Bring on the ‘big bang’

Lloyd Gedye

Lloyd Gedye is a journalist at the Mail & Guardian who tends to focus on business matters and music in that order.

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In a bid to introduce much-needed competition into the telecommunications sector, South Africa’s smaller wireless telecoms players have taken the regulator and the minister of communications to court.

This move can be viewed as a direct challenge to government’s failed policy of managed liberalization, which is responsible for the exorbitant telecoms pricing that consumers and businesses have to contend with in the country.

If the court application is successful, 50 to 100 smaller telecoms players could enter the market offering voice and data services that will challenge fixed-line incumbents Telkom and Neotel and mobile incumbents MTN, Vodacom and Cell C.

The Wirless Access Providers Association (Wapa) filed papers in the Witwatersrand High Court this week requesting a declaratory order that would allow its members to roll out their own telecoms networks.

Rolling out telecoms networks, which involves laying cables and setting up wireless bay stations, is a key step in allowing the Value Added Network Service (Vans) industry to compete in the telecoms sector.

Since 2005 the Vans industry has been stuck in a legal quagmire caused by conflicting policy statements made by the Independent Communications Authority of South Africa (Icasa) and Minister of Communications Ivy Matsepe-Casaburri about Vans’s rights to self-provide telecoms infrastructure.

“Despite repeated attempts by industry players to obtain certainty as to the rights of Vans, neither Icasa nor the minister has, until recently, made any statement in this regard, despite the passing of more than three years,” says Wapa.

Wapa argues that if the Vans are given the right to self-provide infrastructure we would see a ‘big bang’ liberalization of the market.

“In other words, South African consumers, after many years of having to reply on a monopoly facilities provider, will have a far greater degree of choice,” says Wapa.

Although the issue of self-providing telecoms networks has remained a legal grey area, some Vans have chosen to roll out their own networks regardless.

But with Icasa’s recent statement that Vans will not be allowed to self-provide their own networks, these companies are facing serious financial risks and are appealing to the court to get some clarity on this.

It is a damning indictment of both Icasa and the department that Vans have to go to court to get clarification on the issue.

Vans operators feel pushed to take legal action because they can no longer afford to sit back and wait while the established players roll out substantial networks of their own.

“Many of our members have been building their own networks since 2005,” says David Jarvis, chairperson of Wapa. “Our concern is that existing operators will be denied the right to continue operating.”

Jarvis says the lack of clarity on the issue is confusing because it is not clear if Icasa’s silence is because of vested interests or a lack of capacity at the regulator. He says that allowing Vans the right to self-provide would introduce a potential 50 to 100 new telcos into the market which could offer services like Telkom.

He says the bigger operators argue that this is an untenable situation, but Jarvis says that in America 200 new telcos were introduced after deregulation, which were whittled down to six after consolidation of the market.

Storm Telecom’s Dave Gale says there is a need for transparency in Icasa’s license conversion process and it is clear that the Vans are no longer going to sit and wait for the regulator.

“Frustration levels have reached boiling point,” says Gale. “Now they are going to force Icasa’s hand.”

Gale says Icasa is still under-resourced and is battling under the massive workload that comes with the license conversion process required by the Electronic Communications Act.

“There is so much happening at the moment,” says Gale. “Icasa has too many irons in the fire and everyone is looking at it to pull a rabbit out the hat.

“They (Vans) are here and they are keen to get into the market and provide the competition that can get things moving ahead,” says Gale.

One analyst who did not want to be named says allowing Vans to self-provide would be the difference between 40 rather than 12 players in the market at an infrastructure level, which would drive down pricing. Icasa says it has not seen the court papers yet and therefore cannot comment.

Attempts by the Mail & Guardian to contact the spokesperson for the minister of communication were unsuccessful.

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