Three cheers for the bravery of our communications minister
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Suzanne Vos
Very early last Thursday morning, the day of Parliament’s debate on the Telecommunications Amendment Bill, I received a telephone call at home from African National Congress MP Nkenke Kekana, the (genuinely excellent) chairperson of the National Assembly’s Portfolio Committee on Communications.
He uttered two words: “Flip-flop”. It was a joke, but not a funny one for the ANC, and he was not laughing. The telecommunications policy process preceding the draft legislation had been characterised by the media every time it changed as “flip-flop”.
It could only mean there had, overnight, been major changes to legislation that had already passed through the committee opposed by the Inkatha Freedom Party and the then Democratic Alliance and was ready to be bulldozed that day through the National Assembly by the ANC majority.
Flip-flop. Apparently at midnight (I learned later from other sources) and under great pressure from some state stakeholders who were opposed by certain other state stakeholders and would-be private investors in the sector, the Minister of Communications Ivy Matsepe-Casaburri had agreed to reinsert the issues of “number portability” and “carrier pre-selection” in the Bill.
They had been deleted in their entirety in the final stages of negotiations, allegedly at the insistence of Telkom. Cell C had also threatened to throw its toys out of its cot over a crucial issue involving the definition of so-called “fixed mobile” which for a while had Telkom smiling. This too was “cured”, as lawyers would say. Flip-flop.
Amendments would now be introduced in the National Council of Provinces. It was too late (and impractical) for the National Assembly. The minister would explain all in her speech which she did.
For the uninitiated, carrier pre-selection and number portability are both essential enablers of competition in the telecommunications industry and for the IFP they were not negotiable. When you have a telephone monopoly, like we have had, they are irrelevant. Introduce competition, as the Telecommunications Amendment Bill attempts to do, and they are critical.
Of course, it depends on how you view the word “critical”. For consumers carrier pre-selection and number portability offer choice: that is critical. For national and international investors in the proposed second national operator (including subsidiaries of state assets Eskom and Transnet), due to be licensed in May next year, the ability to be able to lure subscribers from your competitor (Telkom, another state asset) is also critical. Nobody will invest in you if you can’t.
On the other hand, for the incumbent monopoly, Telkom, losing customers and the very real cost of introducing services, especially number portability, is also critical.
It was clear to the committee that Telkom and its minority United States and Malaysian shareholders Thintana were fighting tooth and nail to ensure that the issues were delayed until 2005 or thereafter. This was a battle worth billions of rand and well worth putting up a fight which Telkom certainly did. Potential investors in the second operator, M-Cell, were throwing up their arms in despair.
So we get to the ugly face of the competing interests of state capitalism (especially Telkom) and the executive versus the executive and MPs attempting to responsibly manage the liberalisation of the telecommunications sector by introducing competition to Telkom with the second national operator and to Vodacom and MTN with the advent of Cell C. They were also attempting to ensure stability and the protection of existing vested interests, including Telkom and private stakeholder investments in the industry, and to add value to other competing state assets being introduced into the market, including subsidiaries of Eskom, Transnet and Sentech.
They also have to attract new national and international capital investment and expertise to enable the second national operator to get off the ground and ensure affordable telephony and healthy, viable competition capable of driving down prices and rolling out networks to under-serviced areas. This implies accelerating access, customer service satisfaction and another “critical”: bridging the “digital divide” between the “information rich and the information poor”.
In this scenario the minister and the committee were faced with a telecomms tightrope: how to balance competing government department interests in state enterprises and satisfy the needs of existing national and international private stake-holders in the fastest-growing industry in the world.
Communications, the line ministry, was giving Sentech, the signal distributor, an international telecommunications “gateway” service enabling it to operate as a “carrier of carriers” and a “multimedia” service.
This, in turn, gave M-Net and Multi-Choice serious heartburn as they are already up and running with multimedia services and Telkom, again, was hardly enthusiastic about Sentech’s on-a-plate international telecommunications linkage.
Informed rumour has it that, realising that the committee was determined to push through carrier pre-selection in 2003 and number portability soon after 2005, Telkom sent a runner to Tuynhuis the night before our final deliberations with a sternly worded letter along the lines of “back-off or face the consequences”.
Their trump card? The forthcoming listing (IPO) of Telkom from which Trevor “show-me-the-money” Manuel is expecting many, many billions of rands. This week the finance minister said he was not relying on the Telkom listing this year because of “unattractive market conditions”.
Telkom’s scare tactic was that introducing carrier pre-selection and number portability would decrease the value of Telkom at the IPO. Flip-flop! All mention of “carrier pre-selection” and “number portability” disappeared from the Bill!
The ANC MPs put on a brave face. The IFP “spat the dummy”. There was no way we could support the Bill.
Telkom also, allegedly, threw a major wobbly during the policy process and when two competitors to Telkom were mooted, Thintana is said to have threatened to dump its shares at the IPO. Flip-flop!
In the end, three cheers for the bravery of Matsepe-Casaburri: the ugly face of state capitalism was given a make-over.
We will have carrier pre-selection (soon) and number portability waiting in the wings. And, flip-flop, the IFP managed to support the Bill after all.
But I took two “support” and “oppose” speeches to the podium just in case minister flip-flop had changed her mind. She hadn’t.
Suzanne Vos is an IFP MP and a member of the National Assembly portfolio committee on communications