The VANS self-provisioning conundrum

Early days

The question as to whether VANS can self provide is still in limbo despite the fact that it has been over 2 years since the minister first stated that it would be permitted and then backtracked in January 2005. Her failure to clarify the issue has effectively thrown the industry into a state of bewildered confusion.

On the 3rd of September 2004, the Minister of Communications, Dr. Ivy Matsepe-Casaburri, published various determinations as per the Telecommunications Act. One of these determinations was that “VANS may self-provide facilities from 1 February 2005.”

ICASA, after holding workshops and calling for industry input, released an official statement that “VANS may self-provide facilities from 1 February 2005. Self-provision contemplates the procurement of telecommunication facilities by a VANS licensee from any telecommunication facility supplier and to use them under and in accordance with its licence to provide telecommunication services.”

In an 11th hour statement from the Minister at the end of January 2005 she clarified her determination, saying that “the issue of self-provisioning was issued in the government's policy determinations only in relation to mobile cellular operators in terms of fixed links, to give full meaning to the intention to reduce the costs of telecommunication services in SA. It is the intention that value-added network operators may obtain facilities from any licensed operator as specified in the determinations."

This was welcomed by some industry players like Telkom but many other companies – who had already invested millions of Rands in equipment – did not take too kindly to this ‘clarification’.

Uncertainty remains

Despite her ‘clarification’ nothing is clear regarding self-provisioning.

The ultimate authority may lie with ICASA, but the regulator is currently working on a new licensing regime and did not want to commit to a certain position.

“We are in the new regulatory environment and are aligning all the licences issued in terms of the Telecommunications Act and the Broadcasting Act to the Electronic Communications Act,” ICASA said.

“That is the reason ICASA has been involved in the Licence Conversion process, which will clearly stipulate which licensees may or may not provide what services,” the authority concluded.

Clarification needed

Telecommunications lawyer Dominic Cull of Nicciferguson Inc, believes that ICASA is correct in looking forward but points out that in converting licences the Authority needs certainty on the existing rights of licencees.

This is because section 93 of the Electronic Communications Act requires that licences be converted “on no less favourable terms”. This implies that existing rights must be transferred to the new licences to be awarded to licencees.

“ICASA, probably due to political influences, has steered away from providing certainty as to the existing rights of VANS with particular reference to the issue of self-provision.”

Cull has little doubt that VANS may self-provide in the sense expressed by ICASA and are not restricted to obtaining their facilities from licensed telecommunications service providers (as opposed to telecommunications facilities providers).

“An opinion obtained from Senior Counsel supports the view that the Minister’s clarification is legally irrelevant and that the effect of her determination with regard to self-provision was to remove any restriction imposed by section 40 of the Telecommunications Act as to where VANS could obtain their facilities from.”

Cull goes further to point out that a ruling that VANS can self-provide has massive consequences for the licence conversion process and it would be in the interests of all parties for legal certainty to be obtained as soon as possible.

“Failure to obtain such certainty will almost definitely lead to a court challenge as there are many licencees with much to gain and even more to lose in the conversion process.”

Until the new Electronic Communications licenses are awarded uncertainty is likely to remain. And with various VANS vying for the right to put down their own infrastructure one can expect a fierce battle which may just land up in court.

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The VANS self-provisioning conundrum