November 05 (IPS) – The COVID-19 pandemic has triggered a migration from physical workplaces in many areas of the economy to digital online services supported by employees who work from home. In parts of the economy such as mining, manufacturing, and hospitality, workers must continue to be physically present. However, other industries have found that virtual platforms are effective replacements for offices.
However, online requires digital infrastructure and information and communication technology (ICT) services. The digital infrastructure is essential to meet the new demand for virtual services as quickly and cheaply as possible. It also shows the potential of digital technologies to support economic growth. Many developing countries have extensive national strategies and initiatives to promote data mining, digital intelligence, e-government and e-commerce. These include India and China.
A number of countries have successfully used the digital revolution to enable broader socio-economic development. But South Africa has fallen behind. It lowered the International Telecommunications Union’s Information Society Index. The index measures the development of the countries towards information societies using three parameters: readiness, intensity and impact. For example, willingness is measured using indicators of access and skills. The 2018 index ranks South Africa 104th out of 144 countries in terms of access to fixed broadband, compared to 77th in 2002.
So what went wrong?
The “managed” liberalization of the incumbent telecommunications provider Telkom was unfortunate. The idea was that this would accelerate the development of the sector and provide affordable access to communication services. However, the broadband speed is 10% of that in countries like South Korea and Singapore.
South Africa has an appropriate political framework and the skills required for digital transformation. Instead of opening up the fixed line market, Telkom’s privatization resulted in a public company with a protected monopoly. Together with a weak and ineffective regulatory authority, Telkom successfully prevented the licensing of a second network operator. It also blocked steps towards healthy competition. This included the refusal to support the unbundling of local loops and the sharing of fixed line infrastructure.
In a recent Policy Research Paper, we outlined how the local digital industry can be stimulated. We are concerned with the question: does South Africa need new instruments or can traditional politics suffice?
Failures and successes
The 2013 National Broadband Policy, known as “South Africa Connect”, is considered a competent guide for South Africa’s digital development. The World Bank’s Broadband Commission on Digital Development noted this, for example
South Africa Connect is a great example of a policy that focuses on both supply-side and demand-side aspects.
However, a number of factors have stood in the way of digital transformation. One of them was the lack of continuity in the political and administrative management of the national ICT portfolio. Between 2009 and 2018, South Africa had 11 different ministers responsible for telecommunications. It only had four presidents at the same time.
Another reason was the ill-considered division of the ICT portfolio into two departments under the previous administration. This created disparities between telecommunications, broadcasting and information technology and hampered the progress of South Africa Connect.
A third factor was a conflict of interest between the regulator and the state as the major shareholder in Telkom. The Ministry of Communications was the administrator of the state stake in the privatized Telkom. But it was also responsible for the political and regulatory environment in which the company operated.
Finally, it is reported that political appointments in key agencies such as ICASA (the regulator) and the Universal Service and Access Agency of South Africa have limited capacity.
Despite its governance problems, South Africa has made some notable achievements.
For example, it has created a world-class research and education network. The South African National Research Network offers gigabit-per-second networks to all South African universities, science councils and national research institutions.
The model is based on the aggregation of demand from similar users and the purchase of long-term, high-capacity, leased-line or dark-fiber network capacity on a competitive basis from carriers. This is combined with the policy of always buying bandwidth levels based on future and unexpected requirement levels.
This was the key to success. The network was central to the digitization of higher education. It is now playing an important role in migrating the sector to online platforms. The graphs below show how the lockdown disrupted the network’s usual support for Internet traffic and resulted in massive migration to commercial networks.
SANReN support for internet traffic
Screenshot Screenshot.What do you need?
The key is a policy that is a mix of supply and demand side interventions. Measures on the supply side reduce costs for companies. Demand side refers to policies that stimulate demand.
On the supply side, the state must invest in an inexpensive, fast and universally accessible data transmission infrastructure. This should go hand in hand with supporting domestic digital businesses and entrepreneurs through public procurement processes to improve government services.
Estonia is a good example of how a combination of strategies can enable an advanced digital economy. On the demand side, the government has ensured decentralization, interconnectivity, integrity, open platform, uniqueness and transparency. The open platform principle ensures that every institution can use the infrastructure. Unique ensures that users are never asked to enter the same information twice.
Estonia’s approach led to a different architecture than the US. The focus there was on personalization, anonymity, information privatization and competitive efficiency.
Aspects of the Estonian model are based on a high level of trust between individuals and digital companies. It is also backed by an advanced capable state and highly skilled workforce. These factors make it difficult for other countries to replicate.
Developing countries must be of great strategic importance in developing their domestic digital industries. For example, developed countries like the US can impose an agenda on developing countries that enables the appropriation of local data, allows unrestricted repatriation of profits and prevents technology transfer.
Another important factor is that government interventions in digital space must be proportional to their technological capabilities. A capable state can be closely involved and control digital development. However, with limited technological capabilities, the focus should be on creating a favorable environment. This would include ensuring a level playing field, creating an open market, promoting healthy competition and providing appropriate legal frameworks.
For South Africa, the focus must be on developing a generally accessible data and digital public infrastructure. This should include high-speed broadband (more than 100MB per second) and support for domestic digital businesses and entrepreneurs. This should be done through public procurement processes aimed at improving government services.
A number of other steps should also be taken. The first is to develop the skills for data mining and digital intelligence. The second is to provide the legal framework to support systems for secure but inexpensive electronic transactions. The final step is to prevent global corporations from privately appropriating public data.
David Richard Walwyn, Professor of Technology Management, University of Pretoria and Laurens Cloete, PhD student, University of Pretoria
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