The objectives of this research include an evaluation of whether or not competition can occur when Telkom is the supplier of part of the fixed line equipment as well as a competitor for the Second Network Operator. Internet Solutions is uniquely positioned to either greatly benefit or be extremely adversely affected by the introduction of the Second Network Operator (SNO) in South Africa.
Objectives of the study
If South Africa is to compete internationally, bandwidth costs must be brought down, as most businesses cannot afford the amount of bandwidth they need to operate efficiently. The high cost of telecommunications in South Africa is hampering the country's ability to grow, which directly affects the economy and social issues.
Research Methodology
Sampling
Non-probability sampling allows for subjective techniques as opposed to statistical techniques to be used when selecting the research samples to be investigated. This can in fact be investigated in more depth and in this case study purposive sampling will be used.
Limitations of the project
Many websites were used to access information that was uploaded and updated from the pre-internet era. Government speeches, laws and bills have been analyzed in terms of the changes that have been made to each one since the act or bill was introduced.
Structure of the research
- Chapter 1
- Chapter 2
- Chapter 3
- Chapter 4
- Chapter 5
The literature review part of the thesis, this chapter will examine the theories surrounding deregulation as well as the relevance to today's environment. A study of various environmental models (including the political, economic, social and technological model - PEST - and Porter's 5 Forces Models) will also be completed here, as this study seeks to gain a better understanding of the environment in which SNO and Telkom will be in operation.
Conclusion
CHAPTER TWO
Review of the theory and conclusions as to the relevance of those theories in the practical environment
Introduction
- The invisible hand
Deregulation
In fact Adam Smith believed so wholeheartedly in the invisible hand of the market that he believed governments should never interfere in market economies. In fact, government deregulation increases the market potential of the economy and provides a significant competitive advantage so that the producer, supplier and consumer all benefit.
The Telkom Listing
Relevance of the theory
Improved fiscal position
Increased foreign investment
Stimulate demand and therefore supply 4. Increase innovation and technical 'know-how'
- Improved Fiscal Position
- Increased Foreign Investment
- Stimulated Supply and Demand
- Increased Innovation and Technical 'Know-How'
- Increased Efficiency and Cost Affectivity
- Increased Service Levels
- Unemployment
- Instability of the market
- PEST Analysis
- Conclusion
For fixed lines it is a case of Telkom or nothing, which should change with the introduction of the second fixed operator. Goolam continued; "The amount of money that comes is not important, on the contrary, it is the signal that the government is giving to the investment community.
CHAPTER THREE
Components of the South African Telecommunications market
Introduction
Telkom
- The history of Telkom
- Telkom and deregulation
- Current Telkom Service offerings
It would take 106 years before the telecommunications department would once again be completely independent of the postal service. In 2001, the launch of the Telecommunications Amendment Act (Act 64 of 2001) for the first time gave many South Africans hope for an independent Second Network operator, comprising Eskom, Transtel and other as yet unnamed players (Neotel: 2006). Another point to consider is that the timing of the Telkom listing was not ideal.
Every organization operating in South Africa today must be aware of their social responsibility for the growth of the people of South Africa. One of the objectives of Telkom's stock exchange listing was to create ownership opportunities and promote a savings culture.
Neotel: The Second Network Operator
- Ownership
- The Neotel Network
- Services Neotel provides
These services are offered within the limits of the Transtel VANS (Value Added Network Services) and PTN (Private Telecommunication's Network) licenses. In addition to their own upgrades, Transtel has a close working relationship with MTN based on the identification, development and installation of base stations and containers (Transtel: . 2006), as well as the 23.7% investment that Transnet had in MTN to provide the majority of the shares were sold to Newshelf (Bidoli:2004). One of the most far-reaching telecom providers in Africa is connected to the World Wide Web via the underwater SAT-3 cable.
The acquisition of Tyco Global Network gives VSNL control over one of the most advanced submarine cable networks in the world (over 60,000 km long). This IP-based network's main connection to the outside world is on the SAT-3 cable, where it connects from South Africa to Sisembra in Portugal, from where it is connected to the rest of VSNL's international network.
Telecommunications regulatory environment
This act would see the introduction of an independent authority (ICASA) to regulate the South African telecommunications market and be accountable only to South African laws and the constitution. A number of objectives were stated; the only goal that would define the path of the market was to "regulate telecommunications in the public interest" (Polity: 2006). This would be a guiding objective to ensure partial liberalization of the market, and no member of the council should have a conflicting interest in sitting on the board and being part of the decision-making process.
In reality, the granting of the second license was repeatedly delayed, increasing doubt that the license would actually ever be granted, as well as creating distrust in the entire telecommunications deregulation process, until finally on December 9, 2005, the license was awarded to Neotel ( Neotel: . 2006). For comparative purposes, an environment that is the opposite of the South African environment will also be examined (the United Kingdom) to evaluate the outcome of deregulation in both similar and different environments.
