It was a game of pass the buck in the government last week over who exactly was responsible for the decline of state-owned telco Sentech.
Early last week, Sentech released a position paper titled The State of Sentech, in which it accused the government of failing to allocate it the funding it required to roll out its wireless broadband infrastructure network.
Sentech’s discontent was clear in the position paper, with chairperson Colin Hickling listing numerous financing and policy about-turns made by the government that affected the telco.
Following the release of the position paper, beleaguered Communications Minister Ivy Matsepe-Casaburri lashed out at the National Treasury, accusing it of failing to fund its wireless broadband plans for Sentech.
Matsepe-Casaburri says that Treasury officials do not understand the crucial role Sentech could play in lowering South Africa’s exorbitant cost of communications and taking voice and data services to rural communities.
But the minister is flogging a dead horse with Sentech in a desperate attempt to appear to have some solution to combat exorbitant broadband prices and the growing digital divide.
The Treasury has long been concerned about the quality of business plans put forward by the Department of Communications, which is clearly evident by the lack of funding over the past three years for the planned broadband wireless network.
The wireless broadband network is expected to cost in the region of R3,1-billion, and so far the Treasury has allocated just R500-million to Sentech.
The fact that Sentech failed in the commercial wireless market with its MyWireless offering, despite being first to market in 2003, does not instil confidence in its ability to get a wireless network to work in rural and under-serviced areas.
The state-owned telco is going through a restructuring process, phasing out services such as MyWireless, Biznet and its international telephony business, which have been less than profitable.
The 2008 Budget Estimates of National Expenditure states that Sentech made a pre-tax loss of R5,9-million in 2007/08 and that it is predicted to make a pre-tax loss of R59,1-million in 2008/09.
Matsepe-Casaburri said she would not shoulder the blame for Sentech’s woes, as she shared its frustration and that the Treasury was preventing it from succeeding by failing to support it.
Treasury spokesperson Thoraya Pandy said that all proposals for funding put to it must go through a means test. “We must be convinced that sound decisions are made with regard to the use of public funds,” said Pandy. “The primary function of Sentech is to provide signal distribution to broadcasters.”
It appears as if the subtext is that the Treasury does not want the fiscus to have to cough up millions or billions of rands for Matsepe-Casaburri’s potentially failed idea. Just how Sentech would turn a wireless broadband network in under-serviced areas into a viable business is unclear.
The question needs to be asked: Would there be enough consumers in these areas who could afford to connect to such a network, even if it was affordable compared with current market pricing?