Con­fu­sion reigns

Vans li­censees still in the dark as reg­u­la­tors swad­dle them­selves in mire of lit­i­ga­tion

Finweek English Edition - - Communication & Technology -

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

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