What are your current policies and priorities with respect to increasing broadband penetration throughout South Africa?
CARRIM: We've gathered from various studies, not least the World Bank, that for every 10% penetration of broadband, you can get up to 1.38% growth rates, particularly in developing countries. Now we think that with the broadband policy, strategy, and plan that we're taking to Cabinet, we're going to create a huge impetus for a significant rollout of broadband. We're looking towards public-private partnerships in that regard, because the cost of rolling out broadband in our country is far too great, and government alone cannot do it. So we're working towards cooperation with the private sector while recognizing, understandably, that the private sector's orientation is to get rates of return on their investment, and so they will focus largely as they've done until now, on the urban areas. But what about the poor? What about the disadvantaged? What about the rural areas that perhaps need broadband even more than those of us who live in the urban areas. That's where government, through its state-owned companies, and through its share in a publicly listed company, and we'll explore that carefully bearing in mind market considerations, will actually take a greater measure of responsibility for the rollout of broadband.
However, what we are also doing with the transfer from analog to digital migration on terrestrial television is that we will be able to release spectrum, that's newly released and that's much needed by the mobile operators in particular. When we release spectrum, the independent regulator of our country, ICASA as it's called, the Independent Communications Authority of South Africa, will have license obligations for those who get the spectrum, to ensure that they focus more than they currently have on the underserviced and un-serviced areas.
How is the government working to overcome the challenges faced by domestic private sector players and foreign investors in South Africa?
CARRIM: We're acutely aware, to our great regret, that one of the reasons for foreign investors not flowing into South Africa to the extent we would like is the high costs of communication. We're saying that, with our broadband policy, strategy, and plan, we’re on the cusp of reducing the cost to communicate. Already, the independent regulator has taken a position to significantly reduce the mobile termination rates and to create a degree of asymmetry to provide for more competition so that the cost to communicate can come down. This will benefit not only the poor and the disadvantaged or even just the average citizen or user of cell phones in South Africa, but more fundamentally, it will reduce the cost of business for South Africa and it will benefit the economy as a whole.
Of course, we're aware that the mobile operators, some of them at least who feel that they are being disadvantaged, are saying that if this goes ahead as it is intended to on April 1, 2014, they will have less money to invest in new infrastructure; they will have less room to actually help in the delivery of devices to their customers at a lower cost. We understand their concerns. We're trying to find a balance between the needs and interests of the consumers and the economy as a whole on the one hand, and obviously the needs and interests of the mobile operators who obviously must have a rate of return on their investment that's profitable enough.
We're acutely aware, to our great regret, that one of the reasons for foreign investors not flowing into South Africa to the extent we would like is the high costs of communication.
Now, we've heard this before when we reduced the cost to communicate. In fact, the experience of that over the last three years, is that they did not suffer particularly, but in fact they increased their revenues and profits and the number of consumers they now have. We think that yes, in the immediate term, they might lose out on profits, but in the medium and long term, with the growth of the economy, with development and job creation, they will have more consumers available to use more of their services. At the moment, our country has something like 30% of our people using smart phones, which allow for much more use of data, and it's in data in particular that these mobile operators can draw more profits today. So in short, we are saying to both the domestic investors and the foreign investors, we are now significantly reducing the cost to communicate.
But the other difficulties which foreign investors tell us are standing in the way of more effective foreign investment, are our transport costs and our energy costs. So the government has decided to focus in the period ahead on ICT, transport, and energy, and there are links between these three sectors. We are saying that we are poised now to create the conditions for far more foreign investment and even far more domestic investment, and we are saying to investors, foreign and domestic, please engage with our ministry, engage with our government, and assist us in your own interests. We've said it to the mobile operators, yes you might lose out a bit on your immediate profits but the economy as a whole will benefit, and it will create the space for you to get far more of your consumers using far more of your services. So you might sacrifice in the immediate instance some profits, but you will benefit in the medium and long-term interests.
Let me also say that our government is very committed to dialogue. We are very keen to engage with both foreign and domestic private sector industry players, not just in the ICT sector, but in any sector, and we think that we're a crucial country for growth on the continent as a whole. Yes, yes, other countries are doing very well. Yes, yes, we hear that foreign investors are saying they might actually get better deals elsewhere in Africa. We do not want to be seen as grudging about that. If other countries in Africa are growing, it is good for us. It's our continent. It's good for the poor and the disadvantaged. Anywhere in the world if the poor and the disadvantaged benefit, it's good for all of us including those of us in South Africa. But at the moment, we are the most powerful economy in our part of the world. We have the most advanced infrastructure. We accept that we could have made better decisions, we could have shaped better policies, we could have shaped better legislation, we could have been more abreast of changes in ICT and adjusted our policy and legislation in that regard, but that's the past.