Egg-dance to win Infraco licence
The government is considering an amendment to the Electronic Communications Act to allow for the issuing of telecommunications licences to state-owned enterprises such as the proposed broadband Infraco company.
The proposal will be submitted by the communications department to the cabinet in the next few weeks in an attempt to unlock the legal conundrums involved in the bid by the public enterprise department aimed at setting up Infraco as soon as possible.
Infraco’s role will be to provide broadband access at affordable prices, thereby lowering the cost of telecommunications in the country. The move will be in line with the call made by President Thabo Mbeki for the lowering of telecommunications costs as part of the government’s plan to lower the cost of doing business and to attract direct foreign investment.
The senior manager of telecommunications policy, Mashila Matlala, told Parliament’s public enterprises committee during a discussion on the Broadband Infraco Bill that the proposal envisaged a fast tracked, special licensing process for strategic state-owned enterprises such as Infraco.
However, the promulgation of this amendment bill is likely to take six to nine months. It is believed that the period is likely to place the second national operator, Neotel, under financial pressure. The commercial viability of Neotel depends on its having access as soon as possible to the long-distance broadband fibreoptic network that Infraco has acquired from Eskom and Transnet subsidiaries Esitel and Transtel.
The legal conundrum arose because the provision in the Broadband Infraco Bill that Infraco be given a deemed telecommunications licence is considered beyond the scope of the Electronic Communications Act. However, the act vests the power to issue telecommunications licences in the hands of the regulator, the Independent Communications Authority of SA (Icasa).
A deemed licence was proposed in the bill as Icasa’s normal licensing process would take too long and would have to be open to all players.
Icasa chairman Peter Mashile emphasised, however, that the Electronic Communications Act did not allow for deemed licences. The act also did not allow for the agreement that is envisaged between Infraco and Neotel, which would give Neotel the exclusive right to market Infraco’s broadband infrastructure for at least four years.
This exclusive agreement was intended to compensate Neotel for its loss of the broadband assets of Esitel and Neotel, which were originally intended to be housed within Neotel.
Public enterprises director general Portia Molefe insisted that Parliament, as the supreme law maker, was entitled to pass a law that gave Infraco a deemed licence. This was the preferable route in the interests of speed.
However, she said an amendment to the Electronic Communications Act would be proper as it would allow Icasa to issue Infraco with a licence within the terms of the amendment.
Molefe said Infraco intended to deliver a 95% discount off current national long-distance broadband rates within five years. It would maintain an internal rate of return of 16%, which was suitable for a utility.
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