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Good intentions, poor outcomes: Telecommunications reform in South Africa


  • Gillwald, Alison


As the first decade of democratic rule draws to a close in South Africa, this paper reviews the telecommunications reform process in terms of the performance of the sector against the twin national policy objectives of affordable access to communications services and accelerated development to meet the needs of a modern economy. It critiques the implementation of international reform models which have in practice tended to emphasise privatisation at the expense of other reform mechanisms--including competition and, in particular, regulatory measures. It argues that this has impacted negatively on affordable access and has inhibited market innovation. This paper identifies the root of the problem as the market structure. Designed around the vertically integrated incumbent operator, it induces inherently anti-competitive impertives that demands a resource-intensive regulatory response. The regulator has often not had the statutory powers, and seldom the capacity, to circumscribe the behaviour of the incumbent so that it does not impact negatively on new entrants. Without effective regulation, the assumed benefits of liberalisation--including more affordable access through improved management of the incumbent and more efficient allocation of resources in the market through competition--do not materialise. The paper argues that developing country telecommunications markets demand more from a regulator than simply meeting the threshold requirements of transparency and predictability via so-called international "best practice" models. Such a limited approach will not be sufficient to meet the challenges facing most developing countries. The highly imperfect nature of developing country markets, and the enormous income disparities and inequities that exist, require strategic regulation. This is necessary to enable innovative service provision, especially to under-serviced areas, and to facilitate fair competitive markets that promote the viability of the new entrants needed to build the information infrastructure--the infrastructure necessary for a country's participation in the global network economy. Simply removing all market-entry restrictions, however, is likely to place an even more onerous burden on already-struggling regulators and is unlikely to contribute to universal access and other developmental goals. A new policy approach involving the fundamental restructuring of the market is needed to remove the anti-competitive incentives that exist in the vertically integrated market structure that generally accompanies privatisation in developing countries. While a more horizontally structured market will not remove the incumbent advantage entirely, it is likely to reduce the need for constant adjustment of anti-competitive behaviour on the part of the incumbent, freeing up regulatory resources for more strategic regulation towards achieving national developmental objectives.

Suggested Citation

  • Gillwald, Alison, 2005. "Good intentions, poor outcomes: Telecommunications reform in South Africa," Telecommunications Policy, Elsevier, vol. 29(7), pages 469-491, August.
  • Handle: RePEc:eee:telpol:v:29:y:2005:i:7:p:469-491

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    References listed on IDEAS

    1. Madden, Gary & Coble-Neal, Grant & Dalzell, Brian, 2004. "A dynamic model of mobile telephony subscription incorporating a network effect," Telecommunications Policy, Elsevier, vol. 28(2), pages 133-144, March.
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    7. Heli Koski & Tobias Kretschmer, 2004. "Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(1), pages 89-113, November.
    8. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
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    Cited by:

    1. Morgan Bazilian & Patrick Nussbaumer & Hans-Holger Rogner & Abeeku Brew-Hammond & Vivien Foster & Shonali Pachauri & Eric Williams & Mark Howells & Philippe Niyongabo & Lawrence Musaba & Brian Ó Galla, 2011. "Energy Access Scenarios to 2030 for the Power Sector in Sub-Saharan Africa," Working Papers 2011.68, Fondazione Eni Enrico Mattei.
    2. Mohamad, Noorihsan, 2014. "Telecommunications reform and efficiency performance: Do good institutions matter?," Telecommunications Policy, Elsevier, vol. 38(1), pages 49-65.
    3. Gershon Sibinda, 2008. "Regulatory Environment Analysis In The South African Telecommunications Industry," South African Journal of Economics, Economic Society of South Africa, vol. 76(2), pages 212-227, June.
    4. Thamae, Leboli Z. & Thamae, Retselisitsoe I. & Thamae, Thimothy M., 2015. "Assessing a decade of regulatory performance for the Lesotho electricity industry," Utilities Policy, Elsevier, vol. 35(C), pages 91-101.
    5. Devkar, Ganesh A. & Mahalingam, Ashwin & Deep, Akash & Thillairajan, A., 2013. "Impact of Private Sector Participation on access and quality in provision of electricity, telecom and water services in developing countries: A systematic review," Utilities Policy, Elsevier, vol. 27(C), pages 65-81.
    6. repec:eee:juipol:v:45:y:2017:i:c:p:1-26 is not listed on IDEAS
    7. Nour, S., 2014. "The impact of ICT in public and private universities in Sudan," MERIT Working Papers 018, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Thai, Do Manh & Falch, Morten & Williams, Idongesit, 2015. "The Role Of Stakeholders On Implementing Universal Services In Vietnam," 26th European Regional ITS Conference, Madrid 2015 127184, International Telecommunications Society (ITS).


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