Johannesburg — IT WAS a surprise to see Internet Solutions support a move that increases the state's intervention in the telecoms sector.

Normally everybody highlights Telkom 's failure to provide affordable services, the disaster of Sentech's internet services and the fiasco of having state-owned entities form the basis of Neotel as reasons why the government should leave telecoms alone.

Yet licensing state-owned Infraco to sell access to its broadband infrastructure suddenly makes sense. Infraco is sitting with fibre optic lines built for Transnet and Eskom that are apparently sitting fairly idle, at a time when businesses are clamouring for faster, cheaper bandwidth.

Telkom's bandwidth is expensive, Neotel has yet to reach much of the country, and the cellular networks' supply is costly and patchy. So give Infraco a licence to sell its bandwidth to any voice or data carrier that needs extra capacity and let it supply tons of the stuff to universities, schools and hospitals too.

A sensible restriction would be to ban Infraco from selling bandwidth to the large companies that form the bread and butter business for the private sector. But if it sells wholesale capacity only to other operators, then the private sector seems to endorse its activities.

Since voice and data carriers buy most of their bandwidth from Telkom, Neotel or the cellular carriers, a price war triggered by Infraco would benefit the industry and every company or consumer beneath them.

Could state intervention finally do the telecoms industry some good? It would seem so.

IT'S NOT the kind of thing that you want to say too loud, so perhaps it should be expressed as a whisper. But the truth is that banks are starting to show some backbone.

Yesterday was a good example, with Standard Bank up 4,5%. The other big banks also up , and the banks' index was up more than 3%.

All this is a bit counter-intuitive. Earnings at the big four are expected to decline somewhere between 2% and 30%, as two of the quartet have already announced as recently as last week. And banks globally are not exactly flavour of the month.

Yet, investor sentiment is changing too. The market as a whole is cheap, which attracted bargain hunters. But even these bargain hunters were wary of banks. That is what has now changed, and the sense is that much of the bad news is now in the market.

Lower interest rates should reduce banks' bad debts, and the economy may have reached an inflection point.

There is, however, still room for caution . Volatility remains high, which indicates uncertainty. Given the international circumstances, one piece of bad news and these small gains could quickly be lost.

So don't shout it from the rooftops, but certainly it may be time to take a look.

WHEN demand for goods is low, companies tend to cut prices in a bid to stimulate interest in their offerings. However, this has not been the case for car manufacturers who, due to past rand weakness, have been forced to raise prices at a time when demand continues to ebb.

Year to date, new vehicle sales have plummeted 35,8%.

Domestic car manufacturers have adjusted their prices upwards this year after prices rose 8,5% on average last year.

The weak rand made it particularly costly for manufacturers to import cars and components last year. The mighty yen, in particular, has inflicted much pain on companies that import from Japan, such as Toyota SA, Subaru Southern Africa and Nissan SA. The Japanese unit gained more than 40% against the rand last year. The South African currency has recovered some ground so far this year.

If vehicle makers do not lift car prices, they run the risk of going out of business. Even recent cuts in interest rates have not boosted car sales by improving consumer confidence, a key factor in bolstering demand for new vehicles.

The situation for the sector looks bleak: car prices are unlikely to fall until the rand fully recovers against the yen, euro and dollar.

The Bottom Line is edited by Colin Anthony.