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How SBC (AT&T) Pillaged South Africa's Economy

kdawson posted more than 6 years ago | from the privatization-trumping-liberalization dept.

The Almighty Buck 270

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."'"

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270 comments

Hmm... (5, Funny)

bigstrat2003 (1058574) | more than 6 years ago | (#20364193)

Wow, a large company with a history of doing ridiculous things purely for its own profit, does a ridiculous thing purely for its own profit in a young foreign market, where it's no doubt easier to get away with this stuff.

Seriously, I didn't see this one coming.

Re:Hmm... (1)

nickhart (1009937) | more than 6 years ago | (#20364259)

Wow, capitalism in action.

Re:Hmm... (0)

Anonymous Coward | more than 6 years ago | (#20364325)

Take your commie claptrap elsewhere. Government enacted monopolies are anathema to free markets.

Who said anything about communism? (1)

Infonaut (96956) | more than 6 years ago | (#20364371)

Government enacted monopolies are anathema to free markets.

Uhhh.. yes. And what does that have to do with a critique of capitalism gone awry? You are aware that there are positions between libertarian free markets and completely state-controlled economies, right?

Re:Who said anything about communism? (4, Insightful)

MyLongNickName (822545) | more than 6 years ago | (#20364673)

Because this is a discussion about AT&T and South Africa. The poster used this as an example of "capitalism gone awry" which it is not. It would be closer to fascism than capitalism. A central authority made a decision for the entire country, leaving one player in place to implement a system. Nowhere does this remotely look like capitalism.

Re:Who said anything about communism? (5, Insightful)

zeromorph (1009305) | more than 6 years ago | (#20365109)

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.

Re:Who said anything about communism? (1)

Planesdragon (210349) | more than 6 years ago | (#20365171)

The poster used this as an example of "capitalism gone awry" which it is not.
Yes, it is. Capitalism, like democracy, will destroy itself on a long enough time-scale if there are not anti-capitalist checks to ensure that capitalism survives.

Re:Who said anything about communism? (1, Insightful)

Anonymous Coward | more than 6 years ago | (#20364719)

You are aware that there are positions between libertarian free markets and completely state-controlled economies, right?

Of course he is. But look at the comments so far, The usual Slashdot mixture of sardonic humor, cynicism and sarcasm. People are resigned to watching this run all the way, hoping perhaps that it will burn out in some spectacular crash that we can all sit back and watch the fireworks. I've lost count of how many articles I've read this week alone with the theme that capitalism is heading for catasprophe. Greed and ignorance have lead us down a road that is difficult to pull back from. How do you reclaim the sensible middle ground when the legal and electoral systems are a bought and paid for part of the whole corrupt system? As time goes by I've swung from away from being conservative, not towards the left but towards self empowerment. I used to work in the media industry but now I see no option than to wholeheartedly support "piracy". Economies are being destroyed everywhere by what is essentially a tax on liberty, on free movement, free association and communication. The war on travel vis TSA and the war on communication with warrentless wiretaps conducted by megacorps in league with government are part of the same thing. Those who still believe it has anything to do with security are idiots, it's about control and money. If they could tax us for breathing they would do so in a moment. We have to defeat these sociopaths, legally, illegally, one way or another. There is short window of history available where we still have one power, the power to take this technology away from them. Aren't there enough mobile phones in existence that they could be hacked and turned into an open mesh network? Free communications for everyone? That would be an interesting start.

Re:Who said anything about communism? (1)

Simon80 (874052) | more than 6 years ago | (#20364843)

Aren't there enough mobile phones in existence that they could be hacked and turned into an open mesh network? Free communications for everyone? That would be an interesting start.

Unfortunately, if it can't be done in software, then it's not at all feasible on a large scale, and I'm guessing that can't be done in software. Plus, I don't think a p2p mesh of cell phones would be enough to enable wireless communications at the quality of cell phone networks. One still needs a way to connect the network to the PSTN, and it has to have enough bandwidth to carry phone calls.

I think it would make a bigger difference if cell phone base stations could be shared freely in the same way that 802.11x access points are shared today(intentionally or not). Unfortunately, it seems that in some places (the UK, for example), law enforcement thinks that it's their job to police "unauthorised" use of wireless access points. Imagine the same people trying to wrap their heads around the benefits of democratizing cellular networks?

Re:Hmm... (0)

Anonymous Coward | more than 6 years ago | (#20364473)

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Re:Hmm... (0)

Anonymous Coward | more than 6 years ago | (#20364815)

One of my favorite movies of all time. BElieve it or not, this song is the ringer on my cell phone.

Re:Hmm... (0)

Anonymous Coward | more than 6 years ago | (#20364861)

Stop buying your music at Walmart.. f**king censorship.

Re:Hmm... (1)

Colin Smith (2679) | more than 6 years ago | (#20364649)

ITYM State regulation in action.

 

Re:Hmm... (2, Insightful)

jcr (53032) | more than 6 years ago | (#20364685)

Nope, state interference in markets in action. This story is an object lesson in why governments shouldn't keep competitors from entering a market.

