related African group proposals to charge the networks sending information to Africa go through, those who will suffer will be users in Africa, particularly those with limited budgets and no internationally accepted credit cards. The European Telecommunications Network Operators’ Association (ETNO), representing European telecommunication companies, is proposing that the “sending party network pays” principle be written into an international treaty. This proposal would force content providers to pay local telecom operators for the delivery of user-requested data. Users from countries not seen as having large revenue potential could even find themselves cut off from some content. Alternatively, attractive content may have to be moved behind paywalls, making them inaccessible for those without credit cards.
Our sister organization RIA has been pushing hard for lower termination rates in South Africa. Now in the context of a retail price war, a small operator has joined the call. This nicely refutes the claim that mobile termination rates have nothing to do with retail prices. In a move that will no doubt irk MTN and Vodacom, Knott-Craig says he wants the Independent Communications Authority of SA (Icasa) to drop the rates even further beyond the 40c/minute they will reach in March 2013. “To Icasa, I say: ‘Drop mobile termination rates even further, provide Cell C with asymmetrical rates to help us achieve the scalability we need to compete even more fiercely with the large incumbents, and we will surprise you and them with our response.
Our sister organization Research ICT Africa has issued an interesting document called mythbuster on the contentious issues of high mobile termination charges and their contribution to giving South Africa mobile prices that are three times those of neighboring Namibia. More strength to your arm RIA. Mythbuster is a great idea. We should see if we can do one soon.
The quote below comes from one of many media reports that carried the results of RIA benchmarking of mobile prices across Africa. SA’s prepaid cellphone pricing is three times more expensive than Namibia’s, making SA among the most expensive countries in Africa despite an intervention to regulate the tariffs, according to a study released this week by Research ICT Africa. The research found that among 46 African countries studied, SA ranks 30th in affordability of prepaid mobile telephony. This places SA behind countries whose regulators have enabled competition by enforcing cost-based mobile termination rates. Kenya, Mauritius, Egypt and Namibia were found to be the most affordable.

Into Africa

Posted by on April 14, 2011  /  0 Comments

LIRNEasia has been privileged to work with Research ICT Africa over the past six years. We share resources and knowledge with them on the demand-side survey with their senior Researcher serving as our statistical consultant. They have adapted our Telecom Regulatory Environment instrument and we use their Sector Performance Review template. The training course that we used to teach in Singapore was shifted to Cape Town in light of RIA’s ability to offer it with the imprimatur of a world-class university. So it was with pleasure that I accepted the invitation to brief the South African Minister of Communication along with RIA’s Executive Director.
Namibia poses an interesting question. The regulator acts to reduce one of the key costs of providing offnet calls, the mobile termination rate. But the operator holding 85 percent market share refuses to make a corresponding reduction in offnet call charges. Now the regulator has responded by ordering reduction of offnet call charges. Namibia has led SA in cutting call termination rates — the fees the operators charge one another to carry calls between their networks.
The Economist has featured three below-the-radar companies that has established a major presence in the Internet space. This again shows that new industries offer the greatest opportunities for entrepreneurs from countries that do not have long histories of leading economic activity. THEY may not have the name recognition of a Google or a Yahoo!, but they can claim to belong in the same league. The websites of Digital Sky Technologies (DST) account for more than 70% of page-views on the Russian-language internet.
LIRNE.NET (through Research ICT Africa) together with University of Cape Town’s Infrastructure Management Programme, is organizing a five-day training course in telecom regulatory reform. The course is to be held from 12 – 16 April 2010, at the UCT GSB Breakwater Campus, V&A Waterfront in Cape Town, South Africa. The course is designed to enhance the strategic thinking of a select group of decision-makers in telecom and related sectors in developing countries and emerging economies. The aim of the programme is to address the many challenges posed by the current stage of telecom and ICT reform to governments, regulatory agencies, operators and other stakeholders.
In a major win for think tanks seeking to bring evidence to the policy process in developing countries, the Supreme Court of Appeal in South Africa, by its decision The Competition Commission of South Africa v TELKOM (Case No: 623/2008), has unequivocally overruled the claims of bias leveled against the LINK Centre, then headed by our colleague Alison Gillwald (now heading Research ICTs Africa). In addition to getting its odd argument rejected, Telkom will have to pay a 3.7 Billion Rand fine plus costs. Ouch! Alison is the featured dinner speaker at CPRsouth4 in Negombo, Sri Lanka, on December 7th.
  Anybody could have guessed this. It is unimaginable that entire world will go through a recession simultaneously. Not everyone can be losers for too long. There should be winners somewhere. For example, what would the US firms that find their human resources costs, logically do?
Unsatisfied broadband users added flavor to both our Public Seminar and Mobile Broadband QoSE workshop. That included university students prevented access during the residential peak to Wi-Max subscribers experiencing 20% of the promised speed – even with perfect LoS (Line of Sight). Such complaints are common and not limited to Sri Lanka. From Indonesia to India and from Bangladesh to Philippines we find broadband users rant not receiving the promised. We empathise with them, but this hardly an Asian or a developing world issue.