On Friday, Communications Minister Ivy Matsepe-Casaburri informed the press of her decision to appeal the Pretoria High Court’s ruling in favour of Altech Autopage stating that Vans (Value Added Network Services provider) can self provide and should hence automatically receive Individual ECNS (I-ECNS) licenses.<\/p>\n
In a statement Matsepe-Casaburri said that the ruling will undermine government’s managed liberalisation policy to the detriment of the information and communications technologies (ICT) industry.<\/p>\n
Matsepe-Casaburri further said that she will fast-track an amendment to the Electronic Communications Act (ECA) to "remove any ambiguity around managed liberalisation and to make it clear that Vans licensees are not entitled to I-ECNS licences under licence conversion".<\/p>\n
The Altech Vans court ruling was widely welcomed by both the telecoms industry and consumers with the hope that this will finally open the South African telecommunications market to competition and force broadband and telecoms prices to fall.<\/p>\n
Show me the money<\/strong><\/p>\n The Minister’s decision was greeted by fierce criticism – a stark contrast to industry’s reaction to the court ruling. <\/p>\n According to one telecoms expert the reason for the appeal may be related to financial gains from Government and politically connected people’s share holding in Telkom and other telecoms operators.<\/p>\n “Government has a share holding in Telkom [and] politically connected people have interests in Vodacom, MTN and Neotel, all of whom stand to lose through greater liberalisation of the telecoms industry,” he said.<\/p>\n “If you read between the lines of Ivy’s statement, the ICT industry would be "harmed" if VANs were to self-provide – i.e. the incumbents would see a risk to their profits. They have probably been leaning on Ivy to appeal, and the delay in the appeal coming has probably been due to the time it has taken for Ivy to be lobbied by the incumbents,” he said.<\/p>\n “It is a tragedy for South Africa that the likes of Ivy Matsepe-Casaburri are tolerated and allowed to maintain a status quo which sees the enrichment of an elite at the detriment of the population as a whole,” he concluded.<\/p>\n Many observers agree that commercial interests are at the root of the Department of Communications’ managed liberalization policy. In 2005 Communications Department Director-General Lyndall Shope-Mafole said that the Government was protecting Telkom “so that we could get big value for it because it was going [public on the stock market]. It had to do with bringing investors into a company that is South African.”<\/p>\n The protection of Telkom’s monopoly is widely acknowledged as the main reason behind South Africa high telecommunications costs and poor services. <\/p>\n Lack of competition<\/strong><\/p>\n A recent academic paper by Robert Horwitz and Willie Currie gave an account of how Telkom’s monopoly resulted in huge profits for its shareholders, notably SBC and Malaysia Telekom, at the expense of the South African economy.<\/p>\n "Telkom, granted a five-year period of exclusivity to expand the network, has used its monopoly power to thwart competition. It has raised prices so high as to be damaging to the economy,” the paper says.<\/p>\n It further says that SBC (now AT&T), as a Telkom shareholder, transferred its San Antonio corporate legal team to South Africa to help draft the Telecommunications Act, to make sure the legislation fitted its requirements.<\/p>\n In 2004 both SBC and Telekom Malaysia sold most of their shareholding in Telkom, making a significant profit in the process. <\/p>\n The SBC\/Telekom Malaysia share sale opened the door to another controversial shareholding deal where Public Investment Corporation (PIC) and the Elephant Consortium – both with strong links to the ruling ANC party and Government – now owned 15.1 percent of Telkom’s shares.<\/p>\n In this deal the PIC bought the SBC and Telekom Malaysia shares – 15.1% of Telkom’s shares – held by Thintana for R 78.00 per share. A few months later the PIC sold 10.1% of these shares to The Elephant Consortium at R92.50, making a profit of R 1.5 billion.<\/p>\n During this entire period Telkom enjoyed a legally protected monopoly, which saw the company’s profits and share price soar.<\/p>\n It is often forgotten that Government intended for a Second National Operator (SNO) to be licensed in 2002 and a Third National Operator (TNO) was on the cards for 2005. The SNO was only licensed in December 2005.<\/p>\n Opened up at last<\/strong><\/p>\n With the High Court’s ruling that Vans can self provide many people believed that the South African telecoms market was going to become a truly competitive environment.<\/p>\n The minister’s announcement that she will appeal this ruling, and even amend the ECA to disallow the self provisioning of Vans, throws the telecoms industry back into a state of limbo.<\/p>\n ICASA has a deadline of 19 January 2009 to convert existing telecoms licenses under the Electronic Communications Act, but with a looming court case, a potential change to the ECA and no real sanction attached to this deadline it is uncertain if ICASA will meet this obligation.<\/p>\n ICASA was not immediately available for comment.<\/p>\n