Licences on the line
The planned liberalisation of SA’s telecommunications industry is in a mess. A lawsuit brought by technology group Altech is threatening either to hold back the liberalisation of the sector or, if the high court finds in Altech’s favour, throw it open to full-scale competition.
Altech and other companies in the sector want to receive “individual electronic communications network service” (I-ECNS) licences under the Electronic Communications Act. These licences would give them the same rights as the bigger industry players, such as Telkom, MTN, Vodacom and Neotel, allowing them to build their own national communications networks.
But Altech says the process is flawed and wants the courts to review it. Rivals say Altech is holding up the liberalisation of the sector simply because it is worried it will not be issued with a licence.
The FM has been poring over thousands of pages of affidavits related to the case. Altech has called 29 respondents, including Independent Communications Authority (Icasa) chairman Paris Mashile and communications minister Ivy Matsepe Casaburri
In this case Matsepe-Casaburri has come under fire again for issuing policy directives that lack clarity. Icasa’s independence in interpreting and effecting the rules has also been questioned.
Altech wants the court to decide whether companies issued with value added network service (Vans) licences under the Telecommunications Act, now repealed, have the right to build their own telecom networks independently of other licensed infrastructure operators.
If they are — and many in the industry believe that a policy directive issued by Matsepe-Casaburri in 2004 entitles them to these rights — then SA’s telecom industry will experience a big bang liberalisation.
Matsepe-Casaburri, on the other hand, says she never intended for Vans licensees to have the rights they are now claiming. She argues that allowing Vans to self-provide would fly in the face of her policy of “managed liberalisation”.
Vans licensees — examples include M-Web, Vox Telecom and Internet Solutions — have until now had to rely on networks built by licensed infrastructure operators, mostly Telkom, to provide their services. Many want to build networks using wireless broadband technologies so that they can provide voice and data services over their own infrastructure.
Vans licensees have long maintained that Telkom competes unfairly with them — a number of complaints from Vans about Telkom’s alleged anticompetitive behaviour are being investigated by the competition commission. Allowing Vans to build their own networks would minimise the opportunities for Telkom to cross-subsidise its own Vans business, they say.
But legal opinion is divided on what Vans licensees are entitled to do. Many in the industry insist they have the right to build their own networks in competition with incumbent operators. Some, such as Cape Town based UniNet, are already doing so, providing services using unlicensed radio frequency spectrum.
In late 2004, Icasa, chaired at the time by Mandla Langa, found that Matsepe-Casaburri’s 2004 policy directives allowed Vans operators to self-provide.
But since then the minister clarified the directives and Icasa was forced to back down and remove a clause that would have given Vans operators the right to build their own networks.
Under Mashile, who is seen as more pliant to Matsepe-Casaburri than Langa, Icasa now backs the minister’s view. In its responding affidavit in the Altech matter, Icasa councillor Marcia Socikwa says the interpretation Altech seeks to place on Vans licensees would yield an “absurd result — SA would then have more than 600 network licences”.
But the industry disputes this. Telecom lawyer Dominic Cull, who represents a number of wireless Internet service providers, says there is only a handful of companies with the deep pockets needed to build large-scale networks.
But Icasa, which previously held the view that Vans could self-provide, will now argue in court that they may not do so. “The restriction on self-provisioning was never removed by the ministerial directive,” Socikwa says in the court papers. “The directive dealt only with the date and the entities from which they would have to obtain telecom facilities.”
In her affidavit, Matsepe-Casaburri says that no I-ECNS licences should be granted to Vans licensees “since Vans were not entitled to self-provide” under the Telecommunications Act.
She argues: “Vans have never been entitled to provide facilities and therefore have no right to an ECNS licence under the licence conversion process.” It is irrelevant if this is prejudicial to Altech as “the law has to be followed”.
Siyabonga Madyibi, regulatory affairs director at Internet Solutions, says the minister has thrown the industry into confusion. “She now says she intended Icasa to issue invitations to apply for I ECNS licences as a separate process to the licence conversion process,” he says. “A year down the line she says the wrong process was followed.”
Edwin Thompson, chairman of the Communications Users Association of SA, says the minister is trying to assume more powers than she has under current legislation. “This is an attempt [by the minister] to change the law outside of parliamentary process,” he says.
In her policy directives, the minister has a right only to set the date for further liberalisation of the sector, Thompson says. So, in 2005, when she clarified what she meant in her 2004 policy determination on Vans, she was acting beyond her powers. “She only had the right to determine the dates, not what they meant,” he says.
The problem, he says, is that the act can be interpreted to mean almost anything. But it is Icasa’s role, not the minister’s, to define legislation. “Icasa is not there to interpret the minister’s determinations but rather to interpret the act,” Thompson says.
Altech wants the high court to interpret what the Telecommunications Act meant. If it finds in Altech’s favour, SA is set to become one of the most liberalised and competitive telecom markets in the world. Matsepe-Casaburri concedes that if this happens, all Vans operators will have to have their licences converted to I-ECNS licences.
No rights that licensed players inherited under the Telecommunications Act may be taken away, so if the court finds that Vans can self-provide, they will automatically have the right to do so under the Electronic Communications Act.
If the court finds against Altech, Vans will still be able to apply for I-ECNS licences, but the number of licences issued will be limited. For consumers, this will mean that it may take longer for telecom and broadband prices to fall.
Altech’s case is set to be heard in the Pretoria high court from July 29-31.
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