High telecoms costs killing SA productivity: Nashua

 ·17 May 2012
Chris Radley

High telecommunications tariffs in South Africa are hampering the potential for economic growth and holds back large businesses, according to Chris Radley, managing director at Nashua Mobile.

Nashua argues that the telecommunications industry has the potential to be one of the engines driving South Africa’s GDP growth past six percent annually, but only if strong competition is nurtured in the sector.

Commenting on the health of the country’s telecommunications industry on World Telecoms Day on 17 May, Radley said that telecommunications is a levelling, democratising technology that empowers people to participate in the economy by giving them access to information and markets they did not have before.

“However, telecommunications tariffs in South Africa are still somewhat high as a result of a lack of competition,” he said. “This excludes many people from access to basic voice and Internet services that many countries are beginning to regard as a basic human right.

“The result is that the economy is less productive and globally competitive than it could be and that many people are denied the opportunities that fast Internet connectivity offers them to improve their lives,” says Radley.

The MD highlighted an example of where more affordable Internet services could help micro and small businesses to operate more efficiently and bring e-health, e-learning and other services to poor communities.

“Large businesses in South Africa are held back by high telecommunications costs. A number of studies place our cellular costs as among the highest in Africa, while one report says that we have the lowest minutes of telecommunications usage among the Brics countries. Stronger regulation, coupled with policies that encourage more infrastructure level competition, could help to change that picture,” continued Radley.

He said further that it is pleasing to see that SA watchdog, ICASA, has taken some concrete steps to tackle high telecommunications costs in South Africa, for example, by standing firm on mobile termination rates.

“Nashua Mobile would like to see certain important regulatory decisions and processes concluded as soon as possible,” Radley said. “The process around licensing the precious spectrum operators need for commercial deployments of LTE networks is particularly urgent,” he added.

This technology, stresses Nashua, is key to bringing faster and more affordable mobile broadband to market. “Digital dividend spectrum is also up in the air,” continued Radley. “South African regulators and legislators have an opportunity to position South Africa at the forefront of global telecoms if they move as quickly as the technology does.”

SA does have much to celebrate, Radley offered, noting that the county has benefitted from a flood of international bandwidth as a result of new submarine cables landing on the coast, and operators are clinking up the metros with fibre.

“Prices are falling as result, even as quality improves. This is largely thanks to the work that the regulator and policy makers have done to accelerate competition in recent years,” he said.

“Where a gigabyte of mobile data cost R1,050 five years ago, it costs just R150 today, and costs of fixed-line broadband have also tumbled. Telkom’s recent moves to reduce IPC costs are also to be welcomed.  And the explosion of tablets and smartphones means that access devices are becoming more accessible to more people as well,” Radley concluded.

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