-jcr

Re:Hmm... (0)

Anonymous Coward | more than 6 years ago | (#20364305)

Yes, and let's just ignore the inconvenient fact that in the process they imprisoned and enslaved millions of people. They were forced to live in their own fecal matter, drink their own urine. Children were separated from their mothers. Rape was commonplace, and if a child was unable to sufficiently satisfy, he or she would be brutally and mercilessly beaten and urinated on, left to die a broken and soulless shell of a human.
Food is rarer than gold in these camps, and cannibalization was so common that the guards would burn the weakest prisoners to try to dampen the urge for the other to murder them and eat what little was left of their starving, wasted bodies.
Countless, unspeakable acts occurred in these camps, on a daily basis. All because you want cheap phone service, you terrible, terrible bastard.

Re:Hmm... (5, Insightful)

NessunoImp (1138559) | more than 6 years ago | (#20364309)

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:Hmm... (3, Insightful)

gmack (197796) | more than 6 years ago | (#20364623)

The trouble is that it's very hard to do that with telephone service. There are a lot of installation costs when the cables are put in the ground and the returns aren't very large.

The problem here is that an inexperienced government got taken advantage of by SBC. SBC has a history of buying their way into a monopoly then abusing that position to no end. In several cases they have even gotten the local governments to ban VOIP and then blocking those ports at the isp leave.

Re:Hmm... (1)

the_womble (580291) | more than 6 years ago | (#20364679)

Mercantilism is not"pre-capitalist", it is a form of capitalism that takes a different from free market capitalism.

I would say mercantilism is still very much alive and well, although no one would call it that: the usual phrase is something like "business friendly"

Re:Hmm... (0)

Anonymous Coward | more than 6 years ago | (#20364343)

I don't see how raising your prices is ridiculous if you have no competition anyways, ISTM it would be more ridiculous not to do so.

Backlash against domestic suppliers (2, Insightful)

EmbeddedJanitor (597831) | more than 6 years ago | (#20364821)

During the apartheid days, South Africa had a well established telecommunications industry that could make phones etc. These companies could easily have done what was needed to provide the telecom infrastructure for the new Southa Africa. THis would have kept money in the country and provided a few more jobs.

However, most of these companies were also involved in making military stuff that propped up the apartheid regime. Likely they were "punished", to the detrament of all.

Re:Hmm... (1)

hxnwix (652290) | more than 6 years ago | (#20364867)

I would just like to say that connecting the country of obscene profit taking with a continent of disrupted societies and precarious governments, with no oversight whatsoever... umm... Well it didn't have a good outcome.
I'm sorry, but I don't see how anybody could possibly have predicted this. Clearly, we are looking at a bad situation and we should all pull together and do our part. This is not a time for blame - I know that if we all do our share, we can make the world a better place, "one sub-Saharan nation at a time."

~AT&T

Headline should read: (3, Insightful)

Anonymous Coward | more than 6 years ago | (#20364195)

How South Africa's Government Pillaged South Africa's Economy

Re:Headline should read: (4, Informative)

sethawoolley (1005201) | more than 6 years ago | (#20364389)

How South Africa's Government Pillaged South Africa's Economy
It's not clear from the article that South Africa's government gained anything from this (there's a small note about (greedy) "management smarts" being imported, but it is very clear how SBC gained enormously). The headline seems quite valid unless you're a fundamentalist market libertarian that can never find fault with a corporation since it's always the government's fault.

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.

Re:Headline should read: (1, Insightful)

Anonymous Coward | more than 6 years ago | (#20364577)

Well...the South African government was and still is the largest shareholder in Telkom. They definitely have benefited from the huge profits that Telkom has made over the years in the form of dividends and capital appreciation of the shares. Not hard to make money when you're the only company allowed to provision fixed line services.

Re:Headline should read: (4, Informative)

mac1235 (962716) | more than 6 years ago | (#20364591)

Yeah, they should have mentions the government is the majority shareholder and got the lion's share of the profits...

Re:Headline should read: (1)

sethawoolley (1005201) | more than 6 years ago | (#20364725)

Yeah, they should have mentions the government is the majority shareholder and got the lion's share of the profits...
Yeah, I see that now, thanks. As I said, the article wasn't very clear.

I consider it fascism at its most insidious: government owning a stake in a private corporation, and allowing it to run privately, without public oversight.

Despite what minor bribes probably took place, that was the major bribe for the government.

Is that the definition of Fascism this week? (1)

HornWumpus (783565) | more than 6 years ago | (#20364969)

Leftests use the term to mean whatever they want it to mean. Always ignoring Fascisms Socialist core (Mussolini etc).

Fascism like many other forms of Socialism involves the government owning industry and running it as it sees fit.

Re:Headline should read: (1)

Original Replica (908688) | more than 6 years ago | (#20364675)

It's not clear from the article that South Africa's government gained anything from this

Good point. I'm sure no money changed hands between government officials and SBC. I'm sure they gained and maintained their state backed monopoly through a really clever sales pitch and a snappy powerpoint presentation.

How South Africa's Government was Utterly Stupid (1)

Colin Smith (2679) | more than 6 years ago | (#20364741)

but the ultimate source of the problem was corporate greed that lead to the collusion of government and a corporation,
Oh, don't be stupid.

