You’re not allowed to be big enough to have a monopoly in South Africa — unless you’re a state-owned enterprise (SOE). The Competition Commission last week told Vodacom it could not buy into fibre company Maziv, in which Remgro’s CIVH is the largest shareholder, because it would be too big.
But the fibre network already owned by SOE Telkom is bigger than the proposed Maziv tie-up.
There’s irony in how the ineffectual state with its own monopolies — Eskom, the SABC and others — has an agency that stymies the private sector from trying to create the economies of scale the government itself has.
In most functioning democracies such competition oversight is a good thing. But this is not the case in our dysfunctional country under the ANC. Electricity can be off for up to 12 hours a day, half the sewage water the municipalities are supposed to treat doesn’t pass the basic standards and our health care, education and security are in trouble.
In this context, would it be bad for competition and, importantly, consumer prices, if a few of the biggest fibre suppliers joined forces to provide better internet access?
Before we answer that, let’s remember how the government tried to provide internet through Telkom when it had a legal monopoly.
It took a gutsy little fibre start-up called Vumatel to kick-start the fibre-to-the-home (FTTH) industry when it won the request for proposal to install an FTTH network in Parkhurst, Joburg. I lived in the suburb at the time, and after writing about it, I was asked to evaluate the bids.
It was a no-brainer to go with Vumatel.
When Sipho Maseko was CEO ... he turned a cumbersome, struggling SOE into a world-class company
The government has for the past two decades consistently failed to enable the so-called information economy — but the private sector isn’t allowed to establish it. Huh?
There is precedent for how abusive a private sector monopoly, or duopoly, can be: Vodacom and MTN kept call and data cost artificially high for at least a decade. The Competition Commission and the Independent Communications Authority of South Africa (Icasa) finally got around to bringing costs down.
But fibre is different. It is the backbone of the internet. Globally, it’s an economy-of-scale business.
Telkom is a different company now, but has failed to use its fibre network to better effect. When Sipho Maseko was CEO and turned a cumbersome, struggling SOE into a world-class company a few years ago, Telkom still had the most expensive fibre packages in the market. As I wrote at the time, “Telkom, with the most to offer, gives its customers the least.”
Telkom eventually got this, and now offers well-priced unlimited mobile data bundles that many of my geek friends rave about. But its fibre offerings haven’t matched this success.
Until the government can do a demonstrably better job of providing crucial internet access to the country, please leave it to the professionals who are better at delivering what they say they will.
*Shapshak is editor-in-chief of Stuff.co.za and executive director of Scrolla.Africa
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