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Matsepe-Casaburri: SADC Communications Investment Forum (10/03/2003)

10th March 2003

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Date: 10/03/2003
Source: Ministry of Communications
Title: Matsepe-Casaburri: SADC Communications Investment Forum


ADDRESS BY THE MINISTER OF COMMUNICATIONS, DR IVY MATSEPE-CASABURRI, AT THE SADC COMMUNICATIONS INVESTMENT FORUM's SESSION ON SADC ECONOMIC GROWTH THROUGH REGIONAL INTEGRATION, "ROLE OF GOVERNMENT - (POLICY AND LEGISLATION) RSA CASE", Maputo, 10 - 11 March 2003

Distinguished Guests
Ladies and Gentlemen:

The challenges that we face as Africans are indeed immense as we try to create a better quality of life for the people of this vast continent. Moreover, in the Southern African region, the attainment of regional economic growth through integration is no easy exercise, especially when largely we are dealing with states that have long suffered as a result of wars, apartheid and colonialism and are now beginning to undergo reconstruction and development at the same time as they face up to the realities of a rapidly globalising world. Yet we must use all our energies and intellects to move forward in order to make progress for Africa's people, for a better Africa and a better world.

The South African case that I present to you is one that is full of hope for the future and in which careful steps over the last nine years have been taken, amended, improved and streamlined in order to ensure that we do indeed arrive at a more equitable society in which there is economic prosperity such that the citizens of this country can enjoy a better life. It is our belief that the political freedoms which all South Africans have enjoyed since 1994 must be coupled with economic liberation, so that our people can truly enjoy the full fruits of our freedom.

A priority since the establishment of a democracy in South Africa has been to put in place legislation and policies that seek to deracialise and develop South African society, to increase access to services and resources and to reduce levels of poverty. We hoped to do this by provision of infrastructure, transfer of skills to increase human resource development so as to promote employment and to bring about especially the economic empowerment of historically disadvantaged communities and individuals, and attain overall economic development through modernisation. These processes have been necessary because of the gap between historically white and black areas and the need to bridge this gap.

Even the Economic Report on Africa 2002 by the UN Economic Commission for Africa acknowledges that the gap between rich and poor is among the largest in the world, even as, in the same breath, the report argues that South Africa could be a locomotive for African growth. The report speaks of South Africa in the following way; and I quote:

"While greater integration with the global economy is often correlated with a reduction in unemployment, this correlation does not seem to hold in South Africa. One possible reason for this is that the benefits of globalisation are largely confined to South Africa's sophisticated and industrially developed core economy, while the peripheral economy surrounding it has not real functional links to that core nor any link to global markets."

The report makes the important point that:

"Narrowing the gaps between the modern and peripheral economies will require economically empowering those in the periphery through training, job opportunities and better social services. Only then will the economy allocate scarce resources more efficiently and thus move onto a higher growth path."

All our efforts have been directed at ending poverty and broadening access to a better life. In recent years, the focus has also been more specifically on an Integrated Sustainable Rural Development Strategy and urban renewal programmes. The ICT sector in particular was identified as having the tools with which we can accelerate our own development and also which enable us to participate on a more competitive basis in the world economy.

It is in this context that, in the communications sector from the outset we knew that drastic changes had to take place if we were to make inroads in reversing the imbalances of apartheid, in bringing about economic growth and to make South Africa more economically competitive in the world. Each of these presented its own challenges, but each was also inextricably linked. Our initial concern was that government ought to play a role primarily as a policy-maker and we set about putting in place legislation that sought to create this new and broad policy framework. This was coupled with the recognition of the centrality of the IT sectors in economic development and in enabling Africa to leapfrog into the future. The first ISAD conference led by then Deputy President Thabo Mbeki was a landmark event in this regard.

Thus the Telecommunications Act of 1996 came about in our belief that it would meet our developmental objectives. This important legislation established:

(i) Satra (South African Telecommunications Regulatory Authority) as an independent regulator that was tasked with certain roles that included introducing competition, providing universal access and service, managing frequency spectrum and setting up standards.

