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| Gartner Dataquest Says New South African Telecom Policy to Have Little Impact on Regulatory Changes for the Country |
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STAMFORD, Conn., September 10, 2001 - While the government in South Africa has tried to increase competition in the telecommunications market, the latest regulatory policies will do very little to open the South African market, and could restrict consumer choice, according to Dataquest Inc, a unit of Gartner, Inc. (NYSE: IT and ITB).
Telkom South Africa remains in essence a monopoly for domestic fixed-line service, and had an agreement via the 1996 Telecommunications Act to maintain that until May 2002. A new policy directive was issued, and three weeks later final amendments to the policy were issued. The policy says one fixed wireline license will be issued in May 2002, most likely combining the assets and participation of Esi-tel and Transtel. Both major operators would be issued a "fixed-to-mobile" license, but the grants would be limited in some way to less than full cellular service. The new policy also moved the deadline for number portability and carrier pre-selection back from 2003 to 2005. "Much attention throughout the rest of the African continent will be focused on the implementation and success of South Africa's moves to open its national telecom market to competition - limited as these steps may be," said William Hahn, senior analyst for Gartner Dataquest's worldwide Telecommunications and Networking group." "Regulators are still very much focused on a course of tightly managed and facilities-based competition. The policy flip-flops raise more questions about the level of commitment of the South African government to true competition, and therefore new entrants, particularly, need to be more concerned about what was left unsaid than what was detailed in the latest directives," said Hahn. Gartner Dataquest said under the new policy, attracting investment is critically important, but issues such as interconnection rates, wholesale terms and conditions, number portability and carrier preselection must be ironed out and the implications understood before the new entrant and Telekom can develop realistic, market-based business cases. Investors interested in South Africa must also take account of its commitment to empowerment of disadvantaged groups - a share of up to 30 percent must be included in the new major operator's licenses, and Telekom has reserved a 5 percent stake for employees and empowerment groups. "The best way to assure investors on all sides that these entities will retain value long-term is to roll up the sleeves and delve into the dirty business of how the carriers will negotiate their relations," said Ron Cowles, principal analyst for Gartner Dataquest's worldwide Telecommunications and Networking group. "The highest priority must be specific rules of engagement, especially regarding resale and interconnection between the competing parties; this must be settled before year-end if the SNO is to have a good change to succeed. Until that process is made clear, the tremendous potential opportunity of the national market will remain untapped." Gartner Dataquest said Telkom South Africa should act quickly to increase its support organization, review its pricing policy, improve on loyalty programs and explore additional revenue opportunities not only through new services domestically, but possibly also through overseas stakes. The new entrant should target specific user groups such as large corporations offering both voice and data services from the onset, as well as comparable or better service level agreements than the incumbent. Additional information is available in the Gartner Dataquest Research Brief "About Face in South Africa: Consequence of the New Telecom Policy." This report details the policy flip-flop, discusses the impact this policy is likely to have on Telkom South Africa, on potential new entrants in the market, on investment, and on the penetration of telecommunication services. This research is published by Gartner Dataquest's worldwide Telecommunications and Networking group. This group provides analysis for the full spectrum of telecom and networking issues. To keep up to date on the latest telecommunications issues, please visit Gartner's Telecommunications Focus Area at www.gartner.com/1_researchanalysis/focus/telecom_fa.html. To subscribe to Gartner Dataquest programs, please call 800-419-DATA, or 408-468-8009. Reports can be purchase on the Internet at www.gartner.com. Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software and services sectors of the global information technology industry. Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients understand technology and drive business growth. Gartner's divisions consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner, Inc. is headquartered in Stamford, Connecticut and consists of 4,600 associates, including 1,400 research analysts and consultants, in more than 80 locations worldwide. The company achieved fiscal 2000 revenue of $855 million. For more information, visit www.gartner.com. |
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Contact: Christy Pettey Gartner 408-468-8312 christy.pettey@gartner.com |
