Vans licensees still in the dark as regulators swaddle themselves in mire of litigation
UNCERTAINTY CONTINUES TO dog South Africa’s telecommunications industry with service providers still in the dark about what their rights are. That after Communications Minister Ivy Matsepe-Casaburri resorted to taking regulator Icasa to court so the department itself could get some clarity in the wake of both bodies taking divergent views on how value added network service providers’ (Vans) licensing should proceed.
Matsepe-Casaburri went to court on an urgent basis for a declaratory order on whether her appeal – against Justice Davis’s 29 August ruling in favour of granting Altech and other Vans with Individual Electronic Communications Network (I-ECNS) licences – suspends the judgment in its entirety.
It’s not yet clear whether she will win the right to appeal.
However, not complying with the judgment would meanwhile place Icasa in contempt of court – given that it had decided not to appeal the judgment – unless there’s a court order directing it not to.
Therefore, Altech is justifiably breathing down Icasa’s neck for its I-ECNS licence, in terms of what Davis’s judgment allowed.
Icasa’s decision not to appeal the judgment was in itself a victory for its independence against a department that seems hell-bent on slowing the pace of deregulation in the industry in SA. Industry leaders continue to wonder, behind the scenes, how MatsepeCasaburri managed to survive the recent political transition. But nobody doubts she’ll be gone by next year’s election.
The Minister says Icasa is aware its decision not to appeal would have a negative effect on her decision to appeal. But she acknowledged (in the latest court papers) that Icasa was “an independent body and I’m obliged in law to respect Icasa’s decisions, even if I do not agree with them. In those circumstances I had no other alternative but to institute these proceedings”.
From the outset, the biggest concern with Altech’s court proceedings against the Communications Department and Icasa was the time litigation could take. However, Justice Davis delivered a speedy verdict in favour of faster liberalisation, injecting a new sense of optimism into the sector. News of the Minister’s last minute appeal quickly squashed that. It now seems the ensuing litigation sideshow could further drag things out.
In order for telecoms investors to make decisions regarding any future investment, they need regulatory clarity to move forward. Without that millions, if not billions, of rand in capital expenditure by SA and foreign players could be lost to this country – a point analyst Irnest Kaplan and others have made on previous occasions (see Finweek, 2 October: “Licensing on hold”).
It seemed just weeks ago that Icasa placed a moratorium on the licence conversion proc- ess in the wake of the Minister’s appeal. But subsequent to lifting that moratorium, Icasa is insistent it had nothing to do with the conversion of Vans to I-ECNS licences. Rather, it says, that related to issues of application and licence fees for the new categories of licences under the Electronic Communications Act (ECA). The regulator hopes the recent publication of draft licence fee regulations put paid to that lack of clarity.
But how could it, if a layer of potential competitors still doesn’t know whether they’ll be able to proceed towards building their own networks or even what rights their services licences will actually give them?
Matsepe-Casaburri herself admits that potential pitfall in her latest court papers. If Altech and other Vans can get I-ECNS licences and start investing in a network rollout while her appeal is still proceeding then the outcome thereof would be “academic”.
If the licence was issued and the appeal later upheld she says: “What I fear is that Altech may have unnecessarily expended large amounts of money on the rollout of its electronic communications network.”
Altech hasn’t yet decided whether to go ahead and build its own countrywide network but believes it should have the right to do so. In a statement that speaks of possible pressure to protect the incumbent operators, the Minister also said issuing Altech and other Vans with I-ECNS licences would devalue the licences of the network licensees, such as Cell-C, Telkom, MTN, Vodacom and Neotel. She said while a Vans licence costs about R6 000 the SNO (Neotel) had paid R100m for its licence.
As commentators on Fin24’s website pointed out in response to news of MatsepeCasaburri’s latest court application, Neotel must have felt badly done by. But to be fair, Neotel has had the past few years to steal the march on its other potential competitors by rolling out an already substantial fibre network presence, has access to plenty of spectrum for a wireless network rollout and has regulatory certainty with regard to what it can and can’t do. That certainty currently represents a substantial advantage.
Telecoms dog and pony show continues as department and regulator head to court. Ivy Matsepe-Casaburri