SA’s Slide Down African Internet Rankings a Wake-Up Call for Government

4 March 2009

Government should treat the news that the country is growing its Internet penetration at a much slower rate than any other country in Africa as a serious wake-up call about the need to accelerate deregulation of the telecom market.

That’s according to William Stucke, Management Committee member at the Internet Service Providers’ Association of SA (ISPA). He says that the country’s dismal annual single-figure rate is an indictment of the government’s failed ‘managed liberalisation’ of the local telecom market.

Said Stucke: “The only country in the Africa and Indian Oceans region that is growing Internet penetration at a slower rate than South Africa is Reunion, which has twice our Internet penetration. Growth in the South African market has stagnated over the past five years thanks to a lack of meaningful competition in the market.”

Internet growth statistics released in Hyderabad, India during the recent Internet Governance Forum Meeting show that South Africa has fallen a long way in the African Internet rankings since 2000, when it had 2.4 million subscribers representing 53% of Internet users across the continent. Today, South Africa represents only nine percent of Africa’s total Internet subscriber base with 5.1 million users.

Between December 2000 and 2008, South Africa has added only about 2.7 million new subscribers to its Internet user base, compared to the 10 million added by Nigeria, the 8 million added by Egypt, the 7 million added by Morocco and the 3 million added by Kenya.

“Over the past 10 years, the rest of Africa has grown its Internet subscriber base at 10 times the pace of rich, industrialised South Africa. We’re a long way off from having satisfactory Internet penetration, and must ask ourselves what has gone wrong.” said Stucke.

Across the rest of Africa, countries have stepped up the pace of deregulation and liberalisation of their telecom markets, while South Africa has treaded water, added Stucke.

“We must ask why government insisted on retaining ownership in the major telecommunication networks when it clearly hasn’t been in the best interests of the country and its citizens,” he said, “Why has government been so stubborn about keeping control of the industry in the face of so much evidence that this approach limits competition, results in high costs to consumers and businesses and ultimately denies many people access to affordable telecom services?”

The five-year delay in licensing a second network operator and government’s attempts to prevent VANS from self-provisioning, in particular, cost the country dearly. Up until now, Telkom has had a legally-enforced stranglehold on South Africa’s international bandwidth, last mile infrastructure and leased lines that have made it difficult for other service providers to compete effectively.

“The issuing of ECS and ECNS licenses is a step in the right direction for South Africa’s telecoms industry. Yet the industry faced a long legal battle to ensure that VANS are able to self-provide as envisioned by the Electronic Communications Act. This is just one example of the time, money and effort industry, the regulator and the government has wasted on legal battles,” said Stucke. “We would all have been better off if we had collectively focused on making Internet services cheaper, better and more accessible to South African consumers and businesses.”

Even now that government has accepted a ruling by the High Court that VANS have had the right to self provide since February 2005, in practice the government and regulator still need to do much to ensure a competitive market that will support the development of the economy and bring Internet access to more people.

Until there is more regulatory certainty around issues such as licence fees, spectrum licensing, interconnection, and local loop unbundling, ISPs will not be able to draw up their business plans and rollout services and infrastructure that will benefit all South Africans, said Stucke.

“The rest of Africa has woken up to the importance of a competitive market in the development of their telecom industries and have stepped up the pace of deregulation and liberalisation. By contrast, South Africa was one of the five least liberal telecom markets up until the recent High Court ruling about VANS and self-provisioning,” concluded Stucke.

“The end results in terms of the growth of the market and Internet penetration are plain to see. We hope that South Africa’s poor performance benchmarked against its peers in the rest of the continent will shock regulators and policymakers into rethinking their approach.”