Global VSAT Review: Entomology, Meteorology And Policy Reform
You’ve got to wonder about Chaos Theory. You know: A butterfly flaps its wings in Japan and sets off a series of events that causes a hurricane in Jamaica.
Last February, there were about 25 of us in a room in Midrand, South Africa. We were a mixed group of government officials, the local monopolist, frustrated would-be African satellite service providers, and me.
The occasion was a Global VSAT Forum Regional Workshop, and I had just begun a presentation on reform trends in the international satellite sector.
One of the workshop delegates raised his hand: “Do you see any hope for South Africa? I mean, we have the expertise and the technology. The customers are asking for service…but Telkom’s local monopoly means we can’t provide any. It seems hopeless.”
I started to answer, but another delegate jumped in: “That’s true. We have clients that want connectivity and by the time we’ve factored in the local monopoly and costed out a satellite ‘solution,’ the price is too high. The customer just walks away–without any service.”
The butterflies’ wings had flapped. What was originally billed as a workshop was spontaneously transformed into a group-therapy session. The industry participants vented. Telkom valiantly defended itself. And the government representative took notes.
A couple of hours later–having scrawled a consensus-based action plan on the flipchart–a representative of South Africa’s Department of Communications and I stepped out of the workshop to discuss the possibility of a follow-up meeting involving local policy makers, the regulator, and the Global VSAT Forum.
The agenda? Fast-track reform of South Africa’s satellite communications sector.
As this magazine went to press, a meeting date had been set for this month. The timing is excellent, not least because the government had already initiated a broad communications policy review. In addition, South Africa–as a signatory of the World Trade Organization’s Telecom Trade Agreement–has already committed to end Telkom’s monopoly on VSAT-based services, possibly as soon as 2002.
Such events have more far-reaching implications. Other administrations in the region look to South Africa for guidance on reform. As South Africa formulates and, eventually, implements satellite deregulation this should serve as a catalyst, first in sub-Saharan Africa and eventually throughout the continent, leading not only to national-level deregulation but also to sorely-needed regional policy approaches.
The climate is ripe for change. African administrations–and for that matter, the Middle Eastern states–have gradually begun removing regulatory responsibility from the PTTs (a.k.a. the local monopolies); 46 percent and 24 percent of the African and Arab states, respectively, have established new regulators, according to the ITU.
Meanwhile, the African and Middle Eastern states continue to commercialize their telecom sectors–28 percent and 33 percent of the PTTs in each region have now been privatized, respectively. (As this publication went to press, two additional Middle Eastern PTTs were coordinating with the Global VSAT Forum in preparation for not only privatization but also liberalization of VSAT-based service regimes.)
That said, PTT monopolies are still the norm, not the exception. This is primarily why Africa and the Middle East–despite an acute need for VSAT-based solutions, such as rural telephony, distance education, telemedicine, and disaster recovery, not to mention Internet services, banking, mining, oil and gas, retail, and more–are home to the smallest installed base of satellite services in the world.
South African leadership will help. That, plus the fact that South Africa will be treading where other nations have already trod.
The ITU’s latest Telecommunications Indicators includes a section entitled “What works and what does not?” In the latter category, is the harsh truth that halfway measures toward competition “mainly had the effect of delaying the introduction of full competition,” according to the ITU report. Likewise, limitations on foreign ownership have proved “ineffective for everyone except those with political influence”–and whom foreign investors perceived as good partners for winning licenses.
As for effective approaches, the ITU singled out Nepal for attention. In countries that choose to retain a monopoly, the ITU advises that consideration should be given to opening parts of the communications sector to competition, and that’s what the government of Nepal did. Nepal Telecommunications Corp. had a monopoly on all international connectivity, and the government took the simple step of allowing others to provide international data connectivity via VSAT.
“[This] has had a transforming effect on the local Internet market,” says the ITU report. “Nepal’s international interconnectivity rose five-fold in a few months after the VSAT market was liberalized.”
The ITU’s conclusion: “Market opening works: Try it.”
From a Midrand VSAT workshop to independent regulators to privatization to WTO commitments to satellite reform to end users being permitted access to cost-effective communications…there’s a lot to be said for chaos. v
David Hartshorn is the Secretary General of the Global VSAT Forum. For more information, e-mail: firstname.lastname@example.org.