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, reordered 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, South Africa 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. Government’s 2016 ICT policy, and by extension the new Electronic Communications Amendment Bill, however, exacerbates the bad aspects of the ECA and then 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, South Africa runs the risk of under-developing new industries.
Opposition to govt policy
With very rare exceptions, the ICT sector declared its unequivocal opposition to 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 the Bill would not take. 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 South Africa is not to lag behind its overseas competitors, it needs to bridge this legal divide as quickly as possible.
South Africa’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. In order 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 around 98% broadband coverage for South African households and more than one mobile phone 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 telecommunications regime that government proposes.
While not perfect, the current legal regime governing ICT in South Africa has been more than adequate and has allowed ISPs, 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 upon 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. South Africa 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 over 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 South Africa’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 South Africa’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, South Africa will require an open communications market.
Martin van Staden is Legal Researcher at the Free Market Foundation and co-author of The Real Digital Divide (2017). He is an LL.M. student at the University of Pretoria