Corporate greed has always existed in one form or another since the dawn of the human race. Greed is human nature. The utter utter stupidity is not to take it into account, and that's where free markets come in.

You pit one greedy bastard against a dozen other greedy bastards. Everyone benefits from the hard work of the group of greedy bastards.

The fault lies with the either utterly stupidity or corrupt politicians who granted the monopoly. It has nothing to do with libertarian ideology and everything to do with understanding human beings.

 

Re:How South Africa's Government was Utterly Stupi (0, Flamebait)

sethawoolley (1005201) | more than 6 years ago | (#20364811)

but the ultimate source of the problem was corporate greed that lead to the collusion of government and a corporation,
Oh, don't be stupid.

Corporate greed has always existed in one form or another since the dawn of the human race. Greed is human nature. The utter utter stupidity is not to take it into account, and that's where free markets come in.

You pit one greedy bastard against a dozen other greedy bastards. Everyone benefits from the hard work of the group of greedy bastards.

The fault lies with the either utterly stupidity or corrupt politicians who granted the monopoly. It has nothing to do with libertarian ideology and everything to do with understanding human beings.
Oh don't be naive.

Your general premise is "People will do bad things, thus they aren't at fault for their badness if they are allowed to do it."

So if people are part of the government, and they allowed this bad thing, they aren't at fault for their badness too, since the people allowed them to?

So, it's back to the people who didn't intervene against these politicians who are at fault -- but they did a bad thing by doing that, and who allowed them to be passive?

You see where this is going?

I think I've got the more coherent point that both the government and the corporation were complicit and both were wrong.

But alas, you're a libertarian ideological fundamentalist, so if the corporation did something bad, they didn't do anything "actually" bad.

Whatever.

Re:How South Africa's Government was Utterly Stupi (1)

Colin Smith (2679) | more than 6 years ago | (#20364933)

But alas, you're a libertarian ideological fundamentalist, so if the corporation did something bad, they didn't do anything "actually" bad.
Eh, no. The purpose of a corporation is to make money. As much money as they can get their greedy little paws on. It's the stated purpose. In black and white. Anyone with half a brain and an honest heart realises that's the purpose of a corporation and treats it accordingly.

The purpose of a government is to govern for the benefit of it's people. Not to make money for corporations. The fault therefore lies with the government (whether corrupt or stupid) for allowing the monopoly situation. The corporation did exactly as it was supposed to. The corporation did a good thing, not a bad thing, for it's shareholders. It fulfilled it's purpose admirably.

 

Greed is not bad. (1)

HornWumpus (783565) | more than 6 years ago | (#20364937)

Greed simply is.

Greed within healthy competition produces very good results. The other guys greed acts as a check on mine, and vice versa.

Wishing greed away is the fundamental flaw in socialist thought.

Re:Headline should read: (0)

Anonymous Coward | more than 6 years ago | (#20364869)

The headline seems quite valid unless you're a fundamentalist market libertarian that can never find fault with a corporation since it's always the government's fault.

What part of 'government granted monopoly' do you confuse with fundamentalist free market libertarians?

This is the telecom equivalent of 'single payer healthcare', or 'universal care', or 'hillarycare', or whatever the socialist are calling their latest powergrab.

Why, when the government imposes monopolies and mandates, do free markets get accused of failing to achieve the public's interest?

government monopolies != market libertarianism (2, Insightful)

blitz487 (606553) | more than 6 years ago | (#20364963)

The headline seems quite valid unless you're a fundamentalist market libertarian that can never find fault with a corporation since it's always the government's fault.
Government granted and enforced monopolies are the opposite of free market libertarianism.

What do you expect would happen when the government jails anyone who tries to compete? Yes, it is the government's fault.

so basically (4, Funny)

Anonymous Coward | more than 6 years ago | (#20364199)

they hate black people.

Re:so basically (0)

mac1235 (962716) | more than 6 years ago | (#20364279)

They only care about the colour of your money...

Re:so basically (1)

hxnwix (652290) | more than 6 years ago | (#20364597)

they hate black people.
No, say it like this: "Black people are good, but money is better." I'm sure AT&T would agree that it's true and non-offensive. I mean, they must agree with my views since they're letting me post this comment (like so many other unfortunates, I have a 12. address).

Re:so basically (1)

ccs.gott (1144593) | more than 6 years ago | (#20364707)

they hate black people.
No, say it like this: "Black people are good, but money is better." I'm sure AT&T would agree that it's true and non-offensive. I mean, they must agree with my views since they're letting me post this comment (like so many other unfortunates, I have a 12. address).
Nope. They pretty much just hate black people.

Re:so basically (0)

Anonymous Coward | more than 6 years ago | (#20364721)

I mean, they must agree with my views since they're letting me post this comment (like so many other unfortunates, I have a 12. address).
Hehe, I like this. Let's see what we can do with it:

Bush and AT&T seek to (A) destroy your money and take your rights (B) destroy your rights and take your money (C) whichever is easier (yay for martial law born from economic chaos!)

Bush and AT&T talk tough on child abuse because, like Mark Foley, they don't dote on women.

Bush and AT&T hate embryonic stem cells being used to cure paralysis because ever since they contracted lime disease, they've lost all taste for other forms of nutrition.

