Registered users can save articles to their personal articles list. Login here or sign up here

MTN pillories ‘draconian and irrational’ telecoms bill

Government’s telecommunications bill could have a ‘devastating effect’ on the ICT sector, says MTN.

Government’s telecommunications bill, if enacted without radical changes, will have a “devastating” effect on the ICT sector, destroying the incentives that have led to almost universal mobile coverage in South Africa.

That’s according to MTN, which has submitted written comments on the contentious Electronic Communications Amendment Bill ahead of parliamentary hearings on the subject this Thursday.

Vodacom, in its submission (see article), called on government not to rush the bill through parliament, saying it “should pause and carefully consider the far-reaching (and we say significantly adverse) implications of the bill for the sector and consumers”.

In its submission, MTN pillories what it calls government’s policy U-turn on infrastructure competition and described the proposal to “impose blanket, cost-based open access on a competitive market” as “draconian and irrational”. It said this policy U-turn will have a “devastating effect on the model that delivered R100 billion plus of investment in the last decade”.

“It will destroy the incentives that have delivered over 98% 3G coverage, a world-class 4G network (currently at 90% coverage, despite no LTE spectrum being released) and growing fibre investment, so jeopardising South Africa’s 5G future.”

The hard-hitting submissions suggest both Vodacom and MTN are running out of options to push for an overhaul of the draft legislation and are now preparing to tackle government head-on over policy changes they believe will severely undermine the industry.


“Why would MTN (or any other network player) continue to invest in its fixed and mobile network when it can get access to Telkom’s or Vodacom’s network at now cost?” MTN said its submission.

“In turn, why would Telkom and Vodacom continue to invest in network expansion and innovation if they get no competitive benefit from it, merely cost-based returns out of MTN (and other service providers)?”

MTN said such a proposal would be “unthinkable” in any other industry. It was akin to forcing airlines to offer seats to their rivals at cost. “Which airlines would ever invest in aircraft on that basis?”

It would be like asking automobile manufacturers to build cars for rivals at no cost. “Which automotive manufacturers would ever invest in a factory in South Africa again?” MTN asked.

The bill is also unconstitutional, it said. It violates the constitution’s property clause, fails to meet the rationality requirement imposed by section 1(c) and section 22, and is “impermissibly vague”.

It warned that abandoning network competition in favour of a cost-based service model has “no international precedent in telecoms”.

“Despite a lengthy policy debate, the cost/benefit of this seismic shift has not been quantified, and MTN’s concerns have been consistently ignored.”

It warned, too, that government’s plan to create a wholesale open-access network, or Woan, is “untested internationally” and “risks reducing competition between networks”.

“South Africa could become resigned to a common standard, low-quality network (the Woan),” MTN said. “While MTN is supportive of a level playing field hybrid model (where commercial operators and the Woan coexist), a policy that ties the release of excess spectrum to the licensing of a contentious Woan risks delaying the availability of much-needed spectrum for South Africa.”

It said communications regulator Icasa should set aside spectrum for the Woan and immediately assign spectrum to commercial operators.

“These issues are as complex as they are critical to South Africa’s economic future. MTN urges that they be debated in a considered manner, not on the rushed timetable that is being proposed. Too much is at risk by experimenting with untested and unqualified policies for such an important sector and engine of growth.” 

This article was published with the permission of TechCentral. The original publication can be viewed here

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.



To comment, you must be registered and logged in.


Don't have an account?
Sign up for FREE

MTN and Vodacom have ripped us off for long enough. The only way to make calls and data cheaper is to have more operators competing. That is what they are trying to block.

I am not expert but I know that telecoms is a highly highly USD denominated capex business. Cell C have tried to become a competitor by installing their own towers and it nearly sunk them.

I personally think if we want good coverage and the latest tech then you can’t do that if these guys are not going to make a return. Their financials don’t show them making huge profits so not sure if they are ripping us off.

Lastly, they are blocking this because they want a return on assets, why should another operator come in, make no investment in the network and use existing investment from others on the cheap?

2 of the Sectors that I am most sceptical of are the cellphone companies and banks. The SA consumer has long been ripped off by these guys so whenever I hear either of them whinging I immediately ask what it is that they are trying to hide / protect. MTN is being bloodied for a second time in Nigeria and face serious fines in Ghana and we are again seeing an exodus of top execs. Smoke and fire.

Just look at how the 2 big cellphone companies have fought tooth and nail to stop the move to allow people to carry over data. Please! It’s like going to the filling station on the 28’th of the month and filling your tank only to have the filling station then demand on the 1’st of the next month that you return to them the fuel not yet used, only so that you then have to fill up again in the new month and pay.

There is so much that these guys could have done to bring in truly exciting and value loaded products / offerings for customers, but every time they are challenged on unfair practices they melt down in tech mumbo jumbo. The cow will need to jump over the moon before I believe a word that they utter.

Seriously P*ssed About Paying for Peanuts (SPAP)

Competition is one of the best tools the free market has ever given mankind, it keeps everything in balance, taking it away, will be a catastrophe.

Price is the messenger between the consumer and the entrepreneur. The needs of the consumer is condensed into the price that he is willing to pay to fulfill his needs. This signals the profitability to competing entrepreneurs. These entrepreneurs fight one another tooth and nail to make a profit from the consumer. This competitive process ultimately benefits the consumer because his needs are satisfied at the best possible price. There is total freedom of choice in this process. Nobody is forced to spend his money against his will. Everybody is free to compete, and to provide a better, more cost-effective service. People who say they are ripped off by a service provider are either malicious or lazy.

When the government enters this arrangement and distorts the message by putting a cap on the price, the profit objective disappears, the competitors are scared off and the consumer cannot get a service at any price. People will eventually depend on government itself to provide the service (at the cost of raised taxes).

Eskom, SAA, Denel and the municipalities show us how efficient government is in the delivery of services.
I would much rather be “ripped off” by the efficient competitive nature of the free market, than by the inefficient monopolistic nature of government.

Government is walking over the corpses of the “battle of the mining charter” and now they are bombing the private healthcare sector, private property rights and telecoms companies. At this rate they will be forced to implement Mugabe’s strategies to cap the prices of food at the retail companies. This will be one month before all shops run empty.

There is no free market on telecoms because of limited spectrum. That spectrum has to be allocated somehow.

Go put up some private cell towers in any country in the world and see what happens.

You underestimate the socialist thinking of the ANC and their determination to implement these policies at your peril.

ZA inc = uninvestable.

Oh, if we could have the Sensei comment (above) be quoted verbatim in the legislature….and have John Steenhuisen explain it nicely to the learned fools!

I had the honour of meeting a Charles Hopkins at Elsenburg during the years 1983 and 1984. Do you know him by any chance?

Load All 9 Comments
End of comments.





Follow us:

Search Articles:Advanced Search
Click a Company: