Licensing on hold
But industry will fight minister’s last-minute appeal
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