ICT policy proposals spell out an attempt to nationalise assets

THE FACT IS, MANDATORY PARTICIPATION IN AN OPEN ACCESS NETWORK SIMPLY DOES NOT MEET THE GOALS IT SETS OUT TO ACHIEVE

Who benefits from the country’s proposed information and communications technology (ICT) policy? Is it “radical economic transformation” or something that will benefit “white capital”?

The introduction to the national integrated ICT policy white paper refers to the National Development Plan 2030: “By 2030, ICT will underpin the development of a dynamic and connected information society and a vibrant knowledge economy that is more inclusive and prosperous.” Seemingly, it is geared to achieve an “inclusive and prosperous society” where “opportunity is determined not by birth but by ability, education and hard work”.

All the usual rhetoric is regurgitated. But who is being branded the evil industrial giant stepping on the underprivileged and downtrodden? The lowest black economic empowerment (BEE) rating of the major cellphone companies is level 3, which amounts to a 110% procurement recognition level. The largest of those companies have BEE ratings of level 2, amounting to a procurement recognition level of 125%. This is hardly a reflection of an apartheid-era business model. It is a reflection of big business achieving the goals of a free and prosperous economic society to the benefit of everyone.

Furthermore, the growth patterns of these companies are clearly being steered in the direction of better BEE ratings and economic empowerment. A good example is MTN’s R9.9bn Zakhele Futhi transaction.

So when the ICT white paper wants to make MTN’s services more “inclusive” to “the prosperity of all”, what is it proposing? Simply put, the nationalisation of the company’s assets through a forced mandatory roll-out of an open access network.

If the proposals in the white paper are acted on, this is exactly what will happen. The specific proposal referred to on page 68 of the paper states: “The regulator will be required to publish a list of deemed open access networks.”

An access provider will be “deemed” an open access network if it has significant market power in the relevant infrastructure market; controls an essential facility; has a network that constitutes more than 25% of the total infrastructure in that market; or has a scarce resource, such as frequency spectrum, assigned to it for its exclusive use.

This mandatory implementation of an open access network will enable the government to control and dictate pricing, active infrastructure sharing and specific network and population coverage for providers deemed to be an open access network. More importantly, all providers deemed to be open access networks must comply with “all of the general open access principles, and to the extent that an operator is vertically integrated, the principles applicable to vertically integrated entities will apply as well”, as dictated by the regulator.

The white paper is clear that participation will be unilaterally imposed on service providers that have the required characteristics.

The regulator will be obliged to publish a list of deemed open access networks as soon as possible after the finalisation of the white paper.

If it works, it works. Right? The fact is, though, mandatory participation in an open access network simply does not meet the goals it sets out to achieve. International studies (Wolfgang Briglauer: The Impact of Regulation and Competition on the Adoption of Fibre-Based Broadband Services: Recent Evidence from the European Union Member State 2013, is but one) show that forced mandatory participation in an open access network results in stunted economic growth and technological development.

The scope and length of this piece does not allow me to further expand on case studies, but the information is there for all to read from page 68 of the paper.

It is counterintuitive to stunt the growth of an industry that has arguably contributed the most to sustained economic development and transformation. According to the ICT satellite report published in 2015, ICT’s contribution to SA’s GDP amounted to 2.9% in 2012.

It is important to note that cellular service providers’ economic contribution is not confined to the ICT sector. Industrial and real estate development would fall outside the scope of analysis of their GDP contribution.