The Ivy and Alec show
Speeding up telecommunications costs is at the heart of it. Erwin has introduced a Bill – the Broadband Infraco Bill – to Parliament. That will give life to new State-owned broadband company Infraco.
State-owned wireless provider Sentech, which is Matsepe-Casaburri's baby, isn't happy about the fact that Infraco is going to step into the wireless turf as well. It wants Government to limit Infraco to only supplying a broadband cable network. But the problem is that Infraco has entered into an exclusive agreement with the second national operator – Neotel – that would seem to preclude that.
Nevertheless, Parliament is a little confused. It's sent Erwin's officials back to their offices to come up with explanations as to why there's a need for two State-owned companies. Why not consolidate it all into one company?
The first two public hearing sessions into the draft Bill, which will resume later this month, were littered with mutterings concerning the urgency to reduce SA's "scandalous" telecoms costs and grumblings about Sentech's failure to do that.
Bureaucratically speaking, the politics of that could be tricky. But the truth is that it's one of an assortment of headaches for a Bill that seems to have been hurriedly, if not shoddily, put together.
Telkom may have a cheek to raise objections to privileged access to State resources. But other players in the telecoms industry – MTN, Cell C and Vodacom – echo concerns that the Bill won't withstand a legal challenge. They claim it's contrary to the licensing regulations set out by SA's principal electronic communications law, the Electronic Communications Act (ECA).
In the interests of speeding up the process of reducing telecoms costs, the draft Broadband Infraco Bill aims to "deem" the licence to Infraco. That effectively gets around having to follow the Independent Communications Authority's (Icasa) protracted licensing procedures.
Other "deemed" licences, such as Sentech's, were issued before the ECA was enacted. While the Public Enterprises Department stands by its Infraco Bill, Icasa is feeling edgy, if not miffed. Icasa chairman Paris Mashile argues that all licences have to be issued in terms of the processes set out by the ECA. That gives Icasa exclusive jurisdiction over licensing. It expressly prohibits any exclusionary rights for licence holders.
Enter the next set of prickly issues: exclusivity and anti-competition. SA's second national operator, Neotel, was formed with Government's promise to give it the exclusive right for four years to market Infraco's broadband infrastructure.
While Neotel is worried that Infraco's licensing will delay the launch of its operations, the Competition Commission's Tembinkosi Bonakele is also concerned about any delay in introducing effective competition to cut telecoms costs.
"A duopoly isn't ideal: economic theory tells us it doesn't bring the prices down. Other companies need fair access to spoil the party," says Bonakele, who is also adamant that the market, not the court, is the answer to ensure that operators behave in a competitive manner.
Cases currently before the Competition Tribunal – most of them against Telkom – prove that. First, it takes too long and costs too much.
Second, the Competition Commission says SA's courts aren't the most effective tool to deal with issues of margin squeeze and pricing arrangements. There's also the problem of forum-hopping where, after a lengthy legal procedure, the accused party for example argues that the Competition Tribunal doesn't have the jurisdiction to investigate and prosecute.
That's Telkom's argument in the case brought against it by MultiChoice. The complaint is that Telkom designed ADSL architecture and priced access to its facilities in a way that excludes competitors.
While political speeches warn how exorbitant telecoms costs are an impediment to any plan to accelerate economic growth, parliamentarians have warned that they'll not be "embarrassed" by passing the Infraco Bill if is isn't defensible in court.
Finweek
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