Telecommunications liberalisation was a key factor in the productivity boom in the US and elsewhere in the late 1990s. It proved that there are benefits to be gained from introducing competition into SA's telecom sector.
That is why, for many in the industry, the slow progress towards liberalisation is so frustrating.
If it had reached the stage of development it could have by now, the cost of communications would have fallen dramatically.
"When you look initially at the lack of progress in SA's telecom liberalisation, it's easy to poke fun," says William Hahn, principal analyst at research firm Gartner.
"If the second network operator (SNO) is licensed this year, it will be two years late, and we were supposed to have a third operator at the end of this year."
Despite some progress, Telkom retains its iron grip on the market.
However, the situation is not that simple. " The course of the mixed-state philosophy', or, in telecom terms, the attempt at managed competition, will never be a broad or easy road," he says.
But SA is also making a number of fundamental errors in its approach to market liberalisation.
Government ownership of commercial assets - it is the largest shareholder in Telkom, with a 38% equity interest - is a hindrance to liberalisation.
"There is no example of [state] ownership in telecoms that hasn't proved to be more trouble than it's worth," Hahn says.
To make matters worse, he says, government controls almost one-third of the SNO through its ownership of Transtel and Esi-tel, the state-owned enterprises that have contributed the facilities to the new entrant. There is no reason for this. Equity and other empowerment imperatives can be achieved without state ownership, he says.
Government's shareholdings in SA telecom providers have complicated every move it has made to liberalise the market.
Government, Hahn says, must sell "every last share" in Telkom - and through it, in Vodacom - as well as the facilities-based entities in the SNO as soon as possible.
Government must make it clear that its role is as an arbiter and catalyst, not as a participant.
Another potential problem is government's singular focus on licensing only one all-purpose, fixed-line competitor to Telkom. Hahn says this is unique in recent times. "It mirrors UK and Canadian attempts in the past, which were not successful," he says.
Another area that needs attention is Telkom's monopoly of the submarine telecom cables that link SA with Europe and Asia . Telkom has come under fire after a report by research firm Genesis Analytics showed it was charging its clients an average of 399% more for access to these cables than its peers in other countries.
The communications department said recently that it would ask the industry regulator, the Independent Communications Authority of SA (Icasa), to consider declaring these cables an essential service. If Icasa were not able to do this, the department would seek legislative changes to enforce it.
Hahn says Icasa should invite comment from all affected parties to find possible resolutions to the problem. If Telkom carries out the threat made recently by CEO Sizwe Nxasana not to invest in new cables running through the region, Icasa should allow Sentech, the SNO or a private player to step into the gap by arranging the needed licence and permissions, he says.
SA's telecom industry is "rife with possibilities", Hahn says. Mobile carriers already own more connections than Telkom, and will grow even quicker over the next three years. Gartner predicts that by 2008 about eight in every 10 connections in the SA market will be mobile.
But more competition is needed. Hahn feels that the combination of the licensing of underserviced-area operators (Usals) - these are full telecom licences granted to companies to serve areas outside the main metropolitan centres - as well as the legalisation covering voice over Internet Protocol and the imminent licensing of the SNO, could be enough to begin breaking down Telkom's monopoly.
"If the Usals use their funds to build lines that Telkom wouldn't have; if the value-added network service providers, or at least several of them, choose to enter the market; and if together with the second and third mobile players they choose to turn to the SNO as the most viable alternative source of transport and bandwidth, then Telkom would be facing a powerful alliance of competitors that have the size, reach, flexibility and social commitment to require a serious response.
Centred on the SNO, the alliance's fibre network will galvanise the alliance and it will "be able to offer everything Telkom does (with the possible exception of cheap access to international bandwidth), at competitive price points, and to reach customers that the incumbent argues it cannot".
But, Hahn cautions, there are a lot of "ifs" that have to be addressed. In 18 months, it is equally possible that the Usals will be struggling and the SNO will be "ambling along, serving a few dozen business clients whose locations are on the routes already served by the fibre network that was in place years ago, and extending virtually no service to remote or consumer sectors".
In this scenario, the cellular companies will have entrenched their dominance.
