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Restricting VoIP and WiFi costs South Africa its position as a technology leader in Africa
Bridges.org and (ESA-CIP)
May 25, 2004

Commentary written by bridges,org in collaboration with the East and Southern Africa Centre for International ICT Policy (ESA-CIP)

http://www.bridges.org/e-policy/comments/voip_wifi/index.html

South Africa is celebrating ten years of democracy -- a period during which the country has shown progressive leadership, including explicitly targeting information and communications technology (ICT) as an enabler of socio-economic development. In its re-election campaign this year, the Government promised to focus on poverty alleviation and job creation. But, ironically, the Government's legislative efforts affecting new technologies like Voice over Internet Protocol (VoIP) and Wireless Fidelity (WiFi) are actually working against the development goals it seeks to achieve.

On one hand, the South African Government has taken unparalleled steps in forming national and international advisory councils to advise President Mbeki on how to extend the benefits of ICT to all citizens. However, existing telecommunications and convergence policies are not keeping pace with technological progress, and communications costs remain high as a result. Moreover, the Government has failed to provide a coherent legislative framework for ICT. Unless the Government aligns its intentions and actions it may undermine the country's position as a technology leader in Africa.

One example is South Africa's strategy to create jobs by enticing international call centres to the country. These centres -- common in places like India -- provide outsourced services using high bandwidth connections and VoIP platforms. VoIP converts calls to data and carries them like messages on any data network (including the Internet), which lowers costs, but can threaten the earnings of traditional telecommunications providers. Call centres provide telephone support services to developed countries from their bases in developing countries where labour is cheap, bringing cash to local economies. VoIP can also support socio-economic development more generally by bringing the benefits of efficient data network use and lowered call costs to individual consumers, small businesses, government agencies, and community organisations. Yet existing legislation that limits the use of VoIP in South Africa stifles advances in this area.

South African law also inhibits the use of WiFi technologies that could help bring the Internet to under-serviced communities. WiFi creates a high-bandwidth network using certain radio frequency transmissions that cover short distances. It is cheap to implement, largely because it does not require traditional wire infrastructure, and can be used to extend the reach of telecommunications and "backbone" Internet connectivity at low cost. And this in turn offers an effective channel for the delivery of many development services to under-serviced and rural communities. But it also jeopardises telecommunications profits.

Developing countries and communities with low telephone penetration stand to benefit the most from the introduction of new technologies like VoIP and WiFi. Gone are the days of voice traffic over traditional copper wire (which is often stolen), and separate cabling for data transmissions. There are huge cost savings to be gained in under-serviced communities by rolling out technologies that allow for both voice and data services on a single, combined, cost-effective network. Moreover, until recently VoIP and WiFi were only available to people with access to personal computers, but technology advances are extending this reach. For example, WiFi can be used to connect handheld devices to the Internet. And instead of requiring a computer with VoIP software, now people can use a regular telephone handset to dial to an intermediate computer connected to the Internet that will convert their call to VoIP.

Across the continent, other African countries are moving to the forefront. Algeria, Mauritius, Mali, Nigeria and Kenya have legalised VoIP and WiFi. For example, the Algerian Government recently approved several Internet Service Providers to use VoIP to legally compete on international calls. Prior to this, only the incumbent telecommunications operator was allowed to offer international call services, costing six times more. These progressive governments are boldly embracing new technologies to gain the long-term benefits of ICT, despite potential short-term losses in revenue as incumbent telecommunications providers restructure their approaches.

Currently, the provision of VoIP services in South Africa is only allowed in areas where less than five percent of the population have access to a telephone. The Government maintains that such restrictions will encourage companies to provide telephone service to these outlying regions and thereby rectify the imbalance in technology access between modern, urban hubs and under-serviced and rural communities. WiFi is also restricted to use by individuals or organisations within the confines of their own premises. So "hotspots" are okay, but connecting offices across town is not. In South Africa, it appears as if Government policy-makers either do not understand the development potential offered by these technologies, or they are just not ready to let go of the entrenched revenue streams from Telkom's stranglehold on the market.

Nonetheless the use of these effective, cheap technologies is growing in South Africa -- albeit illegally -- including in different spheres of government. For example, local government agencies are connecting remote departments with WiFi networks that are well-suited to carry VoIP calls. Their existence is no secret, with public tenders in the local media calling for the installation and maintenance of these systems.

Removing restrictions and allowing competition to thrive in the communications sector will lead to greater choice, lower prices, and the proliferation of innovative services. This will in turn benefit the development needs of under-serviced and rural communities, where communication services are prohibitively expensive, as well as the corporate needs of businesses wanting to enter the value-added network market. All that is holding back the unlimited provision of VoIP services in South Africa is the public announcement of a date, at the Minister of Communication's discretion, from which VoIP will be legal. This is a seemingly easy step, yet one not taken. Consequently, business leaders, development practitioners and the ordinary consumer alike are suffocating under an artificial constraint on telecommunications growth.

And in the meantime the South African Government, with all its right intentions, is increasingly losing its position at the technological forefront in Africa. An apparent reluctance to embrace new technologies must not be allowed to hinder the creation of jobs and wealth for the people of South Africa. Every citizen should understand the socio-economic development potential of new technologies, and call upon the Government to drive the changes needed to allow their widespread use. Unless the South African Government alters its course in this area, during the next election voters may well be asking why the Government has not delivered on its promises.

For more information contact
Ewan McPhie, Policy Director
Tel: +27 (0)21 465 9313
Fax: +27 (0)21 465 5917
Email: media@bridges.org
URL: http://www.bridges.org
South Africa: PO Box 715, Cape Town, 8000, South Africa
United States: PO Box 53099, Washington DC 20009-9099

About bridges.org
Bridges.org is an international non-profit organisation based in South Africa with a mission to promote the effective use of ICT in developing countries to improve people's lives. One area of focus is informing policy decisions that affect people's access to and use of ICT. Bridges.org also conducts technology research and provides social consulting services to ground level projects using ICT, helping with project planning and evaluation and relaying lessons learned. It brings an entrepreneurial attitude to its social mission, and is committed to working with, instead of against, government agencies and the business community. For more information please go to www.bridges.org.

About ESA-CIP
The East and Southern Africa Centre for International ICT Policy (ESA-CIP) is a regional non-profit organisation based in Uganda dedicated to increasing the capacity of East and Southern African stakeholders to participate in international ICT policy-making. The Centre forms part of the broader Catalysing Access to Information and Communications Technologies in Africa (CATIA) programme, which aims to enable poor people in Africa to gain the maximum benefit from the opportunities offered by technology and to act as a strong catalyst for reform. It is being supported by the UKs Department for International Development (DFID). For more information, see http://www.catia.ws

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