Competition finally here?
A LANDMARK ruling set to shake up the telecommunications sector has been issued by the Pretoria High Court, ending Telkom’s lingering monopoly by decreeing that technology company Altech has the right to build its own network.
The verdict means Altech can set up whatever infrastructure it needs to offer voice and data services, and no longer has to lease its bandwidth from Telkom.
The decision will open the floodgates for competition , as it effectively allows about 300 other internet service providers and data carriers to build their own networks too.
The verdict is a serious blow to Communications Minister Ivy Matsepe-Casaburri and the Independent Communications Authority of SA (Icasa), publicly exposing their actions and decisions as flawed. In another slap down, the minister, Icasa and Icasa chairman Paris Mashile were ordered to pay Altech’s legal costs, which will be R2m- R3m.
The verdict caused instant jubilation on the mybroadband website, a forum for the industry. “This will have such a huge impact on the telecoms environment,” one contributor wrote.
The issue centred on whether companies holding Value Added Network Services (Vans) licences were entitled to build their own network, or whether they were obliged to lease their backbone facilities from Telkom or Neotel.
The result could see a flurry of new networks rolled out, giving consumers and businesses a wider range of service providers and triggering price cuts from the increased competition.
The minister’s downfall was a statement she made in 2004 saying Vans licence holders could build their own networks. But she later retracted that, saying she did not intend to create a free-for-all in the sector.
That now looks likely to happen, since Vans operators have gained the right to convert their licences into a more modern format permitting them to develop their own networks. Icasa had argued that under a new licence conversion process, Vans operators would get a far less valuable licence to offer voice and data services, but not to set up their own facilities.
Altech believed that Icasa was reserving the more valuable licences for a select few operators, and took the process to court.
“This is an undisputed victory not only for Altech but for the whole telecoms industry and we are proud to have been pioneers in breaking competitive ground in what has been a long-closed playing field,” says CEO Craig Venter.
It would cost about R1bn to set up a national network so most players could not afford to do that, he says, but those with the financial muscle could now swing into action. “Ultimately consumers will benefit because they will see lower prices,” Venter says.
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