Slashdot Mirror
How SBC (AT&T) Pillaged South Africa's Economy
Kifoth writes "For 8 years, SBC and Telekom Malaysia controlled South Africa's only telecommunications company, Telkom. Telkom had a government granted monopoly in order for it to connect the large parts of South Africa that had been neglected under apartheid. Instead of helping, SBC abused their position and raised Telkom's prices to be among the highest in the world. The billions they made here ultimately went to fund their AT&T merger. From the article: 'SBC, described as "congenitally litigious", is said to have played a major role in the failure of South Africa's telecoms policy to develop a competitive telephone service. Under SBC's control Telkom not only failed to meet its roll-out obligations but behaved "as a tax on industry and a drag on economic growth."'"
A public process in this arrangement, as the article points out, would have caught this and corrected it. Public governments are thus not indictable. Yes, you can indict the government for letting it happen, but the ultimate source of the problem was corporate greed that lead to the collusion of government and a corporation, where if done systematically it would be called fascism.
Ultimately, it's still SBC's fault, despite whatever proximate causes/contributors enabled it.
A company with a "government granted" monopoly abused it. Shocking!
Incidentally, any true monopoly must be government granted. Without the government's force to keep competition away, it's merely a really effective competitor in an open market, like Wal-Mart.
A monopoly, whether government owned (e.g. the US Post Office) or government granted (e.g. AT&T and the Baby Bells in the US, before cellphones, cable company phone service, etc.), is not required to innovate and improve to retain customers, like a free-market business is. Because of this they will tend to deliver a lower quality product at a higher price.
Yeah, they should have mentions the government is the majority shareholder and got the lion's share of the profits...
... I have to say that Telkom is absolutely terrible. Have a look here for more info.
Telkom have consistently been a stumbling block to technological progress in the country, especially with regards to internet access. Telkom owns all the international links to the rest of the world from SA, and most of the bandwidth and international calls have to be routed through them. In fact, the price of ADSL has been so prohibitive that many individuals have pursued cellular alternatives, paying per MB, for light browsing instead.
While it's easy to criticise the private companies who have been managing it, Telkom is a parastatal, and not wholly private; roughly 39% is still owned by the South African government, so I'm fairly certain they weren't too unhappy about the affair. There has been evidence of cronyism at the company, too, most likely as a direct result of this: in 2004 a government pension fund was used "to buy telecoms shares for a group of former government officials". This was part of the government's Black Economic Empowerment (BEE) requirements that firms need to be 1/4 black owned before 2010, and falls within a pattern shown, by 2004 government surveys, that "68 percent of BEE deals went to just 6 black-owned businesses, all of which were owned by top members of the ANC party."
The whole thing stinks, and Saffas get screwed, as usual.
'If Christ had tweeted the sermon on the mount, it might have lasted until nightfall.' - John Perry Barlow
did what a capitalistic company has to do, it maximized its profit by raising the prices
thinking like that is one of the big problem I see that allows shit like this to happen. This thing called "company" you speak of does not "do" anything. it is something virtual, the point of which is to maximize profit, but no, not by raising prices. it is to charge the maximum it can for the demand. for services such as in this case, demand is close to inelastic, and competition, in an "actual" capitalistic market, would prevent this service from being actualized till supply is much cheaper. Once the government steps in and takes the competition away, hence creating an artificial supply curve, it is the government's job to dictate the prices, as we are no longer talking about capitalism. The government needs to set the supply curve if they chose to take away what brings supply lower - hence taking away the capitalism.
This is not at all capitalism. it is a capitalistic company allowed to roam free in a non-capitalist scenario. The people working for this company allowed to roam free are under contract to not steal from it's customers. It is the government's job to monitor this, if they take away competition, a vital part of capitalism. Those people broke the contract in an enron kind of way. It is the job of the government to take these people, who committed a criminal breach of contract. Forcibly the money back from from the "company" that stole it, refunding the people who were victims of criminal theft. Then prosecute the actual people that made the breach of contract decisions, and prosecute them for theft of billions of dollars. Prosecute them the same way as if they were to go into a bank and steal that amount. And revoke the company's license to exist as a company (within that country's jurisdiction).