On the Cover

The path to universal access is fraught with challenges, but there is opportunity for innovation too THE ELECTRONIC Communications Act, signed last month by President , has been welcomed by the market at large as legislative support for the innovative - and cost-effective - use of technology for communication requirements. Nevertheless, there are still many hurdles to overcome before government`s vision of universal access to communication networks can be realised.

According to the introduction of the Electronic Communications (EC) Act, the primary objective of the legislation is to "provide for the regulation of electronic communications in the Republic in the public interest". Consequently, incumbent communication providers may be finding the stipulations of the Act threatening; but consumers are rubbing their hands with glee.

SERVICES PLEASE!

Ultimately, Government hopes that this Act will address the needs of the under-serviced markets. Speaking earlier this year, Mpetjane Lekgoro, the chairman of Parliament`s Portfolio Committee on Communications, explained that the principle of open access was at the heart of the legislation.

"South Africa must become a knowledge society and convergence [of communications] facilitates the conversion to a networked economy. The potential benefits of the [then] proposed legislations are enormous."

"For example, increasing access to broadband has a significant impact on South Africa`s society: SMMEs are empowered; skills are developed; service delivery becomes far more efficient; economic participation is extended to all; and the public has both access and choice when making decisions on which is the best service for them," he said.

But then why not deregulate the industry completely? According to Lekgoro, government chose to manage liberalisation, backed by the belief that if the industry was left to its own devices it would only focus on profits. "Historically, markets left alone lean towards profit and might neglect social responsibility. The [EC Act] addresses that."

TOO MUCH FOR TOO LITTLE

On the surface Lekgoro`s comments may appear rather harsh; however, these businesses do have shareholders to report to and profitability is demanded. Commonly, the nature of the under-serviced area is that it is difficult to access - due to geographical remoteness or risks - and has little to offer in the way of returns when compared to high income, dense residential areas. Additionally, the required infrastructure comes at considerable cost to the company, never mind the ongoing management and maintenance costs.

Having said that, cellular service providers have been able to find profits in servicing the historically unserviced - the introduction of the prepaid cellular service model in particular has enabled cellular companies to provide services without fear of high debtor defaults. And the current proliferation of cellular use in these areas could make it difficult for fixed line operators to enter with offerings based on voice alone.

The former CEO of the Universal Service Agency which is mandated to promote the delivery of telecommunication services to the under-serviced sector, Dr , says the new issue in these areas is access to broadband.

"Access to broadband connectivity is very much limited because of the infrastructure investment required to extend services to these regions. Additionally, the cost of telecommunications is relatively high which presents a major challenge to enabling small business with access to broadband. But if the field is opened up through , the prices will lower, increasing affordability and demand and enabling positive return on the infrastructure investment," he says.

TARGETING TOWNSHIPS

Gulube is not alone in this belief, local wireless broadband provider iBurst has set its sights on the township market as an area for growth. According to iBurst MD Jr, there is certainly money to be made in these areas.

"Of course an area like Diepkloof in Soweto does not have the demand that a wealthy, built-up area like Sandton does. But the areas still hold potential. We are beginning to see Internet caf s popping up - modelled on telephone kiosks - and these often have queues to access their services. And we expect that demand to grow," he says.

LOOK ELSEWHERE

Orion Telecom director Jacques du Toit, says that the local market should not confine its vision to traditional channels alone, as innovative technology use and delivery mechanisms could enable broader access.

"One of the main problems that companies have to address when considering the under-serviced sector is that the revenue likely to be generated does not warrant the cost of rolling out infrastructure. However, there are other options. Mobile infrastructure is a lot cheaper than its fixed-line counterparts; there are regions testing WiFi and WiMAX; and then there is voice over power line, which has amazing potential as almost every home already has a connection to electricity services, so the infrastructure is there. We just need to think differently," he explains.

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