Barry Streek
Telkom’s decision to implement an average 5,5% tariff hike for services without the approval of the Independent Communications Authority of SA (Icasa) has raised questions about the ability of “regulators” to effectively police parastatals as they are privatised.
Apart from ensuring that state monopolies do not abuse their position, regulatory bodies are government’s defence against the charge that privatisation will leave consumers of basic services at the mercy of the market.
The government has sought to appoint or strengthen regulators in several sectors, but the Congress of South African Trade Unions (Cosatu) argues that the regulators lack the power to balance consumer and commercial interests. Telkom’s latest tariff hikes of up to 24% for certain domestic calls, due to kick in next January seem to strengthen Cosatu’s case.
The previous rates regime lapsed in May last year, and draft regulations submitted by Icasa were rejected by Minister of Post, Telecommunications and Broadcasting Ivy Matsepe-Casaburri, leaving a regulatory vacuum. This raised suspicions that Telkom and particularly its foreign shareholders lobbied the minister for a more industry friendly dispensation.
Telkom’s Andrew Weldrick said Icasa approved new rates last year, despite the absence of a regime. However this year it had refused to consider them. He said that once the regulations were in place they would bind Telkom and the second operator.
Democratic Alliance spokesperson for communications Dene Smuts said the Telkom monopoly filed a new tariff plan knowing full well that there was no rates regime in place.
“This is tantamount to rogue behaviour by an unregulated monopoly. Regulation exists precisely to compensate for the absence of competition. If the minister keeps overturning the regulator’s rulings, consumers are at the mercy of the monopoly.”
The Inkatha Freedom Party’s Suzanne Vos accused the US-Malaysian consortium Thintana, which owns 30% of Telkom, of “holding a gun to government’s head every two minutes of the day Either we have a regulator, or we do not. Nowhere else in the world does a monopoly dictate to government and the regulator. It’s outrageous,” Vos said.
African National Congress chairperson of Parliament’s communications committee Nat Kekana said once the regulations were in place, Telkom would have to comply with them. His understanding was that Matsepe-Casaburri would intervene “in due course” and the regulations would then come into force.
There would always be disputes between industry and the regulator, Kekana said. Mechanisms would have to be developed to avoid litigation and delays so that the regulator’s decisions could be implemented as soon as possible.
Smuts and Vos agreed Telkom had to be economically viable, and had to roll out lines to under-serviced South Africans. However, the existing tariffs had made telephones an unaffordable luxury for poor people. “The new local tariffs propose a 24% hike for calls longer than 90 seconds. That will simply leave everyone off the hook,” Smuts said.
Vos said Parliament had to consider the matter urgently because Telkom’s new rates were dividing South Africa between the information-rich and the information-poor. “The result of this price structure is that it will further disempower poor people.”