State not committed to liberalising telecoms
OPPOSITION parties have condemned a decision to challenge a legal ruling that promises far greater competition in the telecoms sector, describing it as an attempt to protect the state’s vested interests at the expense of consumers.
The move by Communications Minister Ivy Matsepe-Casaburri to appeal a verdict that gave hundreds of firms the right to build their own networks was “another attempt to let the snouts of Telkom and Neotel shareholders, including the state, continue to snuffle in the highly lucrative and monopolistic telecoms trough,” the Inkatha Freedom Party said. Its communications spokeswoman, Suzanne Vos, said appealing against the judgment showed the department did not want to liberalise the sector but to retain state control and hand out new licences to party-political pals.
Instead of allowing competition, the minister seemed determined to ensure that only hand-picked players were allowed to build new networks, Vos said. “Poor service, appalling access to bandwidth and high prices plague long-suffering South African consumers and seriously impede economic development.”
The high court ruling declared that about 300 companies holding a Value Added Network Services (Vans) licence could automatically have that converted to a new licence that allows them to build their own infrastructure. Without those licences, the voice and data carriers are forced to lease their lines from dominant players including Telkom, which is 38% government-owned, or from Neotel, which is 30% government-owned through Transnet and Eskom.
The minister is challenging the verdict as she believes it seriously undermines her “managed liberalisation” policy and will be detrimental to the industry. But Democratic Alliance spokeswoman Dene Smuts said the minister had mismanaged, not managed, liberalisation of the sector.
Matsepe-Casaburri has also said she would instruct the industry regulator to issue only a few of the valuable new licences. Altech, which instigated and won the legal action, had objected to the restriction of those licences, fearing they would go to favoured companies that had held discussions “behind closed doors” with the regulatory authority.
Analyst Irnest Kaplan said companies such as Internet Solutions and Vox Telecom could compete more effectively with the incumbents if they could build their own networks. More importantly, having the right to do so would give them more bargaining power in leasing the existing infrastructure and result in lower prices.
“If this appeal is upheld it will be a sore blow for telecoms competition in SA, which has long suffered under stifling legislation,” said Anton Potgieter, CEO of Huge Group telecoms company.
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