(ii) A Universal Services Agency, the objectives of which included advising the Minister of Communications, on ways of bringing about universal access and service, co-ordinating initiatives by service providers and extending access by working with community-based structures.

(iii) A Universal Service Fund was also established, the contributions of which would come from every telecom operator, and with the purpose of providing subsidies to the historically disadvantaged and to people with disabilities so that they would be given skills that would serve to broaden access. The rollout of telecentres became another way in which the historically disadvantaged could be the beneficiaries of modernisation and enable large numbers of people in rural areas to have access to telephones and basic ICT.

The same Act also allowed us to enter Telkom into a Strategic Equity Partnership, whereby 30% of Telkom was sold to Thintana Communications, a consortium comprising US-based South Western Bell (SWB) Communications Inc, and Telekom Malaysia Berhad. Social obligations were placed on licence holders who entered this partnership. In addition to this, the Government also set aside a 3% holding in Telkom for a qualified black economic empowerment group that was in line with our commitment to deracialise the South African economy. The aims behind the Strategic Equity Partnership were to make sure that Telkom would be able to attract and nurture the best skills as part of our corrective action and to get the best possible technology from outside the country and the necessary technological expertise to roll out services to communities. The partnership would also handle the migration from analogue to digital. In return for a five-year exclusivity period, social obligations were placed on the company to roll out telecommunications to rural and disadvantaged areas, schools, clinics and hospitals.

By March last year, Telkom had installed 2,8 million lines, 195 399 payphones and 707 881 fixed-line prepaid lines. It also invested in Intelsat, a commercial satellite communication service-provider, an international mobile satellite organisation and received a major boost in international connectivity when the SAT-3/WASC/SAFE undersea fibre optic cable system was launched linking Africa with Asia and Europe. Telkom would also play a decisive role in the SADC region improving connectivity and bringing digitisation to a number of Southern African countries.

However, our law and regulations tied Telkom to specific technology instead of being technologically neutral. This policy decision could not be sustained as increasingly it became clear that affordability of the services was a barrier.

Meanwhile, mobile communications had entered the South African market in the early 1990s just before the advent of democracy, with two operators, Vodacom and MTN. They were joined by Cell C last year. The first two would go on to provide extensive telecommunications coverage in other parts of the region and the continent. Though social obligations were placed on these, they were not linked to their growth and profitability. We regretted this afterwards, when the sector grew from the expected half million in 4 to 5 years to 5 to 6 million.

In the context of rapid technological change and advancement and to meets the needs of the South African people, the Telecommunications Act underwent major amendments in 2001. Here government introduced the Second National Operator that would compete with Telkom. The SNO would consist of a partnership made up of (i) 30% to Esi-tel and Transtel SOEs, (ii) 19% would go to BEE, and (iii) 51% to a foreign equity partner. Through this Telecommunications Amendment Bill, government also came up with new sets of licences whereby small private operators would be able to participate in areas where the teledensity was less than 5%. In these areas voice-over IP would be used.

The challenge we face is that there has been duplication of infrastructure in some areas and very little roll-out to others. The issue of facilities sharing where this is possible is a thorny issue that policy makers and regulators will need to confront. The Bill also introduced the E-rate whereby there would be a 50% discount for schools for use of the Internet. The Act also mooted one National Number for Emergency Services.

The implementation of these is easier said than done, given the huge disparities and skewed infrastructure between the historically disadvantaged and advantaged groups and between rural and urban areas. While this also brings services closer to our people, the contest between vested interests and us is likely to be a protracted one.

Already prior to 2001, government had witnessed rapid developments within the telecommunications and broadcasting industry whereby similar services and applications were beginning to define the reality on the ground. As a result of this challenge of convergence, a policy decision had to be taken, which became official in the Amendment Bill, to marry the two existing regulators, the IBA (Independent Broadcasting Authority) and SATRA to become ICASA (Independent Communications Authority for South Africa). However the challenge posed in passing a convergence law has not yet been met. Lengthy consultation and management of possible contestation is our priority.

