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A lot of attention has been drawn to the exorbitantly high cost of telecommunications in South Africa, particularly with the establishment of the popular website. A lot of attention has been drawn to the exorbitantly high cost of telecommunications in South Africa, particularly with the establishment of the popular website. While that site strongly attacks the profits that are being racked up by the monopoly fixed-line operator in South Africa, the reality is that the profits are an ancillary issue, or even not worthy of attention at all.

Rather, what is an enormous issue for consumers and businesses in this country is the fact that the excessive costs of telecommunications and Internet bandwidth in this country limits economic growth in a very real way.

Telecoms: a necessary operational evil

Almost every business in operation in this country today depends on telecommunications to a greater or lesser extent.

The unjustifiably high cost of calls drives up the operational costs of every one of these companies, limiting their potential for development, limiting the amount of available money for investment and limiting their profitability.

An entrepreneurial culture is encouraged in South Africa as it is often recognised that the future of the economy lies in the ability of small businesses to get off the ground and grow, thereby creating employment for more people.

There is little doubt that with exorbitantly priced telecommunications, many individuals who have conceptualised a business idea have been limited or even prevented from realising their dream because they are unable to gain access to an affordable and reliable telephone.

Holding back the services industry

There has been some growth in the services industry, and our country has also been singled out as a possible destination for the establishment of offshore call centres, owing to the availability of a relatively low-cost and capable workforce.

Such offshoring projects create hundreds, even thousands of jobs. However, in its Most Global Nation survey, consulting firm A.T. Kearney ranked South Africa just seventeenth out of a possible 25 destinations.

Because cost-cutting is the primary reason for establishing offshore call centres, one of the serious limiting factors to this country`s viability is therefore the high cost of telecommunications, which seriously limits the influx of foreign investors seeking to establish call centres in this country.

That costs the country in terms of foreign investment, job creation and development.

The crux of the matter is that the costs that South African businesses and consumers are forced to bear are, simply, not justified. The incumbent monopoly operator inherited its infrastructure from the apartheid government - its network has been paid for many times over.

The cost of data connectivity

In terms of data connectivity, South Africans are forced to pay some of the highest rates for Internet bandwidth anywhere on the planet.

The potential benefits of new technologies that would lower the cost of doing business are kept artificially high by the monopoly.

For example, Voice over Internet Protocol (VoIP) could allow businesses to interact globally at the cost of a local telephone call - but they are not permitted to do so as the only organisation that is allowed to carry such traffic is the sole operator.

The bottom line

The bottom line is that the financial implication of such costly communications makes it more difficult for South African companies to be competitive, especially on a global scale.

A higher operating expense limits development, and has a detrimental effect on the economy, while the regulatory environment stifles the vital innovation that could create better business efficiency.

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