Statement on SA telecommunications policy

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Press statement issued by the Congress of South African Trade Unions.

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COSATU statement on the COSATU/CWU Submission
on the Intended Telecommunications Policy Directions

COSATU and the Communication Workers’ Union (CWU)
have made a joint submission on the Intended
Telecommunication Policy Directions, gazetted on 23 March
2001. The submission’s approach to telecommunications
policy rests on:
· Accessibility and affordability of telecommunications
services to working people and the poor;
· The direct interests of our members in the
telecommunications sector;
· The importance of this sector for South Africa’s economic
development.

Accessibility and market structure
Access to telecommunications is a basic need and right,
necessary for people’s full participation in society and the
economy. Lack of access wastes time and money and limits
opportunities. Universal access to telecommunications is also
crucial in building an inclusive and cohesive society and
strengthening democracy.

COSATU is not convinced that the proposed market
structure will foster a telecommunications industry which
meets people’s basic needs. While we are not opposed to
some regulated competition for the provision of high-level
services to business, we are opposed to competition in the
provision of basic telephony.

To maintain Telkom’s integrity, viability and orientation as the
national public telecommunications provider, COSATU
believes it should retain its public sector character and
obligations. The state is best placed to deliver basic
telecommunications services and therefore public ownership
and a public sector (non-commercial) orientation of Telkom
will best dispose it to quality and equitable service delivery.

Given the massive needs for the extension of telephone
services, the optimum market structure would be for Telkom
to have sole responsibility for the roll-out of basic telephony,
with this responsibility being funded both from the fiscus and
dedicated levies on operators providing other
telecommunications services. Any telecommunications
providers, including Telkom, need tightly circumscribed license
conditions and ongoing monitoring and regulation, to ensure that
government objectives, particularly universal service, are indeed
met.

The attainment of universal service is a priority and a
challenge, but a more decisive approach is needed to extend
services to the majority of South Africans. The page-and-a-
half of the Policy Directions devoted to this does not clarify
how progress will be accelerated. Government should set a
five-year target for universal service for all, with every
household linked up to the telephone network.

Affordability
If they are to be genuinely universal, however, telephone
services must be affordable. They will not be universal if
phones are disconnected as fast as they are installed because
people cannot afford them. An international study suggests
that basic telephony should cost no more than 0.7% of a
household’s total income. But in South Africa the total
households spend on telephony is 2.87% of monthly income.

Given the high levels of poverty and unemployment,
affordability means state funding and cross-subsidisation.
Competition will not address the problem of high tariffs for
basic services, and may actually worsen the situation if price
cuts are concentrated at the upper end of the market. Ongoing
direct regulation of tariffs will thus be necessary to ensure
affordability of basic telephony and genuine universal service.

COSATU proposes a price structure based on the system of
lifeline services and progressive block tariffs developed for
municipal services, incorporating cross-subsidisation. We
support the apparent intention to increase the size of the
Universal Service Fund.

Employment
South Africa is currently facing an unemployment crisis
and this is a central policy challenge facing us. Any policy
initiative needs to be guided by the imperative of protecting
current jobs and creating new ones. Telkom has already shed a
fifth of its workforce over the past year, down from 61 237 in
1999 to 49 128 in 2000. The possibility of future retrenchments
would obviously further worsen the unemployment situation.

Job retention and creation in telecommunications is not only
compatible with universal service provision: the massive rollout
of infrastructure and services required actually depends on
sufficient adequately trained and motivated employees.
Telkom should be investing in training staff, not retrenchment.

Conclusion
In a nutshell, the telecommunications priority for COSATU is
the extension of affordable telephone services to all South
Africans. We do not believe the market structure proposed in
the Policy Directions can achieve this.

For further information please contact Fiona Tregenna at the
COSATU Parliamentary Office on 021 461 3835

Siphiwe Mgcina
COSATU Spokesperson

[email protected]
082-821-7456
339-4911

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