Before you mod me down, remember: AT&T has vetted both the TRUTH and the POLITICAL CORRECTNESS of the above. Please take the above as indubitable axioms, examine your reality for consistency, and redefine it where necessary to accommodate these new fundamental principles. AT&T AND GEORGE WALKER BUSH: JOINED AT THE ASS, FOREVER.

Monopolies are bad (2, Informative)

Anonymous Coward | more than 6 years ago | (#20364213)

This shows why monopolies are bad and a more liberal economic policy is better

Playing to the audiance is bad (0)

Anonymous Coward | more than 6 years ago | (#20364417)

"This shows why monopolies are bad and a more liberal economic policy is better"

Is that what it shows? How would a more "liberal" economic policy have done in the face of a corrupt regime (ANC)?

Re:Monopolies are bad (0)

Anonymous Coward | more than 6 years ago | (#20364425)

This shows why monopolies are bad and a more liberal economic policy is better

The dumbass who reflexively modded you up as Insightful is going to be really bummed when he figures out what you mean by "Liberal."

Re:Monopolies are bad (3, Insightful)

sethawoolley (1005201) | more than 6 years ago | (#20364457)

This shows why monopolies are bad and a more liberal economic policy is better
This shows why private monopolies and back-room arrangements are bad. Public monopolies (public utilities, private utilities with public reporting requirements, etc.) are not shown to be bad by this case.

Liberal economic policies help in a lot of things, but utilities are one of the cases where it's an infrastructure investment that still is most efficiently done cooperatively, particularly since you have to deal with public rights-of-way and all that. Services on top of the infrastructure should be liberalized, of course.

We really do need to get people to think beyond left and right more these days and more on what works best for the particular situation.

No phones without monopolies (2, Insightful)

EmbeddedJanitor (597831) | more than 6 years ago | (#20364871)

In a place like South Africa, only a government regulated monopoly would be interested in providing telecom to a lot of very poor people with very poor credit rating. Free market companies would just walk away from that because it makes no business sense.

Re:No phones without monopolies (1)

notamisfit (995619) | more than 6 years ago | (#20365059)

True enough. Any moral company would have taken one look at the situation, thanked the ANC for their time, and walked away. Telephones are a service, not a basic human right to be provided at the expense of others.

GNAA announces switch to Windows Vista (-1, Offtopic)

Anonymous Coward | more than 6 years ago | (#20364215)

GNAA announces switch to Windows Vista

fellacious (GNAP) Intercourse, PA - Windows Vista appears to finally
be taking off, at least within one Fortune 100 company. The GNAA had for the
past 13 years been using Red Hat Linux and it's successor, Fedora Core, but
growing discontent with the free software operating system forced CTO Jmax to
declare on Wednesday that the company was to be switching its entire
infrastructure to the new version of Windows, effective immediately. "I'm not
going to theatrically claim that I wasn't expecting to have to do this," Jmax
said. "This has been coming for quite some time." The GNAA's troubles with Red
Hat's Linux system included chronic governance problems, a persistent failure
to maintain key repositories, a complex and undocumented submission process
which has kept the GNAA's free trolling utilities off the Red Hat-based
desktops of thousands of would-be trolls, inability to keep RPM up to date, and
a failure to address the problem of Firefox not crashing a entire computer when
the user loads Last Measure. "The deal-breaker, though, was when a key Last
Measure server remained down for four hours while our entire Intercourse
development team tried desperately to bring it up despite not having
statically-linked package manager binaries." What had happened was Dikky,
visiting from Norway, wanted to play the child pornography mod of Doom 3 on
that server- which had to drag several libraries with it. "In addition," said
Jmax, "several key software applications used in the GNAA's corporate workflow
are proprietary software- which means that they had to be run in an Ubuntu
compatibility environment anyway." However, being as those unnamed
applications were written in C#.NET, "We expect that our transition to Windows
Vista will come off without a hitch."

All Monopoly = Bad (2, Interesting)

fozzmeister (160968) | more than 6 years ago | (#20364247)

Well if you set up a monopoly it will be abused, you need very strong regulators to keep anything clean. Doesn't matter if its a state run monopoly (NHS, BT (before privatisation), British Rail etc) or a granted monopoly.

Re:All Monopoly = Bad (2, Interesting)

ExploHD (888637) | more than 6 years ago | (#20364339)

That is a very broad argument in saying that all monopolies are bad. There are times when you have to have a monopoly such as the electricity you're getting or your local phone service (excluding VoIP, not everybody has broadband). You are correct in saying that strong regulation is needed. Without the regulation, prices would be much higher.

Re:All Monopoly = Bad (1)

dgatwood (11270) | more than 6 years ago | (#20364647)

As long as they are not allowed to make a profit, monopolies are fine. However, all for-profit monopolies are bad.

Without competition to keep prices reasonable, government regulators have to walk a tightrope between trying to keep prices low and not causing the business to file Chapter 11, and when it comes to either a private company or a division of a larger public company, they really have only the company's word to go on.

