@JohanD - interesting thank you. Assuming that ICASA proceeds as it has (roughly) indicated, is there a way in which this can be structured so that competitive forces can play a role in price-setting on the wholesale network (rather than waiting for ICASA to get its act together)? Will be very interesting to see who bids to be the wholesale operator...
Don't know. The structure makes it difficult because you have to artificially apply pressure and that has effect as competition and there are always going to be some hole that gets exploited. I have some ideas but what would actually be required is a case study of what worked overseas and what did not.
I think the important thing is to differentiate who owns the "logical country-wide network" and who owns the underlying physical towers. I don't thing the new entities need to necessarily own the physical infrastructure. Some quick idea of a structure within the current scope that might work (pretty much armchair stuff though):
1) New operators most like likely do not have the capital/network infrastructure/land-use rights to start from scratch. I think the regulations must be written in such a way that existing operators can actually build the network components leveraging their current infrastructure and capital.
2) The new wholesale entities do a couple of things:
a) They coordinate the build of the network using their spectrum.
b) They manage the network operations.
c) They facilitate and manage offset agreements (for entities that helped build parts of the network), and provide a single commercial platform for wholesale access to the logical network (for entities that only want to use the network).
d) Their income is provided by margin of the sale of access to the network, fees for managing the network. The management fees are based on the fees that current operators charge for maintaining the network.
The objectives would be:
1) Fast network deployment. Current operators try to build the wholesale network as fast as possible because offset agreements.
2) But they build it as cheaply as possible, because their cost of using the total network depends on the cost of their portion of the network.
3) Providers without their own infrastructure can negotiate a reasonable deal with the single wholesale operator without negotiating directly with competitors.
4) The profit of the wholesale operators are based on their efficiency (how cost effective they can manage the network), and how much wholesale access they can sell (number of operators on their network).
What is regulated:
1) How much infrastructure an operator can own within the wholesale network. E.g. saying for example "Vodacom can only own a maximum of 30% of Wholesale Operator A Network's infrastructure". This will ensure fairness of offset agreements, because it puts a cap on how much can be offset.
2) The management fee of the wholesale operator is determined by the management cost of the current cellular's operators network, plus a fixed margin.
But frankly, given that, I would still prefer existing operators compete head to head on all aspects of the network. They have the capital, the know-how and they are quite efficient at rolling out networks. The only thing I would require that is not in place is better regulations on wholesale access.
