The government’s ICT policy is holding SA back
When it comes to information and communications technologies, SA needs to move towards an open-market environment, and quickly
Information and communication technologies (ICT) have caused unprecedented change during the previous two-and-a-half decades. Whereas previously communication technologies used analogue methods, digitalisation means data can be generated in a private network, beamed across a roof via microwave, re-ordered on an ethernet backbone and then wander out over a public-switched line to be broadcast via satellite to an overseas receiver — all without corruption at the other end. The message becomes everything: the underlying network technology, irrelevant.
Many countries, SA included, have tried to adapt their legal systems to reflect the convergence of different media. The Electronic Communications Act (ECA) ushered in substantial change from the previous Telecommunications Act and, for the most part, is in line with international best practice.
The days of heavy-handed legislation and regulation are over. They are no longer acceptable in a globally connected world.
The government’s 2016 ICT policy, and, by extension, the new Electronic Communications Amendment Bill, however, exacerbates the bad aspects of the ECA and also introduces bad (and potentially bad, given the bill’s ambiguity) new policies.
These interventions will have the effect of perverting incentives and causing unnecessary, and potentially damaging, market distortions. Specifically, the retention of this up-and-coming legal regime creates skewed incentives for other economic players, who ignore customer demands and misallocate capital. Without a flexible, market-oriented legal framework, SA runs the risk of under-developing new industries.
With very rare exceptions, the ICT sector declared its unequivocal opposition to the government’s policy throughout 2017, and its unequivocal support for an open market policy in telecommunications. Yet government relented, and introduced the amendment bill late last year in a form it had previously assured stakeholders it would not take.
The government should move towards an open-market environment quickly. A digital divide is as applicable to legal regimes, that is, countries, as it is to definitions of the rich and poor. If SA is not to lag behind its overseas competitors, it needs to bridge this legal divide as quickly as possible.
SA’s ICT journey, so far, has been a success story.
The country is a notable player in the ICT industry and has the potential to leapfrog the industrial development undertaken by developed nations. To do that, we need to remove all the legislation and policy that prohibits businesses from experimenting with products and services in a competitive market. With about 98% broadband coverage for South African households and more than one cellphone per person in the country, the destitute have been empowered in a way not possible at any other time throughout history.
We stand to roll back this success story, however, if we submit ourselves to the ICT regime the government proposes.
While not perfect, the current legal regime governing ICT in SA has been more than adequate and has allowed internet service providers, quite recently, to start rolling out high-speed fibre internet connections. Under the amendment bill’s proposed provisions, ICT firms will not be able to innovate because they will be dependent on government and its policy goals.
Policy makers need to understand how the information economy works and set their priorities accordingly. The days of heavy-handed legislation and regulation are over. They are no longer acceptable in a globally connected world. SA can choose to opt out of this exciting process, but then it foregoes all the benefits of belonging to the global market.
Central planning has been rejected by human experience, with more than 200-million people having died — mostly in Asia — in the last century because bureaucrats and politicians believed they knew better than the market. While nobody likely will die as a result of the ICT policy, it does have the potential to further retard SA’s economic growth by making it a less appealing destination for investment. The knock-on effect of bad ICT policy will be disastrous across the breadth of the economy. An open environment, on the other hand, will encourage entrepreneurs to set about building infrastructure critical to SA’s development.
Relaxation of control is going to be difficult for a government accustomed to heavy political intervention. However, the state should have confidence in the talents of free people to generate large amounts of new wealth for which government-run industries rarely show much ability. This country’s road to prosperity will be determined by economic growth, and to achieve that growth, SA requires an open communications market.
• Van Staden is legal researcher at the Free Market Foundation and co-author of The Real Digital Divide (2017).