Neotel punts more competition
According to Head of Regulatory Affairs at Neotel, Tracy Cohen, now that Value Added Network Providers have the legal right to compete directly with telecoms incumbents there will be a definite and inevitable increase in merger and market consolidation activity.
Yet, she emphasises that in order for market liberalisation to have a real, tangible impact on lower prices and increased access for local businesses and end users, “spectrum and pricing issues still remain a significant problem in the sector and need to be addressed. For example, the licence itself, while a welcome start for increased competition is not sufficient in itself to significantly alter the dynamics of our local market.”
What is key for real change is how many of the new infrastructure licences will ultimately use these licences in their current form, she says. “Even though a review of access regulations is currently underway in different processes, it is imperative that the interconnection framework, essential facilities and termination rates get urgently addressed for there to be any major shift in the SA market. Regulatory certainty is going to be critical and the rules of the game need to be well defined and the playing field needs to be leveled.”
Cohen says other factors slowing market entry include the issue of funding, which is a challenge to secure in the current global economy and the current lack of progress on spectrum policy and allocation – especially high demand spectrum which needs to be urgently addressed by the regulator.
“There is enormous talent in the local sector that needs to be unleashed in a liberalised market where clear and definite rules exist and incentives are in place to facilitate new entrants,” she says.
Of course though, network build -out is extremely capital and skill intensive, says Cohen, and its extremely unlikely many, if any, VANS will build networks. “Differentiation through product offerings and service levels will be key, but this will also depend on how joint ventures and strategic partnerships are formed and on these partnerships finding a specific strength to leverage. “
“Efficient, equitable and effective spectrum allocation and numbering resource allocation requires urgent attention if new entrants and smaller players are to compete effectively with incumbents, but these interventions must be based on sound commercial and economic realities that will serve the public interest and the sector as a whole,” she said.
Regarding carrier pre-select and its implications for the industry and local business, Cohen says it is “overdue” and was required by law in 2006. While carrier-preselect will certainly be welcomed by most in the SA telecommunications landscape, termination rates need to be urgently addressed to make it a viable business plan as the current context of interconnection rates questions the economic sense of carrier pre-select.
In conclusion, Cohen says more competition will bring more innovation, better service quality and customer choice, but again, asymmetric regulation is required and the access framework for the sector needs to be resolved if this is to have any meaningful impact.
Neotel, ICASA and competition – give your views
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