Brainstorm:At the moment South Africa's market is very fragmented, mainly along licensing lines. No one is sure when the regulator is going to clarify the situation. Gazing into your crystal ball, can you tell us what types of providers and what types of services can we expect to see when that day comes?
Gartner principal analyst for carrier operations and strategies, Will Hahn: Firstly, emerging markets are not going to develop into copies of today's developed markets. Secondly, South Africa, in particular, is going to be rather unique and is more likely to serve as a model for other countries than the other way around.
You're quite right to point out the regulator's responsibility and that's a mare's nest that needs to get sorted out urgently. However, I see little indication that events are going to force that hand. So in the end, I cannot support that it will be three years hence when all this has "settled down" or any other particular year. Whenever it is sorted out, the regulator will have made some important decisions:
1. Whether to issue unified licences;
2. What model of line-sharing versus facilities-based competition it wants to facilitate;
3. Clear and transparent rules from anti-competitive behaviour to foreign investment levels that come as close as possible to those generally used in the economy (i.e. reducing sector-specific powers to the lowest possible level consistent with consumer safety and satisfaction). This heavily implies that the government will exit significant ownership of telecommunications assets, but it's not impossible to retain a managed approach - just more difficult, in my opinion.
Whether it settles or not, I think there will be plenty of room for Huge, Vox et al. to grow in the shadow of Telkom, Neotel, MTN and Vodacom (certainly not in power order there). If they continue to offer point solutions and the government retains ownership and licensing restrictions, I would say it creates a field day for systems integrators. If the government allows open ownership and institutes unified licences (something like "here, you can provide telecoms services and we don't care what access network you build/lease to provide it"), then you could see serious consolidation, but as long as teledensity remains low, it would be tough for the big players to net all the successful little fish (unless government once again makes it too hard to get a licence).
Another "inevitable" factor to consider is the price of long-haul bandwidth. It is certainly dropping and could drop again by orders of magnitude if the submarine, terrestrial and satellite projects now in the works all come to fruition. This, combined with the more recent commitment to open access, just about guarantees that Telkom's monopoly will be broken open, and sooner rather than later. This also creates a fruitful market for converged offers - Telkom will initiate some, imitate others, but won't be able to contain them all. While the bulk of the market will remain in relatively few hands, I don't see consolidation that squeezes out significant new players altogether.
All of this likely applies more clearly to business customers than consumers. The fate of universal service is another issue regulators must continue to address and it's a thorny one. My biggest disappointment is that I don't have a neat model country to point to and say, "it will be like that, in three years". South Africa is unique and that's both the good news and the bad news.