Publication: Telecommunications News, 2001 (Insert to ComputerWeek)
Theme: Feature article – Policy Framework
Title: Chartering challenging waters
South Africans from all walks of life have been lamenting the lack of an
efficient telecoms service. Disapproving comments are usually accompanied by
knowing nods and the words, “I can’t wait until there is competition for Telkom”.
But wait we will, because even if Telkom has done the honourable thing by
turning down its final year of exclusivity, a truly competitive environment is
still a long way off.
A delegation of 300-odd stakeholder representatives spent a weekend thrashing
out the major telecoms themes at a colloquium earlier this year, with the aim of
establishing a framework for a new telecommunications policy and looking at ways
to enable the smooth and speedy introduction of a single competitor for Telkom
now, and additional competitors in the future. This Act promises to be an
improvement on the last, which has governed the different aspects of the sector
with varying degrees of success over the past five years
“The Act of 1996”, said Communications Minister Dr Ivy Matsepe Casaburri in her
introductory speech, “focused mainly on Telkom and the need for universal
service. The approach of our government then was based on the need for access,
participation of and ownership by the previously disadvantaged majority of our
people in the infrastructure and services in this sector.
Casaburri stressed that, this time around, the objectives were to facilitate
debate among stakeholders, provide a transparent process of policy-making, and
solicit the views of stakeholders, especially around areas where there had not
been consensus in the 61 written submissions from the broad range of interested
parties. At the same time, she emphasised the need to strike a balance between
timing and transparency, especially considering the importance of the
Information and Communications Technology sector to the overall economy.
Over the three days, the broad objectives were met as, under the chairmanship of
Emmanuel OleKambainei and Mavis Sintim Misah-Ampah of the DBSA, delegates
addressed each of the issues and made recommendations for inclusion into a
policy document. But the process was not without its hitches. At one point near
the end of the discussions, COSATU threatened to upset the apple-cart when
Charley Lewis indicated that the organization was not only against multiple
licenses, but against the assumption that competition is required.
Nevertheless, each topic was sufficiently covered, ad nauseam in some cases –
but this ensured that, if nothing else, everybody left the colloquium that
Sunday evening with a broader understanding and new appreciation of the
complexities of the deregulation process, and just what the industry and any
would-be contenders are up against.
Easy does it
As expected, a significant amount of discussion took place around the nature of
competition. Early in the proceedings, a delegate from Jasco suggested a simple
show of hands to determine who was in favour of a big bang approach - where
licenses are granted to as many competitors as the market can handle. The
suggestion was quickly averted, as the audience went on to carefully analyse the
most effective scenario. Many of the written submissions were clearly in favour
of a gradual liberalisation, ensuring that consumers get the best and most
affordable telecommunications service but some, like Eskom Enterprises, called
for a minimum of three licenses in any sector (fixed and mobile) for 5 to 7
years before introducing full liberalisation.
Build it or piggy-back?
The nature of competition accounted for much of the debate, where an
understanding was required regarding the difference between facilities and
services-based competition. Facilities-based competition means that the
suppliers compete with each other by providing services to customers by means of
their own telecommunication infrastructure. Services-based competition, on the
other hand refers to a scenario where service providers do not provide their own
telecommunications facilities, but provide services by means of facilities that
they have unbundled from network operators (i.e. Telkom). Telkom, naturally,
supports facilities-based competition, which requires that the new network
operator would have to invest in its own networks.
Given the time constraints for the SNO to be up and running, many believed that
the only rational starting point was services-based competition, where
infrastructure sharing and leasing takes place. At the same time, the opinion
was expressed that facilities-based competition is the best way to achieve
increased teledensity, the stable introduction of competition and promotion of
foreign direct investment.
Who’ll own what?
When the discussion turned to Black Economic Empowerment (BEE), a number of
percentages were bandied about. A submission reflected the belief that foreign
ownership of licences should not exceed more than 60% to allow domestic and
black penetration on all licences – but that it should be substantial to attract
foreign investment. A further submission suggested that BEE groups should have
at least 30% of the SNO and TNO and that non-operating consortiums should be
discouraged from the first phase of the process to not disadvantage current ICT
practitioners. One has to question how a balance will be struck between foreign
direct investment and the imperative to develop indigenous capabilities in
It was Ronnie Seeber of Motorola who suggested that BEE principles should be
about incentives rather than prohibitions, and that a tax rebate may be a
suitable reward for compliance. Acknowledging that BEE and universal access is
an industry-wide responsibility, he also suggested that monies be retained from
the ICT industry to provide universal service or BEE.
The ATF responded that the national objectives (which made up the crux of
Director General Andile Ncaba’s presentation) be underpinned by BEE, and
although the previous Act provided for this there was too little emphasis on its
implementation, causing the ICT sector to lag behind on this score.
Parade or auction?
An item that received much consensus was the beauty contest versus auction
approach to licensing. The auction approach, in which the highest bidder wins,
did not receive much support, with references made to the European cellular
licence auctions as a lesson that SA should learn from The beauty parade or
tender process was a lot more popular as it would help the regulator ensure that
infrastructure development goals are met and encourage BEE.
Telkom, having set itself ahead of its roll-out and service targets, will soon
be sharing its universal service responsibilities as universal service
requirements remain an important part of the telecoms obligations of the future.
One submission, on addressing rural telecoms, suggested that the USA (Universal
Service Agency) facilitate and encourage the establishment of community-owned
networks, impose US obligations on operators and award contracts for the
provision of telecoms services in underserviced rural areas.
It was also suggested that Government should promote cheap, high bandwidth
Internet access, and that the Internet and e-commerce should be fully
deregulated. Most commentators said Voice over IP and Voice over Internet should
be unregulated because they are more cost effective than current technologies in
providing universal access.
The role of the regulator
Delegates made it quite clear what was expected of the regulator. Icasa should
be strong, independent, and properly staffed and resourced. Mike van den Bergh
expressed SAVA’s disappointment in the lack of regulatory support resulting from
“grey” areas in the previous Act. He stressed that the roles, responsibilities
and jurisdiction should be well established to avoid the anti-competitive-type
issues of the past few years.
Although it wasn’t listed as an item for discussion, more than one stakeholder
group raised concerns about the effects of the “brain-drain” and other factors
on the skills supply in the ICT sector. Fortunately, some education-minded
representatives were among the audience and at least one, the University of
Natal to be specific, emerged as an institution with a plan. After watching
student numbers drop in the engineering faculty, while the computer science
departments couldn’t keep up with the applications, the university decided to
offer a degree in computer engineering to entice future telecoms professionals.
By the end of Sunday, 4 February, the colloquium had wrapped up the debate,
having tackled everything from addressing previously disadvantaged groups, to
spectrum and HR issues. Six commissions put their recommendations forward, and a
final recommendation document was compiled for the Minister to present to
cabinet early in March. Cabinet’s policy decisions included the introduction of
a single competitor to Telkom to provide local, national and international
services with one or more competitors being introduced after five years. The
Cabinet also decided that Telkom’s infrastructure should be available to the new
player to benefit the consumer, and, in keeping with the proposal’s call for
technology-neutrality, decided that both companies would be licensed for
fixed-mobile services. Fixed and mobile providers will be offered
third-generation licences in the future. These policy directions will be
gazetted, made open to the public for comment, after which the regulator, Icasa,
will publish regulations and begin the licensing process. Alongside this
process, the Cabinet would discuss amendments to the Telecommunications Act of
1996, which would be submitted to Parliament later this year.
Let’s hope the fast-tracked process promised by the Department maintains its