Untangling the Ivy
One could almost hear the cries of elation ringing out last week when a judge ruled that Internet service providers and other communications companies could build their own networks. The significance of the verdict cannot be overstated.
Craig Venter, CEO of JSE-listed telecommunications group Altech, feels vindicated. Venter was heavily criticised over the decision to drag the Independent Communications Authority of SA (Icasa) and the minister of communications to court recently. But now he is basking in almost universal praise for his decision. Virtually overnight, SA has become one of the most competitive telecommunications industries in the world, assuming government doesn’t appeal the judgment.
Altech had argued that a policy pronouncement, made in 2004 by communications minister Ivy Matsepe-Casaburri (under the old Telecommunications Act), gave holders of value-added network service (Vans) licences — these are mostly Internet service providers (ISPs) — the right to “self-provide” their own network facilities. In simpler terms, Altech argued that the minister, by announcing a date for the further opening up of the industry to competition, had paved the way for Vans to build their own networks.
The court agreed with Altech, throwing government’s policy of “managed liberalisation” — the process of phasing in competition to try to maximise large-scale investment in the sector — out the window. Joe Makhafola, Matsepe-Casaburri’s spokesman, says the minister is “studying the content” of the judgment and will comment later.
The verdict is a slap in the face for government and a victory for the industry and consumers. Matsepe-Casaburri can appeal the ruling, but that would be a mistake. It would paint the minister, whose bumbling and confusing policy statements led to the court case in the first place, as being firmly against the interests of consumers and voters. And any amendment to the Electronic Communications Act to prevent Vans from being given network licences isn’t likely to find much support in parliament.
The verdict is a stunning judicial rebuke of the minister and her policies and illustrates the confusion her policy statements have sown in the industry over the years.
Two days before her 2004 policy changes were due to take effect — and only after Icasa had already interpreted them to mean that Vans could self-provide — Matsepe-Casaburri issued an extra-legal “clarification” in which she explained that she did not intend to give Vans the right to build their own networks. But, as legal experts pointed out, it is not the minister’s role to interpret the law. The act gave her the power to set dates for the further liberalisation of the sector but not to interpret what the legislation meant.
Her clarification led to years of legal confusion, and this has held the industry back and kept prices high. Muddled policy determinations and general bumbling over the years have served only to entrench the dominance of the incumbent operators. For this, she should have fallen on her sword or been fired. Neither will happen, of course. Instead the industry will be counting the days until she retires next year.
But a year is a long time — plenty of time to inflict further damage. The minister could commit one last act of folly by appealing the court’s decision, sowing confusion in the industry for a few more years. Or she could even ask Icasa to impose prohibitively high licence fees on Vans wanting infrastructure licences under the Electronic Communications Act to deter them from becoming infrastructure providers.
SA has a chance to build a truly competitive telecom industry in the interests of consumers and the economy. The minister can improve on her appalling legacy by accepting the court’s judgment.
First published as the column Technology & You in the Financial Mail of September 5 2008
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