De-regulated markets, & a critical analysis of the South African Telecommunications Environment
- Introduction
- Deregulated Markets
- Panama
- Colombia
- Brazil
- Bolivia
- Chile
- India
- United Kingdom
- Analysis of the South African Telecommunications Market
- PEST Analysis: Outcomes
- Porters Five Forces Analysis Model: Outcomes
- Conclusion
The liberalization of the telecommunications environment in the late 1980s was seen as an important step and the plan was called 'Apertura'. This meant that telecommunications providers would have to seek their competitive advantage outside the local environment, and in the case of COTAS-Teledata (a subsidiary of COTAS Ltda), it meant being able to offer international rates (or in long distance) that were materially lower than those offered by Entel (the incumbent). In South Africa there has been tremendous sponsorship of sporting and lifestyle events - prime examples being Cell C Sound of the City (concerts with music artists chosen specifically to appeal to the Cell C market) and Vodacom.
ICASA will have to keep a close eye on the market to prevent collusion by landline operators. In Chapter 5, conclusions will be drawn based on the studies done on the external and internal environments in Chapter 4.
CHAPTER FIVE
Introduction
Critical Success Factors
However, the broadband explosion was inevitable and this offered a cheaper, much faster option at a fraction of the cost. The CRM package, Siebel, manages all customer purchases, provides double-checking of sales numbers (and thus commission), allows the customer to view statistics, and allows the help desk to support the customer by viewing purchases made as well as contacts technical. Vision - Coats (2005) firmly believes that you should pay someone to 'look out the window'.
Google, perhaps one of the most profitable content providers in the world's telecommunications environment, had a vision to become a place where people want to work. One of the programs they run allows their staff to own a 'pet project' during work time.
Lessons Learned
- Panama
- Columbia
- Bolivia
- Brazil
- Chile
- India
- United Kingdom
The liberalization of the telecommunications market began in the late 1980s, but it was not until 1994 that competitors began to emerge. There has also been an 18 month delay between the publication of the SNO and their ability to offer services. South Africa appears to be following a similar path in terms of deregulation, as the introduction of the second network operator paves the way for a possible third network operator.
However, South Africa can look to Chile to see what would have happened if South Africa had chosen this path instead of the more moderate path of partial deregulation. South Africa needs to be very aware of the reality that this could happen here as Neotel prepares to offer services.
Telkom and Neotel
- Customer Service
In the case of the UK, the SNO held back the fact that Mercury was not granted access to the local loop. In SA, Telkom must allow Neotel access to the local loop, but the regulator has not specified what the cost of this access to the local loop should be. If the costs turn out to be high, Neotel will not be able to set its call costs at prices that are competitive and will lose its intrinsic value as a competitor.
The regulator must guard against this by ensuring that local loop access costs are reasonable. He went on to state: "The real challenge will be to ensure growth in the future, particularly as this will have to happen against the backdrop of competitors entering the market and us operating as a listed entity".
Reliability 3. Competence
In December 2005, Synovate completed a customer satisfaction survey and found that Telkom only had a 70% satisfaction rate. Granted, that was in December 2005, but SNO and its competition are a reality that only now has to be faced, 12 months later. One would think that Telkom would launch some serious customer support before the metaphorical horse leaves the stable.
SERVQUAL (see Figure 5.3.1.1) or Service Quality model developed by Parasuraman (1985) aims to identify perceived quality deficiencies. The developer proposes that "perceived quality depends on the size and positive or negative direction of Gap 5.
Responsiveness 4. Access
As we saw in the Telkom section above, there is very often a large gap between intent and delivery, so it remains to be seen whether Neotel can achieve their targets within the timescales set by the terms of their licence.
Communication 8. Security
Tangibles (evidence of the service)
- Pricing and Interconnections
- Technology and Staff
- Potential effects of deregulation in South Africa
- Macroeconomic effects
- Technological affects
- Sociological affects
- Regulatory Recommendations
- Conclusion
The SNO's international connectivity provides technology-rich and up-to-date access to the outside world. One of the key results of the partial deregulation of South Africa's telecommunications environment will be an increase in foreign direct investment. An increase in foreign direct investment can improve the country's overall fiscal position.
One of the hopeful outcomes of deregulation is that the level of customer service will improve. Stimulating the market through marketing and innovation in services and technology are both of exceptional importance.
BIBLIOGRAPHY
NOMENCLATURE
Value Added Network Services Voice over Internet Protocol Virtual Private Network Very Small Opening Terminal Wide Area Network.
KWAZULU- NATAL
