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."'"

Comments

Re:Hmm...

[NessunoImp]

Root of the problem: "as a privatised, state-backed monopoly without a forceful regulator...."

When are governments going to learn? If you are going to privatize, you have to OPEN up the market rather than create a quasi-governmental monopoly. This reeks of mercantilism, which is a pre-capitalistic notion that it is better for a government to protect its industries than open the market to trade and/or competition.

Mercantilism always has bizarre and harmful unintended consequences.

Re:Who said anything about communism?

[zeromorph]

It's capitalism at its best. Remember, Laissez-faire Manchester type capitalism is just one flavour of capitalism. And by far not the most frequent one.

One defining characteristic of capitalism is accumulation of capital/maximizing the profit. A monopoly is a very good way to do so. (Does Microsoft ring a bell?)

This particular monopoly was a government-granted monopoly but monopolies also develop under free-market conditions. Did you never wonder why capitalism needs all this laws and regulation to protect the *free* market? I guess it's not because companies like competitors and want them to stay.

Finally, this monopoly was granted to ensure Telkom a profit for building infrastructure in remote areas. Public services are a typical problem of capitalistic economies since they tend to be unattractive for companies.

And with the monopoly granted Telkom did what a capitalistic company has to do, it maximized its profit by raising the prices.

All I can see is capitalism at its very best. Not very pretty but nothing surprising.