Two things can fix that: a new competitor entering the field and going for the jugular or mandatory non-profit status. The first only works as long as the field is constantly growing (or at least as long as there is a steady supply of new companies entering the field). As soon as the field becomes steady-state, the companies tend to become complacent and stop trying to undercut each other. That's when prices start to climb without bounds until it gets bad enough that somebody thinks they can make a boatload of money by knocking them off their pedestal. Usually, the public gets screwed in the meantime. For manufactured goods, this steady state almost never occurs because there's always somebody willing to undercut the next guy. For services with permanent infrastructure, though, it almost inevitably reaches this state. That's why telecom is so universally screwed up almost everywhere.....

The second choice is, of course, for the government to spin off what amounts to a non-profit corporation to manage the infrastructure and write it into their charter that they can never post a profit. That forces all income to go towards improving the infrastructure or go back to the customers. This works very well at keeping prices low. Case in point, the Tennessee Valley Authority. It's a shining example of a government-owned corporation from what I've seen. It provides extremely cheap power to a sizable section of the country, but because it is self-funding, it isn't under the constant financial mismanagement that a federally-funded program would be.

As for this story, it's not a surprise. AT&T/SBC is "a tax on industry and a drag on economic growth" in the U.S. as well.

Re:All Monopoly = Bad (1)

Simon80 (874052) | more than 6 years ago | (#20364929)

The second choice is, of course, for the government to spin off what amounts to a non-profit corporation to manage the infrastructure and write it into their charter that they can never post a profit. That forces all income to go towards improving the infrastructure or go back to the customers.
Technically, the money can also go toward paying certain employees gratuitous amounts of money, if there isn't enough oversight.

Re:All Monopoly = Bad (1)

peragrin (659227) | more than 6 years ago | (#20364813)

actually local phone service is the worst of the lot. in areas where one has a choice of providers they don't rape you over price. we pay nearly $40 a month in local phone service not in cluding long distance for just one line. My cell phone is only $40. all the long distance I want. VOIP service in our area is limited by the local cable company who trims bandwidth of users who arne't using there VOIP service, which is also $40 a month.

Monopolies are always bad, even for electric producers. how can i say this? In my greater city area many small towns have their own electric providers where they buy electricity on the wholesale market and then sell it to the towns people. on average it is 50% cheaper to get electricity that way than through the regular monopoly companies. 50% friggin percent cheaper. The profit goes to maintaining the local lines, and the 12 or so people who have jobs because of it. Where competition exists so does reasonable pricing. When there is no choice there is abuse. Greed is considered a deadly sin by the Catholics for a reason.

Re:All Monopoly = Bad (1)

petermgreen (876956) | more than 6 years ago | (#20364553)

Well if you set up a monopoly it will be abused, you need very strong regulators to keep anything clean. Doesn't matter if its a state run monopoly (NHS, BT (before privatisation), British Rail etc) or a granted monopoly.
or indeed if it is a monopoly (or near monopoly) that appears naturally through market forces.

given that a monopoly is the likely outcome for last mile communication service (yes some areas have duopolies but that is due to the fact that pre-digitisation phone and TV had very different needs). Given this a granted monopoly with strict rules on allowing compertition over everything except the natural monopoly part is probablly the best option.

ANC probably took bribes (0)

Anonymous Coward | more than 6 years ago | (#20364299)

They couldn't have committed the malfeasance they're accused of with out the ANC letting them. A few bribes would have done the trick. Problem is not muli-nationals; it's corrupt goverment officials who sign "exclusive" contracts. It's easy to tax foreign companies and allow multi-comptetitor access to markets. Problem is 3rd world kleptocracy.

Re:ANC probably took bribes (1)

Performaman (735106) | more than 6 years ago | (#20364419)

You're probably right. Political monopolies and corporate monopolies often go hand in hand.

Re:ANC probably took bribes (2, Insightful)

sethawoolley (1005201) | more than 6 years ago | (#20364483)

They couldn't have committed the malfeasance they're accused of with out the ANC letting them. A few bribes would have done the trick. Problem is not muli-nationals; it's corrupt goverment officials who sign "exclusive" contracts. It's easy to tax foreign companies and allow multi-comptetitor access to markets. Problem is 3rd world kleptocracy.

Yeah, totally.

You're right, of course.

CLEARLY, those who actually executed the bribes are not at fault in this case, even if it was illegal.

Was it SBCs job to look out for the public? (1)

HornWumpus (783565) | more than 6 years ago | (#20364573)

No. They did what companies do, make money for their shareholders.

The 'bad guys' here are those who accepted bribes to ignore their responsibilities. Paying bribes in Africa is just SOP.

Re:Was it SBCs job to look out for the public? (1)

sethawoolley (1005201) | more than 6 years ago | (#20364655)


No. They did what companies do, make money for their shareholders.


The 'bad guys' here are those who accepted bribes to ignore their responsibilities. Paying bribes in Africa is just SOP.

That doesn't make it ethical. In some places even common travelers have to bribe just to stay out of jail, but (and I hate to be tautological) if there's no justification for the bribe, it still remains unjustified.

Both are at fault, not just one side. I guess most people seem to think fault is always limited an individual actor, but causation doesn't work that way even most of the time.

Re:Was it SBCs job to look out for the public? (1)

HornWumpus (783565) | more than 6 years ago | (#20364863)

The justification for the bribes was that the bribes were required to make money for their shareholders. That is all the justification required for SBC's actions. They aren't there for their health.