Clearly, the South African experience has been one of many challenges. The rapid advances in technology, the imperatives of black economic empowerment along with the pressing need for economic transformation would determine the direction policies would go and establish an ongoing dynamic relationship between policy-making, regulation and implementation. The inter-relatedness of economic growth and the development of the ICT sector would mean that one would have to be aware constantly of the need for all South Africa's people to be integrated into all aspects of the economy, the importance of expediting the delivery of services and to begin to use ICTs as a way of making this possible. The need for the best possible conditions to reduce unemployment levels and to ensure a stable economy would mean that partnerships from all sectors of society would have to be drawn into the equation.

Many lessons were learnt as a result:

* There was a need for a common understanding of the role of the policy-maker and regulator, derived not only from how each one views her or himself and how each one views the other, but one that was conscious of a role within the context of a nation. The needs of the nation should be paramount among the main players. Furthermore management of the relations between the policy-maker and the regulator is also important.

* The role of regulators in particular came under scrutiny as independent for what and for whom. Thus, when it came to the process of appointing Icasa councillors, a public process was followed with interviews done by Parliament, recommendations made to the Minister of Communications and signed by the President. In this way, there was oversight with participation from both the legislature and the executive. In this way, the process for the appointment of regulators and a defence of their integrity and 'independence' are also matters that need further attention.

* The issue of ownership came under the spotlight and the question of privatisation versus ownership came under question. Issues of corporate governance and the need to protect national interests and the national transformation agenda required attention. The idea that Strategic Equity Partners ought to be subjected to targets and monitored so as to ensure that the developmental agenda would be paramount would come under consideration.

* Telecentres had been an important component of bringing ICT to disadvantaged communities, but we had no business models from which to work from and to learn from. It also became a reality that in poverty-stricken communities, lines would be connected and then disconnected. Thus the issue of tariffs arose, with the suggestion that there ought to be special tariffs for villages and poor rural areas. It also arose that Telkom should also redefine its mandate and its responsibility to South African society in order to bring about sustainable development. The devil lies in the implementation of this view in the current context.

The lessons learnt would enable South Africa to be able to apply some of its achievements on an international scale in partnership projects with neighbouring countries and on the rest of the continent.

On a regional level, through NEPAD and through the E-Africa Commission, it became important to prioritise regional development through common and shared economies of scale, to promote common standards and inter-operability and a common plan around the management of frequencies. The fibre-optic cable in particular would have to be extended and would promote closer ties between countries of Africa and especially the developing world. But isn't there more we need to do together as SADC?

The reality of a world that is a village of peace-loving and close-knit people and not one of two nations, one rich and one poor, could very well become a distinct possibility if ICTs are to be used widely and wisely. The knowledge revolution could truly belong to everyone and advance our social emancipation as South and Southern Africans and eliminate the marginalisation of Africa from world development. But without general awareness by all our citizens of the importance of ICTs, they will constantly raise the issue of choice between ICTs and priorities such as water, housing, roads etc.

I think that the South African example is important in that meeting the needs of the people has been paramount and working towards universal access is a given and a principled position, thus the crucial focus on ending poverty and underdevelopment. We have also been motivated by the desire for equality both within our country and also worldwide. Communities rather than an individual are now the focus of attention. But the consequence will be the decline in position on the global index because of the definitions used. The World Summit on the Information Society to be held at the end of this year must become an important platform for the voice of the developing world and all who are committed to ending poverty. ICTs can and must help to fast-track development, to challenge existing definitions, and we will do all we can to meet the challenges that we have inherited as Africans and the new ones that arise every day in this new world.

We have shared our experience and some of the lessons learnt with you so that we can embark on a constructive partnership because I do believe that we have a shared destiny. The responsibility for reaching this common destination is placed on all of us. We can no longer remain prisoners of history or prisoners of our fears. We already share examples of partnerships that I have already mentioned, especially the SAT-3 / WASC/SAFE fibre cable around our continent. It has created new possibilities for us to integrate our ICT infrastructure. This world-class technology infrastructure gives us a sense of pride about what we have accomplished on this continent. Let us celebrate the fact that we have done what we have done, and more importantly, that we have done it together. Let us build on this and confidently march with hope and determination to a better African future, together.

Thank you.

Issued by Ministry of Communications
10 March 2003
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