Telkom is expanding its network, but costs are slowing demand
Jubie Matlou
Telephones for hundreds of rural villages and townships spread across the country are ready to ring. About 70000 towers punctuate the country’s landscape, waiting for subscriptions from villagers to connect a telephone line.
Labelled the wireless local loop, each tower has a 10km coverage radius and a capacity to connect 130 individual lines. Gone are the days of terrestrial telephone cables mounted on timber all that’s required now is a little antenna mounted on the roof of a house and connected through a cable to the telephone in a living room. In the absence of electricity, a solar panel is installed to bring the line to life.
This is Telkom’s response to its exclusivity period ending next May when two new fixed line operators enter the market. The Telecommunications Act of 1997 requires the parastatal to roll out telephone services to the country’s remote and rural areas. The mandate carried an R8,2-billion tag.
Tom Berry, Telkom’s chief operating officer, says the five-year deadline was very tight. “The United States and Japan took 70 and 50 years respectively. Universal access is an accepted principle worldwide but the concept is defined differently in different countries. For the US it was 95%, and 60% for Japan.”
Berry says the challenge was even greater because in South Africa universal access is defined geographically “from village to village”.
The mandate also calls for phones to be installed in public amenities, such as clinics and schools, individual households and as coin- or card-operated public phones.
Costs for the roll-out programme to an individual house comes to R15000. “The use of a solar panel has obvious cost implications the availability of electricity would have made a difference,” says Berry.
But can people afford this when unemployment is rampant and many rural households can afford only the necessities?
“That’s why in many countries there are policy provisions to enforce services to be rolled out to remote areas,” says Berry.
“We are ahead of schedule it can take a week for an application to be
lodged and for a line to be switched on, but there aren’t enough people who can afford to pay for the service. It’s the usual business consideration of the economies of scale against the economies of scope.”
However, there are various options. One is a subsidy system, as in Europe, where business services subsidise residential services. The other is for the government to carry the capital costs by purchasing the equipment as it does in other public utility programmes such as water and sanitation.
Telkom is toying with the idea of spreading service costs over a period by allowing free use of service in the first six months, and for the subscriber to be billed monthly.
Recent government directives call for the establishment of a universal service fund, to which service providers contribute up to 0,5% of their revenue. The Independent Communications Authority of South Africa, as a regulator, is empowered to determine the contribution.
In addition, new fixed-line phone operators will also be obliged to contribute to the universal access of telephone services.
Telkom is also looking at regulatory reforms to cushion the costs for the roll out. The new directives allow Telkom and the incoming second and third national operators to use the fixed wireless frequencies the Global Mobile Systems used by the mobile phone operators. Such a move bodes well for rural telephony from a cost viewpoint.
Telephone access in South Africa is reported to be about 30%, translating to about 2,8-million homes with telephone services.
Fred Kelly, of the US-based ParaGea Communications, told the African Computing and Telecommunications Summit 2001 held in Pretoria recently that there are a number of “roadblocks and enablers” to rural telephony.
He cited regulations, economic realities, infrastructure investment or joint ownership restrictions, profit repatriation or foreign exchange restrictions and monopolies as some of the “roadblocks”.