Telkom’s “monopoly” on fixed line internet in South Africa must end in order to support small and medium sized enterprises (SMEs) and boost economic growth in the country.
This is according to Ryan Hawthorne, senior specialist: corporate strategy at Neotel, speaking in a personal capacity at the Broadband Summit in Bryanston, Johannesburg.
Hawthorne said since 95 per cent of fixed connections were handled by Telkom, it was therefore a candidate for regulation. He said there is a need to open up incumbent fixed line networks to new entrants.
“There are lots of different kind of remedies you can impose on fixed line monopolists,” he said, suggesting local loop unbundling which grants new entrants access to the physical wire connection between the local exchange and the customer. ICASA called for a “phased approach” to unbundling in 2012.
Hawthorne said economic reasons were the primary motivation for unbundling, quoting World Bank statistics that a 10 per cent increase in broadband penetration equates to a 1.38 per cent increase in GDP growth.
Ending the monopoly, he said, would lower prices and increase speed of fixed line connections.
“The reality is that among developing countries we are slow,” he said.
Hawthorne said making fixed line connections cheaper and quicker would boost SMEs, who account for 60 per cent of employment in South Africa and rely on fixed line access. Cisco figures suggest fixed line will handle 76 per cent of business data by 2016.
“They (SMEs) simply cannot connect through wireless technologies for the kind of throughput they need,” Hawthorne said. “You cannot drive that sort of volume of data through the internet through mobile networks.
“Supporting SMEs is critical for our growth.
“As the number of unbundled lines grows, so does economic growth.”
