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Economic Growth

Govt looks to Telkom “buy-in” of call centres as high prices continue to cause concern

Wed, 15 Nov 2006 17:00

According to Trade and Industry Minister Mandisi Mpahlwa, in so doing government sees telecommunications costs in the country being lowered.

The Minister said the high costs of telecommunications mitigated the ambitions to establish South Africa as a key international location for the burgeoning international call centre industry.

And while government is also a shareholder in the country's dominant telecommunications company, the “current shareholding arrangements of Telkom are such that [government] can't just instruct Telkom what to do”, he said.

Mpahlwa was addressing reporters on progress made in the Economic, Investment and Employment Cluster in terms of the government's programme of action.

However, a model of “developmental pricing” in telecommunications similar to that developed for the electricity market was being explored, said the trade minister.

This would involve a similar process in developing a framework for a system of favourable pricing where large-scale investments are concerned.

He also urged telecommunications companies to consider the volumes of traffic that would be generated should business process outsourcing take off properly. Companies involved would benefit from these large volumes, he added.

Another way of bringing down telecoms costs in South Africa would be through the existence of competition, now expanded by the recent coming on stream of the country's second national operator, Neotel, Mr Mpahlwa said.

The existence of such competition would be “an incentive in its own right”, he said, referring to a stated option of providing incentives to Telkom to lower costs for call centres, adding that government would be working with both national operators.

This more competitive environment would be enhanced as more broadband rollout projects come on stream and as the Eastern Africa Submarine Cable System (EASSy) picks up steam, with seven countries having already signed the Nepad protocol for this project and more expected to sign it by the end of this year.

Other broadband projects include that of state-owned signal distributor Sentech, whose business plan on the rollout of wireless broadband to the Department of Communications has been finalised.

And from March next year, mobile operators will be authorised for self-provisioning of international connectivity, while municipal ICT broadband is to be linked to USALs – so-called under-serviced area licencees – by July next year.

At the same time, Infraco, a new entity focusing on the provision of broadband infrastructure, is on stream, reporters were told.

Government is not looking at providing direct incentives to Telkom, said the trade and industry minister, but rather at “buy-in in terms of what we see is enormous potential for South Africa”.

At the same time, government would be using its position as a major shareholder in Telkom to exercise its “own influence” on the local telecommunications giant, said the minister.

Government sees it as “exceedingly important” to address the question of telecommunications pricing, which it regards as a “major challenge” to its ambitions to turn the country into a desirable location for business process outsourcing, given the country's favourable time zone for the European market especially and given the large numbers of people in the country who speak fluent English.

Growth in this sector has been projected as being “quite huge” over the next five years, said the minister, giving South Africa an opportunity to establish itself as a location.

Yet government is looking at a range of possibilities “beyond business process outsourcing in South Africa” as it plans ahead, said the minister, adding that government was looking to get “something broader” out of the worldwide growth in BPOs.

Without providing further details on this apart from saying that South Africa had advanced financial services and insurance industries with suitable depth for international competitiveness, he did, however, urge telecommunications companies to think bigger and further forward, and to weigh up the possibilities that would exist further down the line.

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