According to the latest research conducted by African ICT research
house, BMI-TechKnowledge (BMI-T), South Africans will end up
forking out around R900-million in lost savings due to the
relentless delaying of the second network operator (SNO).
Dobek Pater, senior telecoms analyst at BMI-T, says that the
introduction of the SNO will impact heavily on the SA business
sector, since businesses will then have access to more
competitively priced services, thus making the local commercial
market more competitive internationally by bringing down
operational costs in the form of telecommunications expenses.
Pater is confident that the SNO will bring with it a host of
opportunities for both local vendors and end-users alike.
“The changing South African telecoms landscape provides
opportunities for vendors in the hardware and software market. The
SNO is estimated to spend up to R10-billion, with Cell C and
Sentech estimated to spend over R6-billion and R2-3-billion
respectively over the next several years,” he says.
“This also means expansion of the local telecoms market over
the medium term (next four to five years),” states Pater.
BMI-T research states that the fixed line voice market is predicted
to grow at about six percent a year in revenue, while the data
market is predicted to expand at a much larger 17% a year in
revenue. Additionally, mobile is exhibiting seemingly relentless
growth and is predicted to expand at about 15% a year in
revenue.
Notably, with the SNO launch and Sentech’s designation as the
“carrier of carriers”, the three major competitors in
the international gateway market (Telkom, Sentech and the SNO) will
again drive competition in the local market.
“Competition in the international gateway arena means that
telcos, which currently do not have an international gateway, will
be able to choose between these three major operators as providers
of these services. Again, this should lead to an increase in
quality of service provision and decrease in prices. In addition,
with such an expanded international gateway capacity, South African
operators may also provide international gateway services to telcos
from other countries in the region, such as Zimbabwe, Botswana and
Zambia. This would represent an additional revenue stream for the
South African operators and a step in integrating regional telecoms
services,” explains Pater.
However, BMI-T states that the greatest issue flying in the face of
successful competition is regulation. The concurrent launch of an
SNO and the IPO of Telkom is creating major difficulties for the
regulator, the Independent Communications Authority of South Africa
(ICASA). Amongst these issues is infrastructure-sharing.
Telkom has to allow the SNO to share its infrastructure for a
period of two years, after which time the SNO should have its own
local access network in place. In its efforts to stifle competition
in the market, Telkom may consider “creating
difficulties” for the SNO in using its infrastructure, and
this would definitely be a stumbling block for competition in its
initial stages in the South African fixed line market.
Additionally, BMI-T believes that interconnect agreements will have
to be put in place between all the old and new players in the
market, them being the three mobile operators, the three major
national carriers, and the rural telecoms operators (initially up
to 10).
Furthermore, some of the current and future competitors have
certain rights of way, which they can use to their advantage in
rolling out infrastructure networks, for example: Transtel can use
Spoornet railway lines, Esitel can use the power grid
infrastructure. Securing of the rights of way (either their own or
from other players or municipalities and companies.) will be an
important factor in the cost of rolling out infrastructure and thus
creating a truly competitive environment.
BMI-T also states that possible anti-competitive behaviour by
Telkom is noteworthy, based on Telkom's past behaviour against VANs
and the recent disconnection of Transnet lines. Telkom still
remains a giant monopoly in the local market and may feel tempted
to use less-than-ethical methods in the future to compete.
“Lastly, VoIP regulation faces increasing pressure from VANs,
although this should be resolved by about 2005. At present service
providers, such as VANs, are disadvantaged against the major
telcos, who are permitted to carry VoIP traffic. These are all very
complex issues and must be executed properly by ICASA in order to
facilitate the opportunities of future competition,”
concludes Pater. |
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