Telecoms: The year that was
For years we have been led to believe that the lack of broadband was due to the high cost and limited access to international connections where most of the activity is generated. Since July the Seacom sub-marine cable connecting South Africa with Europe and the East has added substantial broadband connectivity but none of the internet service providers (ISPs) have yet come to the party with more attractive offers.
Telkom has made a half-hearted attempt by increasing the cap on the higher do-broadband offering from 3 to 5 GB. “Big deal!” I hear you say! IBurst also made a weakly attempt by reducing some of its prices by 25%, but compared with other countries itsr costs are still high.
So what is the hold-up? If you ask me, everyone is waiting for everyone else to come up with a price cut or a faster connection at the current price. They are most probably asking themselves the question: why reduce prices if the market is still prepared to pay for constricted internet pipes?
The previous Minister of Communications, the late Ivy Matsepe-Cassiburi, made an announcement a few years back that government would put regulations in place to control the landing rights of sub-marine cables. She said that if competition cannot get the cost of broadband down then government must intervene and set conditions connected to landing rights. The regulations did not materialise. Not that I am an advocate of government control, but perhaps she had a point.
The current Minister of Communication, Siphiwe Nyanda is also making noises about lower costs of communication. The Independent Communications Authority of South Africa (ICASA) has been holding meetings about the reduction of cellphone interconnect rates between the various providers but not much headway has been made. In a media statement on 23 October 2009, ICASA said that after deliberations, the Authority noted that mobile operators had nothing to put on the table as they could not come up with an agreed mobile termination rate amongst themselves. As a matter of fact, Vodacom and MTN refused to disclose their bilateral mobile termination rate agreement at the meeting.
The statement also said that the Authority will nevertheless continue with its regulatory processes of developing a framework for competition and cost-based pricing in the voice market as set out in Chapter 10 of the Electronic Communications Act (ECA) and expects to have regulations in place before
31 March 2010.
The best that happened towards the end of 2008 was Altech winning the case forcing ICASA to issue I-ECNS licences to value added networks (VANs).
At the time Altech had come under severe criticism from the telecommunications industry who viewed it’s action as a delaying tactic. The industry questioned why Altech did not wait until the licence process was complete and then appeal whatever decision was made by ICASA. “Our legal team’s point was, why allow a process that is defective from the start, to run its course and only then appeal? That would have further increased any delays”, Altech’s CTO Steven Sidley said at the time.
The judgment was an undisputed victory not only for Altech but for the whole of the South African telecommunications industry.
The Altech court application sought to obtain clarification on whether companies issued with a VANs licence are automatically entitled to receive an I-ECNS licence under the ECA. This would allow such licensees to develop their own telecommunications networks independently of other licensed infrastructure operators.
The ruling vindicates Altech’s position in light of accusations made that Altech was delaying the process, when they actually were simply seeking clarity.
The court judgment changed the 2009 telecommunication landscape; the issue was no longer the licence but shifted to allocation of spectrum.
Out of the blue Screamer Telecom announced its services, using spectrum it leased from an undisclosed source which had some WiMAX spectrum it was not using. The company had been building a WiMAX network covering the greater Johannesburg and Pretoria area for the past two years without alarming the two incumbents. “I guess because ICASA was not allocating WiMAX spectrum, no one was particularly concerned that a possibility of another operator would arise”, Gavin Hart, CEO of Screamer Telecoms told EngineerIT (February 2009, page 46).
“We took a huge risk investing in a network without having an electronic communication network services (ECNS) licence. Our legal team worked on the premise that given the ECA, liberalisation and new licences it would be just a matter of time. The gamble was how long? To our surprise it happed sooner than we expected. We received our I-ECNS licence in mid-January and with our WiMAX network in an advanced stage of development, we were able to start offering services immediately” said Hart.
We have talked about liberalisation of the telecoms sector for decades but every time we think it is all systems go there is a “kinkel in die kabel” (an Afrikaans saying meaning a “kink in the cable”).
So now ICASA can issue ECNS licences, and it has. BT, Altech Autopage Cellular and Screamer Telecoms have all been licensed. And I am sure there are and will be more.
Many companies have licences because the court ruling compelled ICASA to issue licences to all applicants who meet the basic ECA requirements. It will be interesting to see how they use their licences. ICASA is not clear about the process under which for instance it will award spectrum for WiMAX.
Will ICASA go to tender and award spectrum to the highest bidder? Or as its chairman Paris Mashile has often stated, spectrum should be allocated to newcomers and they should be charged on the basis of the income they derive from offering services using the allocated spectrum. I suppose it is laudable that the chairman wants to give smaller businesses an opportunity! But then the question arises, will that ensure the best use of the limited spectrum available? Will ICASA apply the principle of use it or lose it within a reasonable time frame?
But to come back to the 2008 court ruling, did Altech take a principled decision to challenge ICASA in court or did the company have ulterior motives? At a recent press conference Craig Venter made it clear that for Altech it was a case of principle. “The ICT industry can add 2% to a country’s GDP and this cannot happen if there is no liberalisation. Some smaller VANs did not have the capacity or financial resources to take ICASA to court. We felt as one of the larger ICT companies we were able to support this call for liberalisation.” Will Altech use its licence? Venter says yes!
So what is the outlook? It is any one’s guess what ICASA will do in respect of frequency allocation and until that happens no one can go forward.
Another positive sign that 2010 will see some progress was the publication by the Department of Communication of the broadband policy and the proposed spectrum policy. While it does not make any promises, it sets some guidelines for ICASA which may give the authority some direction.
EngineerIT
Telecoms: The year that was – give your views
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