# **Information and Communications Technology (ICT)**

**Overall assessment.** In general, the ICT sector in South Africa displays performance akin to that of the energy and water & sanitation sectors, with some interesting nuances emerging from the pricing of various services. At first glance, the overall indicator of access appears good, but supplementary indicators suggest less than expected quality and major gaps in service delivery, quality and even access in rural areas. For example, on the surface, South African households pay some of the highest local rates in the world, and the low affordability is reflected in low telephone ownership in rural areas. By contrast, off-peak cellular service and international calls to the United States are provided at low, competitive prices, catering largely the wealthier segments of the population. But this has to be qualified. The poor segments of the population may now be effectively by-passing the land-line network, and are switching straight into the cellular network. So the lower rates may not be exclusively benefiting the wealthy. (See the discussion below on the perception of cellular access.) Nevertheless, in the local debate on the cost issue, there are indications that high international prices prevail for calls to many other destinations, and that broadband access is both limited and expensive.<sup>8</sup> Moreover, quality, as measured by reported faults per year per 100 mainlines, appears surprisingly low for an upper middleincome country (Table 3 and Figures 5-6).

**_Access._** In terms of _mainline teledencity_ , the picture is similar to energy and water whereby South Africa has better penetration than SSA, Middle East & North Africa, South Asia, and East Asia Pacific countries but lags somewhat behind middle income countries and Latin America & the Caribbean.  However _cellular teledencity_ is reasonably comparable to upper middle-income countries though it still lags behind high-income OECD levels.  In terms of household _ownership of telephones_ , only 28% of South African households own a telephone, which is much higher than the upper middle-income benchmark of 13% and comparable figures for SSA and South Asia regions, both at 4%, and East Asia Pacific (9%). But it is still a long way from Europe and Central Asia (ECA) at 43%, suggesting considerable remaining room for growth. The ownership rates in rural areas, however, are seven times lower (6%) than in urban areas (43%) in South Africa, making the rural rate more comparable to those in entire group of middle-income countries.

**_Affordability—pricing_** _._ A 3-minute local call in U.S. cents is one of the most expensive in the world in South Africa at 15 cents, which is three times the cost in South Asia and East Asia Pacific and equal to the high-income OECD countries. This reflects monopolistic market structures in local services. Local debate in South Africa has also emphasized the high cost structure, including on the international call market segment.  Nevertheless, within the cellular and international segment, some calls are very competitive. For example, the database used for this benchmarking shows that in terms of the cost of three off-peak minute cellular local calls (25 cents), South Africa has one of the cheapest rates when compared with upper middle-income (54 cents) and high-income OECD (59 cents) countries where costs are twice as much. In addition, according to the database (with original data from the ITU—World Telecommunications Development Report) an international, 3-minute, peak rate, fixed line call to the United States in 2001 appeared lower than in upper middle-income countries and high-income OECD countries, but this needs to be checked against most recent data within the country and a more detailed look at the rate structure before making definitive conclusions.

> 8 See Truen and Hodge (2005).

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