Now that the Independent Communications Authority of SA (ICASA) has wrapped up its public hearings around mobile giant Vodacom's R7 billion bid to buy Neotel, the industry awaits an outcome that will contribute hugely to the future of SA's telecoms landscape.
Subject to ICASA and the Competition Tribunal, Vodacom may relatively soon have power over Neotel's operations, which means it will essentially direct the second network operator's business strategy, and have access to its spectrum, fibre network and customer base. ICASA's decision is expected in March, while the competition authorities are still working through the matter.
Cell C, MTN, Telkom, Internet Solutions, the Internet Service Providers' Association, Wireless Access Providers' Association and Crystal Web all used ICASA's platform to voice their thoughts and concerns last week. Reactions ranged from ardent opposition - from the likes of Cell C - to concerns around processes and regulation from Crystal Web.
Regulatory process
While other parties presented to the end of thwarting Vodacom's attempt to gain control of Neotel and become what Cell C says would be a "super dominant" player, Internet service provider (ISP) Crystal Web takes a more muted approach.
Crystal Web director Paul Hjul points out that the ISP does not seek to oppose the transaction being approved, but rather its primary interest is "in open and legitimate processes and a proper regulatory environment".
In Crystal Web's written submission, it raises concerns around a lack of procedure on ICASA's part regarding change of ownership at Neotel and its licences; Vodacom's intent ("It is not clear... whether Vodacom intends retaining Neotel as a going concern"); and spectrum allocation.
Spectrum forms the basis of the main bone of contention headlining last week's talks. ICASA has been asked to withdraw Neotel's spectrum and reassign it, but Vodacom argues this would be bad for consumers. "In fact, the transaction's impact on spectrum furthers the public interest," says the operator.
Crystal Web says: "Neotel seek in their prayer in paragraph 3.3 of the application for a transfer of the spectrum licences from the sellers to Vodacom. In so doing Neotel depends on a lack of regulations relating to section 31(2A) of the Act to invoke the same procedure as are applicable for section 13(3)."
Hjul explains: "Our approach has been to set out legitimate concerns as to cannibalisation of Neotel (particularly spectrum) by Vodacom and ensuring that in making a determination of the application by Neotel, that it is set out that the spectrum rights held by Neotel can be sterilised post-transaction by Vodacom failing to preserve Neotel as a going concern.
"We are quite pleased with many of the statements and admissions made by Vodacom and Neotel in the public hearings and believe that there has been an evolution in Vodacom's thinking on the transaction."
In summary, Crystal Web's position is that ICASA ought not to act as a barrier to the completion of a transaction that would result in the ownership interest of Neotel being transferred to Vodacom, but that the undertaking, together with the application, is insufficient to ensure the smooth future security of the spectrum allocation held by Neotel.
"It is our view that the transaction does not give rise to ownership concerns but rather that Neotel have not provided any indication as to the future governance of Neotel as an autonomous ECNS licence holder with obligations to interconnect and lease out facilities on a non-discriminatory basis."
Who is Crystal Web?
Having started operating just last year, Crystal Web is a new ISP on the South African block, and an addition to the country's budding small, medium and micro enterprise sector.
Hjul says the founders' primary reason for starting Crystal Web was to fill a gap in the DSL market "and meeting the challenge that several positive changes in Internet accessibility have". The company feels there is a need for new entrants - especially those with a focus on consumers with bandwidth-intensive demands.
Crystal Web MD Shaun Kaplan and Hjul are actively involved in Internet consumer activism.
While the ISP's immediate focus is on uncapped, the company is currently running a summer promotion on capped, DSL Internet and on fibre - presently to the business.
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