US embassy cable - 05PRETORIA4621

UNCLAS SECTION 01 OF 02 PRETORIA 004621 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR AF/EPS, AF/S/MTABLER-STONE, EB/CIP/TCARNEGIE 
COMMERCE FOR 4510/ITA/ANESA/OA/JDIEMOND 
TREASURY FOR BCUSHMAN 
 
E.O. 12958: N/A 
TAGS: ECON, ECPS, EINT, PREL, SF, XA 
SUBJECT: SOUTH AFRICA; TELECOM PRICE RELIEF REMAINS OUT OF 
SIGHT 
 
REF: PRETORIA 13001 
 
(U) This cable is Sensitive But Unclassified.  Not for 
Internet Distribution. 
 
1. (SBU) Summary. Minister of Communications Ivy 
Matsepe-Casaburri opened the Department of Communication,s 
(DOC) Second Colloquium on Telecommunication Prices stating 
that the Colloquium was needed to lower the cost of doing 
business in South Africa, to make the country more 
competitive internationally, and to attract investment.  The 
DOC's 19-page report supposedly contained recommendations 
about how this might be accomplished, but industry 
representatives were unimpressed and demanded more time for 
comment.  Undaunted, Deputy Minister of Communications 
Padayachee concluded the colloquium by stating that DOC would 
begin implementation of an action plan in six weeks.  End 
Summary. 
 
2. (U) The Department of Communications (DOC) held its Second 
Colloquium on Telecommunications Prices in Johannesburg on 
October 11-12.  Invited participants included representatives 
from industry, the Independent Communications Authority of 
South Africa (ICASA), and the consuming public.  Minister of 
Communications Ivy Matsepe-Casaburri opened the event by 
declaring that the purpose of the event was to lower the cost 
of doing business in South Africa, to make the country more 
competitive internationally, and to attract investment. 
 
Matter of Fact Attitude, but Facts Don't Matter 
--------------------------------------------- -- 
 
3. (U) At the beginning of the two-day event, DOC distributed 
a 19-page report drafted by the volunteer Telecommunications 
Pricing Working Group.  The report contained a number of 
recommendations about how South African telecommunications 
prices could be reduced.  Colloquium participants split into 
three groups, each tasked with discussing the report.  In the 
final plenary, the individual groups reported on their 
discussions. 
 
4. (SBU) At issue were twelve overarching recommendations 
that the Telecommunications Pricing Working Group listed at 
the end of its report.  However, the twelve recommendations 
did not necessarily relate to the text of the report.  The 
text contained a total thirty-three recommendations.  No 
analysis or explanation was given as to why only twelve were 
selected.  Some recommendations were vague, e.g., "We 
recommend the regulator to urgently examine the issue of high 
telecommunication prices."  Almost as an afterthought, the 
last recommendation read: "Strengthen the regulator," but the 
text of the report provided no supporting analysis or 
concrete suggestions as to how this might be accomplished. 
 
Industry Dissension 
------------------- 
 
5. (SBU) Industry representatives balked at the matter of 
fact attitude of DOC organizers and the "facts don't matter" 
approach of the report.  This formed the crux of their 
criticism of the Colloquium.  The report offered nothing new, 
they argued, and the final recommendations only confused the 
issue.  Some accused the DOC of holding the Colloquium to 
show that the department was doing something about high 
prices when this was not the case.  Others pointed out that 
the central problem was a weak ICASA, caused by the lack of 
leadership, understaffing, and dependency on DOC for funding. 
 They argued that ICASA needed to be strengthened to 
counterbalance the monopoly power of Telkom. 
 
6. (SBU) Unable to endorse the report or its recommendations, 
industry representatives requested more time to formulate 
comments.  The DOC granted them an additional two weeks 
before its Telecommunications Pricing Working Group would 
release its final report.  Undaunted by industry objections, 
DOC Deputy Minister Radhakrishna "Roy" Padayachee closed the 
Colloquium by promising that an action plan would be 
forthcoming and that the "first steps" in the plan would be 
taken within six weeks. 
 
Comment 
------- 
 
7. (SBU) Industry representatives and analysts agreed that a 
 
PRETORIA 00004621  002 OF 002 
 
 
strong ICASA was essential to fostering the kind of 
meaningful competition in the telecommunications sector that 
would ultimately result in lower prices, more choice, and 
better service for consumers.  The Colloquium and Working 
Group report contributed little to this outcome.  The DOC has 
long had a stranglehold on ICASA and appears to be using 
consumer discontent to tighten its grip.  Parliament is 
currently debating the department,s recently introduced 
"Telecommunications Convergence Bill" that would strengthen 
the regulatory role of the DOC at the expense of ICASA.  Not 
only would the DOC control ICASA's purse strings, but the 
Minister (rather than the President) would appoint all ICASA 
Councilors.  Without strengthening ICASA and/or a clear 
strategy to introduce more competition into the market, 
relief for weary South African consumers will likely remain 
elusive. 
TEITELBAUM