Li­cens­ing on hold

But in­dus­try will fight min­is­ter’s last-minute ap­peal

Finweek English Edition - - Communication & Technology - BELINDA AN­DER­SON

MIN­IS­TER of Com­mu­ni­ca­tions Ivy Mat­sepeCasaburri’s last-minute de­ci­sion to ap­peal the pos­i­tive Al­tech rul­ing means reg­u­la­tor Icasa has again been forced to put its value added net­work ser­vice (Vans) li­cens­ing process on hold. That came in the same week some Vans were due to take pos­ses­sion of their shiny new li­cences – en­ti­tling them to build their own net­works – fol­low­ing Icasa’s de­ci­sion not to ap­peal the rul­ing.

Al­though mar­ket talk sug­gested in­cum­bents – in­clud­ing Telkom and Neo­tel – had put pres­sure on the Com­mu­ni­ca­tions Min­istry (and di­rec­tor-gen­eral Lyn­dall Shope-Mafole in par­tic­u­lar) to ap­peal the rul­ing, the op­er­a­tors nat­u­rally de­nied this. The fact is we’ll prob­a­bly never re­ally know how it came about.

But one thing is for sure: the in­dus­try’s fight­ing talk sug­gests it’s not likely to take Mat­sepeCasaburri’s de­ci­sion ly­ing down. Al­tech wasn’t yet in a po­si­tion to com­ment of­fi­cially. CEO Craig Ven­ter was in the US last week and couldn’t be reached. How­ever, the group is due to release its re­sults this week and Ven­ter would pre­sum­ably have to give some in­di­ca­tion of its action plan at that time.

But Al­tech is be­lieved to have held a “war coun­cil” dis­cus­sion shortly af­ter the news of the Min­is­ter’s ap­peal, which was bro­ken to the me­dia even be­fore the par­ties them­selves had been no­ti­fied.

ECN CEO John Holdsworth says it will join Al­tech and other in­dus­try play­ers in a class action – go­ing all the way to the Con­sti­tu­tional Court should that be nec­es­sary – to over­turn the Min­is­ter’s re­gres­sive step.

Holdsworth says the Min­is­ter and the depart­ment are “out of touch with the pub­lic mood and sen­ti­ment. If they think the in­dus­try will just sit back and take it, they’re sadly mis­taken. This is war.”

In­ter­net So­lu­tions CEO An­gus MacRobert is more prag­matic about the news. He says they fully an­tic­i­pated the Min­is­ter would ap­peal. “We’ve come to ex­pect it,” he says. If the court al­lows the ap­peal, then MacRobert be­lieves it could take up to a year be­fore the mat­ter is de­cided again.

Mean­while, MacRobert says it must just try to un­der­stand the play­ing field and con­tinue as it’s done pre­vi­ously, build­ing part­ner­ships where nec­es­sary.

It’s that un­cer­tainty that un­set­tles the in­dus­try and de­ters po­ten­tial for­eign in­vest­ment.

Irnest Ka­plan, MD of Ka­plan Eq­uity An­a­lysts, says that should the Min­is­ter’s ap­peal suc­ceed, it would be “quite a big step back­wards”. First, it re­duced flex­i­bil­ity and the bar­gain­ing power of the al­ter­nate op­er­a­tors in ne­go­ti­at­ing the use of in­cum­bent in­fra­struc­ture. Sec­ond, “given the un­cer­tainty it makes it dif­fi­cult for them to plan and com­mit cap­i­tal to ini­tia­tives that would ul­ti­mately im­prove the com­pet­i­tive­ness of the sec­tor. The ap­peal also in­tro­duces new de­lays, which are most un­wel­come”.

Huge Group CEO An­ton Pot­gi­eter, who has also been vo­cal in his sup­port of the pos­i­tive rul­ing, says the min­istry’s pol­icy of “man­aged lib­er­al­i­sa­tion” had lim­ited suc­cess thus far and there was “con­sid­er­able merit” in al­low­ing the in­dus­try to take the lead in ad­dress­ing the high costs and lim­ited ser­vices ac­cess in the sec­tor.

Pot­gi­eter, and oth­ers such as Pin­na­cle CEO Arnold Fourie, say the real value of self-pro­vi­sion would have been in the small op­er­a­tors build­ing last mile ac­cess niches in small com­mu­ni­ties.

Mean­while, the depart­ment seems to think that only SA’s large op­er­a­tors should have that right. Mat­sepe-Casaburri says she’ll shortly is­sue an in­vi­ta­tion to ap­ply for a num­ber of new I-ECNS li­cences, in ac­cor­dance with the Elec­tronic Com­mu­ni­ca­tions Act (ECA).

While the rul­ing it­self was 67 pages long, the leave to ap­peal doc­u­ment is only a few pages. The fact the judge’s name was mis­spelled (as Jus­tice Davies, in­stead of Davis) sug­gests it was hastily drafted.

Some be­lieve the ap­peal is base­less and would ei­ther be thrown out or would fail. How­ever, Werks­mans di­rec­tor Kath­leen Rice says it seems un­likely the ap­peal would be thrown out sum­mar­ily, as there are some grounds that an­other judge could dif­fer with Jus­tice Davis’s rul­ing. One of those is whether or not the Min­is­ter’s pol­icy di­rec­tives amounted to ad­min­is­tra­tive action (a di­rect or­der, as op­posed to gen­eral guid­ance).

But what Rice does find prob­lem­atic is the state­ment the Min­is­ter made to the me­dia (via her spokesman, Joe Makhafola) in say­ing she planned to “ex­pe­dite an amend­ment of the ECA to re­move any am­bi­gu­ity around man­aged lib­er­al­i­sa­tion and to make it clear that value added net­work ser­vice (Vans) li­censees aren’t en­ti­tled to in­di­vid­ual ECNS li­cences un­der li­cence con­ver­sion”.

Rice says the only way the Min­is­ter could amend the Act is by say­ing li­censees weren’t en­ti­tled to con­ver­sion on equal terms, which in fact amounted to some form of ex­pro­pri­a­tion.

Big step back­wards. Irnest Ka­plan Ap­peal­ing. Lyn­dall Shope-Mafole Some form of ex­pro­pri­a­tion. Kath­leen Rice Go­ing all the way. John Holdsworth

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