The end of apartheid in South Africa in 1994 brought the African National Congress to political power along with a mandate for reform of nearly all the nation’s institutions, including the telecommunications sector. But “the reform of telecommunications has largely failed,” according to an analysis by Robert Horwitz, professor of communication at the University of California, San Diego, just published in the journal Telecommunications Policy.
In 1996 the South African Parliament passed comprehensive legislation to restructure the sector, roll out telephone service to the previously disadvantaged and establish an independent regulator to oversee the reform. Instead, Telkom, the government-owned national telecommunications monopoly, was able to thwart competition, realize high profits and preside over large increases in the cost of using the national communications network. Over the ten years of reform, Telkom barely increased the number of new telephone lines and imposed high prices for installation and per call charges.
In reviewing the ten-year history, Horwitz and his co-author Willie Currie, former Special Adviser to the South African Minister of Posts, Telecommunications and Broadcasting, outline three main causes for the failure to make telecommunications more responsive to public needs.
In assessing the impact on society of Telkom’s monopoly power over the past 10 years without effective regulation, Horwitz and Currie write, “(Telkom’s) profitability meant the transfer of huge resources from the broader economy to shareholders. High telecommunications prices and limited service offerings created a drag on general economic growth.” And contrary to its central mandate, Telkom failed to increase access to telephone service to the majority.
Expressing further concern, the authors conclude, “South Africa, as the most powerful country in Africa, is seen as a model, both economically and politically.” Thus the “privatization trumps liberalization” model is likely to become accepted throughout the region and “it remains to be investigated to what extent the problems that plague South Africa’s telecommunications sector have effectively been exported to the rest of Africa.”
Advisory: PDF of the article as published is available upon request to Barry Jagoda, bjagoda@ucsd.edu
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Telecommunications Policy