Altech ruling will grow competition
Competition will be a great contributor to better prices. ACTING HIGH COURT JUDGE Norman Davis’s finding in favour of Altech in its case against regulator Icasa and the Department of Communications about the right of Vans licensees to self-provision infrastructure – and his subsequent ruling to not grant Communications Minister Ivy Matsepe-Casaburri leave to appeal – means South Africa is heading for telecoms deregulation on a massive scale.
However, although more than 600 Vans are theoretically eligible to become full-blown telcos, it’s unlikely all those will step up to the plate. In fact, there only likely to be a handful of players doing so. But those might be enough to drive competition to new heights.
Though Neotel’s entry into the market has undoubtedly had a positive effect on pricing and service levels it must be feeling a little put out – after all, it paid a small fortune and fought tooth and nail for its licence. Two years later the market looks completely open.
Interestingly enough, Neotel has welcomed increased competition in the industry in SA. “Increased competition will result in the consumer benefiting from better pricing and service,” says CEO Ajay Pandey. “At the end of the day all telecoms players should be encouraged to do what they can to offer the public a better service at a better price.”
Pandey says new competition drives innovation and service levels and that will ultimately be good for SA’s African telecoms industry. “ The current court process doesn’t change our position on that view. We’ll continue to strive on our part to bring down the cost of telecommunications for all,” he says.
While Connection Telecom director Rob Lith agrees competition will be a major contributor to better prices, he says the issue of interconnect pricing has yet to be addressed. Instead of actively working towards a more beneficial pricing structure for all players, Lith says operators continue to charge the Icasa regulated rate. “This ‘regulated rate’ prescribes a maximum rate a telco provider can charge each other for interconnect – but it doesn’t state a minimum,” Lith says.
While the pressure is on Icasa to adjust the interconnect rate, the increased market competition might see it coming down – with smaller players banding together to create a favourable environment for each other.
However way it happens, Lith says the accepted market rate must come down, since it’s currently hampering the ability of players (including Connection Telecom) to reduce costs for their customers by using VoIP and other complementary technologies. “It will also create a more competitive landscape and allow even the smallest of players to contribute.”