SBC's choices, pay the bribe or go home. Once in place it's only natural to maximize profit within the law. By making it obvious that government sponsored monopolies are not a smart way to go SBC has helped in the long run.

The corrupt 'game' was setup by the South African government.

SBC's staff have an ethical obligation to return as much profit as they legally can to those who trust them with their capital. They have no ethical obligation to deliver phone/internet service at a low price.

Re:Was it SBCs job to look out for the public? (1)

sethawoolley (1005201) | more than 6 years ago | (#20364959)

The justification for the bribes was that the bribes were required to make money for their shareholders. That is all the justification required for SBC's actions.
This is where we fundamentally part opinions. I think it's unethical and pathological behavior to put the shareholders above the law. You don't.

Re:Was it SBCs job to look out for the public? (1)

HornWumpus (783565) | more than 6 years ago | (#20365027)

The law/system in South Africa required the bribes be paid. Shareholder interest is rarely served by working outside the law. But the law can be the root of the problem.

You just don't see that.

Re:Was it SBCs job to look out for the public? (1)

notamisfit (995619) | more than 6 years ago | (#20365133)

SBC's ethical obligation to make money stops where the rights of others are involved. They accepted public money (i.e. money extorted from the South African people at the point of a gun) to build their telephone network, and had the government violate the rights of would-be competitors to enforce a coercive monopoly.

Re:Was it SBCs job to look out for the public? (1)

HornWumpus (783565) | more than 6 years ago | (#20365183)

There is no right to cheep phone service.

As to the rights of others to compete that was taken by the government of South Africa before SBC bought their minority share in the state owned telco.

3 years later... (1)

mac1235 (962716) | more than 6 years ago | (#20364303)

Nothing has changed.

Help support Google. (0)

Anonymous Coward | more than 6 years ago | (#20364307)

Interesting story, but to actually get anything out of it. You have to Google all over the place.

Reminds of "Econmic hitman." (1)

SynapseLapse (644398) | more than 6 years ago | (#20364433)

Song song, different tune. Confessions of an Economic Hit Man [amazon.com] .
Mediocre writing, interesting story though.

Don't blame SBC (2, Insightful)

laing (303349) | more than 6 years ago | (#20364441)

You should blame the politicians who voted to allow the monopoly deal in the first place. Do you believe for one second that they did not know what they were doing?

Re:Don't blame SBC (2, Insightful)

that IT girl (864406) | more than 6 years ago | (#20364639)

Oh, you can definitely blame SBC. You have to blame the politicians too, but don't for one second try to say SBC's absolved of all guilt.

Foxes do what foxes do (1)

bluprint (557000) | more than 6 years ago | (#20364731)

Yeah, you can blame SBC for taking maximal advantage of a market, but that's what they do. Everyone knows that. The government there let the fox into the hen house. The hen house didn't get left open by accident, rather the government invited the foxes in.

Now, one can get all pissed that the fox ate the hens, but the government has the responsibility to look after the best interests of whatever its supposed to be looking after. Not only did the government fail in this case, they failed to such a degree it seems intentional.

Re:Foxes do what foxes do (0)

Anonymous Coward | more than 6 years ago | (#20365141)

Don't blame sociopaths for being sociopaths, blame the government for letting them be sociopaths. Hayukyuk. How witty.

Re:Don't blame SBC (1)

cHALiTO (101461) | more than 6 years ago | (#20364653)

They should blame both

Gov granted monopoly, gov set prices (3, Insightful)

Swervin (836962) | more than 6 years ago | (#20364453)

As much as I hate government interferance in business, if you're going to have a government granted monopoly you should have government set prices.

A Monopoly (4, Informative)

kwiqsilver (585008) | more than 6 years ago | (#20364487)

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.

Re:A Monopoly (0)

Anonymous Coward | more than 6 years ago | (#20364795)

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.
When one company pays to put down a large phone network, who the hell is going to make another one? Would you say the same about Microsoft?

Re:A Monopoly (1)

Colin Smith (2679) | more than 6 years ago | (#20365011)

When one company pays to put down a large phone network, who the hell is going to make another one? Would you say the same about Microsoft?
When the prices become punitive, the wolves see a lot of money to be made and start providing similar services. Yes I would. MS should be left to their own devices, the higher they price their software the larger the numbers who will defect.

 

Re:A Monopoly (1)

mmurphy000 (556983) | more than 6 years ago | (#20365001)

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.

Read up on Standard Oil [wikipedia.org] or other classic antitrust cases sometime.

In other words, another means besides government grant to have a monopoly is to achieve the end through illegal means.

Re:A Monopoly (1)

notamisfit (995619) | more than 6 years ago | (#20365191)

Read it a little more throughly. Standard Oil was a small-shit monopoly (pre-automotive, less than 1% of GDP and about 1/3 the size of the shoe industry at their largest) and were on the verge of getting competed out of the market by the time the breakup went to trial. Without government coercion, monopolies only survive when they provide a better deal than whatever else is out there, and those companies do not justify government theft of property for doing what would be perfectly legal for any other business.

