Changes ahead for telecoms sector
A well-placed source says the policy determinations, which have already been finalised, will include the unbundling of the local loop, giving the second network operator, SNO Telecommunications, access to Telkom’s telephone exchanges. Other operators will not be granted access at this stage.
Local-loop unbundling, which allows operators access to an incumbent’s "last mile" infrastructure, will allow SNO Telecom to provide fixed-line services directly to consumers without having to build its own access network where Telkom already has infrastructure. In markets where local-loop unbundling has been introduced, such as in the UK and in France, prices have fallen sharply.
The determinations are also said to include a clause allowing Sentech to offer switched voice services, in effect making the state-owned broadcasting and telecom company SA’s fourth cellular network operator. Sentech has been lobbying the communications ministry for the right to offer switched voice. A government decision was announced last week to provide the company with the funding it needs – estimated at as much as R1bn – to build a nationwide broadband wireless access network. This same network, which will use 3G cellular technology, can be used to provide voice telephony.
Matsepe-Casaburri will also announce measures aimed at improving foreign investment in the business process outsourcing industry. High telecom costs have been identified by government as an impediment to the development of this sector, which includes outsourced call centres.
The department of communications is reticent about the determinations and what else they might contain. Director-general Lyndall Shope-Mafole says she cannot comment as she doesn’t want to pre-empt Matsepe-Casaburri’s announcement. She confirms, however, that the determinations have already been finalised and will be presented by the minister in early March. She says the policy changes will be made in terms of the Electronic Communications Act, which President Thabo Mbeki is expected to sign into law any day now.
The planned policy changes flow directly from two industry colloquia held last year to identify ways of reducing SA’s high telecom prices. Next month’s announcement suggests that government has opted to accelerate its programme of "managed liberalisation" of the sector in an effort to bring down high prices.
It will follow just 18 months after Matsepe-Casaburri announced a range of other liberalisation measures. These included the right, from February 1 2005, of Internet service providers to carry voice traffic on their networks. However, the previous determinations have had only a limited impact on the sector and this may have been one of the factors that has persuaded government to open the market to further competition.
Matsepe-Casaburri’s new policy directives come as the Electronic Communications Act, new legislation that replaces the Telecommunications Act, comes into force. It’s expected that the new law will result in considerably more competition in the sector.
Deputy communications minister Roy Padayachie says he wants to encourage value-added network service licensees (Vans are traditionally Internet service providers) to approach the ministry if they want to become full-blown telecom operators. In terms of the new law, their request for a licence to build infrastructure to compete with the likes of Telkom and SNO Telecom would not be unreasonably denied, Padayachie says. "[The Electronic Communications Act will make] it possible for them to apply for infrastructure licences," he says. "The act says they are entitled to it and there is nothing that stops them from approaching the minister and saying they are interested. It might be a useful step for companies to indicate their interest in a particular market segment."
Some of SA’s larger Vans, such as Dimension Data’s Internet Solutions, have previously expressed interest in building their own networks independently of Telkom and might take Padayachie up on his offer. The extent of the universal service and other social obligations that will be imposed on them, as well as how much of a licence fee they’ll be expected to cough up, will be some of the determining factors in whether they apply to become fully fledged telecom operators.
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