Re:A Monopoly (1)

hxnwix (652290) | more than 6 years ago | (#20365005)

Without the government's force to keep competition away, it's merely a really effective competitor in an open market, like Wal-Mart.
Of course - and when one company bides its time as it expands until it can afford to drop its prices one area while still profiting in others, it can force smaller competitors out of business. Then it can raise prices - at least until small competitors appear in certain regions, requiring temporary price drops.

But you already know all of this, and love it too! Congratulations, I'm sure it's great getting fucked up the ass!

Re:A Monopoly (1)

Tom (822) | more than 6 years ago | (#20365021)

Incidentally, any true monopoly must be government granted.
Not true, go back to university. There are so-called natural monopolies. There are also local monopolies especially in small, geographically isolated markets. Finally, there are markets that have successfully been cornered and where the difference between monopoly and oligopoly is purely academic.

Re:A Monopoly (1)

Jeff DeMaagd (2015) | more than 6 years ago | (#20365207)

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

Will tend to.

Still, in the case of mail, I don't know of any company that can even come close to the price of USPS for what they do. Most of the time, it's better in price and service than UPS, DHL or FedEx. I think it's ridiculously cheap, even more so in the case of international packages, which I've seen the commercial services costing twice as much for the same package, say $150 vs $300 for something in the 20lb range.

Then Blame the SA Government (1)

Nom du Keyboard (633989) | more than 6 years ago | (#20364507)

Then put the blame where it belongs -- with the South African government, who let this situation continue for many years to the determent of the people who elected them. Or maybe it benefited the people who elected them, to the detriment of everyone else.

To the SA people, you got the government you elected, so blame yourselves, then fix the problem at the ballot box!

Re:Then Blame the SA Government (2, Insightful)

Nom du Keyboard (633989) | more than 6 years ago | (#20364521)

P.S. Blaming big business for acting big business is like blaming a rattlesnake for biting you. They're doing exactly what's expected of them, and you're a fool if you think they are supposed to care more about you than their shareholders, and maybe employees. That's why you elect a government and give them the power to enforce oversight in your best interests.

Re:Then Blame the SA Government (1)

blitz487 (606553) | more than 6 years ago | (#20365083)

You're also a fool if you believe that government employees intrinsically care about you and your interests. Give them any power, and they'll inevitably abuse that power for their own personal interests. That's why government power needs to be extremely limited, with plenty of checks and balances.

Re:Then Blame the SA Government (4, Funny)

PinkyGigglebrain (730753) | more than 6 years ago | (#20365087)

A rattlesnake will bite you because it is afraid and feeling threatened. Business will screw you over because of greed.

Please do not insult rattlesnakes by comparing them to telco execs. There is no comparison.

Re:Then Blame the SA Government (1)

polar red (215081) | more than 6 years ago | (#20364571)

To the SA people, you got the government you elected, so blame yourselves, then fix the problem at the ballot box!
Heh, if they have the choice between a turd sandwich or a giant douche, and neglect to see there's other parties (like in the US) ...

Re:Then Blame the SA Government (3, Interesting)

mrL1nX (798019) | more than 6 years ago | (#20364827)

Heh... the only problem with that is the fact that the vast majority of our people are afraid of change from the ANC to another party. I guess mostly because they are afraid of another Apartheid. However they must realise that our current government pretty much sucks in a lot of ways and maybe a change is needed to make our country stronger and healthier. Or maybe the ANC could start actually doing something for us.. Our internet here isn't great at all.. With 1Mbps - 4Mbps ADSL being the latest thing coming out just recently. And until we see another telecommunications company coming along to help us we'll be stuck with the wonderful prices from Telkom...

as if (2, Interesting)

Topherbyte (747078) | more than 6 years ago | (#20364533)

I needed a new reason to switch providers.

I know Verizon's coverage is excellent, but can anyone attest to their business practices?

Capatalism (0, Troll)

Anonymous Coward | more than 6 years ago | (#20364543)

South Africa is not prepared and not used to Companies entering the market and exploiting us on such a scale. Our Governmental system and laws were not in place to protect humans from such a selfish act that 1 company can destroy our economy. Every South African hates Telkom for doing what they did, this leads to South Africans HATING American Companies for hurting so many millions of people, which in turn makes South Africans HATE Americans and HATE Captalism. South Africa is a SOCIALIST country. Captalism has reached its peak, and is now failing the human race. Socialism is the next evolutionary step towards Ultruism. America is falling behind, Europe has learned from has embraced Socialism, America is set it in it's ways and the AMerican people will always try and exploit anyone they know. Such a sad way to go through life.

And please before I get flamed for disliking the American system and pure Capatalism, there is no price you can put on a human life. For such a "advanced" state you guys dont even have free medical and medicine. You guys hate each other so much that you can ACTUALLY put a price on human life? Thats sick. Everyone has the right to live, all medical should be free. I lives in America for 6 months, I hated it, I went back to live in London for another 5 years, then returned to South Africa where I am not living for the last 3 years.

Re:Capatalism (1)

Renraku (518261) | more than 6 years ago | (#20364601)

Other countries don't know how downright evil some of the companies from the US are. I'm sure AT&T employs workers by buying out local farmers and then paying everyone in food..but not much. Keep them hungry and wanting to do overtime.

What's stopping them? Nothing at all. Better to pay a single USD for 10 pounds of food, and give it to 30 workers, than each worker ten cents.

Re:MOD PARENT DOWN!!! (0)

Anonymous Coward | more than 6 years ago | (#20364759)

Parent is terrorist!!!

"Fiscal Conservatives" (0)

Anonymous Coward | more than 6 years ago | (#20364695)

But don't conservatives preach how gub'ment just needs to get out of the way of the great, mighty, and benevolent corporations, and that the free market will regulate itself?

Seems conservatives might want to rethink this... along with all the other absolute crap they believe.

Re:"Fiscal Conservatives" (2)

Colin Smith (2679) | more than 6 years ago | (#20365075)

Right... So did you miss the "government granted monopoly" bit?

Monopoly:
"exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices."

Government ... granted ... monopoly... So not a free market then. eh?

wait, why was communism evil again? (0)

Anonymous Coward | more than 6 years ago | (#20364791)

oh, because there was no competition, and government controlled monopolies... err... yeah...

thank god we dont have communism anymore.

just .. 3 or 4 companies running the entire planet... hey, thats competition, right?

Is This The Same AT+T That Apple/iPhone Uses? (1)

BSDetector (1056962) | more than 6 years ago | (#20364839)

Is this the same AT+T that Apple/iPhone uses?

Pillaged is Such a Harsh Word (5, Funny)

PhyrricVictory (773671) | more than 6 years ago | (#20364853)

Pillaged is such a harsh word. I prefer the phrases "shareholder value" and "market economy".

As a South African ... (5, Informative)

krou (1027572) | more than 6 years ago | (#20364893)

... I have to say that Telkom is absolutely terrible. Have a look here [hellkom.co.za] 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 [bbc.co.uk] 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 [csmonitor.com] , 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.

Let's not forget (1)

j1mmy (43634) | more than 6 years ago | (#20364995)

the "government granted monopoly" bit. Shouldn't South Africa try blaming itself, first?

Not surprised in the very least. (1)

TheHawke (237817) | more than 6 years ago | (#20365041)

Big companies acting in a predatory manner, you can always be assured that a country will be subverted into a position that they cannot get out of without gutting their economy. Take a look at AUS, NZ, and now SA.

Take a look at our own telecom infrastructure. You can see where communities are in various stages to set up their own broadband structure and the telecoms are not liking it one bit. Several towns have been pretty much abandoned by their ILECs to rot on their old copper, or worse.

Gov't MUST keep a firm hand in matters to keep these companies under control or we'll never hear the end of it!

Devil's Advocate. (2, Insightful)

ShagratTheTitleless (828134) | more than 6 years ago | (#20365095)

"Telkom [was tasked with] connect[ing] the large parts of South Africa that had been neglected under apartheid. ...Instead ...raised Telkom's prices to be among the highest in the world."

So a company that had to build a bunch of new infrastructure to places likely to have a low volume of subscribers to subsidize said infrastructure has high prices. How is this surprising exactly?

That said, I have no doubt there was some ripping off done; I've never experienced an honest telco. But giving them a monopoly was just begging for gouging.

Actually (0)

Anonymous Coward | more than 6 years ago | (#20365119)

the bulk of the blame goes to the South African government, in particular
the department of communications, its minister and former director general. This doesn't mean that SBC is blameless, but they merely made the exploitation more efficient.

There would have been any number of competing communications networks if it only were permissible to build them. Instead Telkom has been shielded from competition by the government. Recently a second telecoms provider has been licensened. Wow. Only about a decade after it should have. And wow, only one. And regulations still favour Telkom. What should have happened about 15 years ago is that anybody should have been able to set up wireless networks. But the department mumbled something about not damanging the market - cough, telkom - yeah, good one, protect the predator.

Put simply, the stuffup in the telecommunications industry ranks among the worst policy failures of the current South African government.

So which is it -- are monopolies good or bad? (2, Insightful)

ErichTheRed (39327) | more than 6 years ago | (#20365167)

OK, on one hand, monopolies almost always abuse their power. Some actually run OK and are good for a society (public utilities like electric and gas are good examples.) I'm actually a proponent of the old-style Bell system for local phone access -- you deal with a single company who sets all the standards and keeps the network running well. The trade-off, of course, is innovation. Or so people claim.

The other side of the coin is also prevalent in telecom and other industries -- companies with a psycho executive board that has no concept of the time beyond next quarter. Too often, we hear stories of executives laying off a percentage of the workforce just to make the numbers that year. Or outsourcing things like IT or customer service because some MBA told them that these aren't "core competencies.' Try getting broadband service out of the telecom companies if you live out in the middle of nowhere, for example...it's not easy. No profit-oriented company wants to support it. This was part of the reason the phone monopoly existed, and why you still pay universal service fees on common-carrier service.

So, monopoly = bad. Unchecked competition = bad. Now what?? I would argue that #2 is better in a perfect world as long as we can reduce the focus on short-term gains. However, now that absolutely everyone is counting on the stock market/casino for their retirement, I can't see that happening. Because of that, #1 is still sometimes the best choice in our imperfect, corrupt world.
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