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Telkom has mixed feelings about ICT White Paper

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 21 Oct 2016
Telkom's Brian Armstrong is calling for industry engagement on the white paper's proposal for operators to return spectrum, which he says goes against international best practice.
Telkom's Brian Armstrong is calling for industry engagement on the white paper's proposal for operators to return spectrum, which he says goes against international best practice.

Telkom has welcomed the publication of government's National Integrated ICT Policy White Paper, but has some mixed feelings about the content within the document.

"Our reaction to the white paper is that there is a lot of good in it. Some of it is concerning and there are some parts that are potentially dangerous. Our view is that one should regulate where it is necessary, and this includes when there is market failure," according to Telkom's chief commercial officer, Brian Armstrong, speaking at a technology conference in Johannesburg.

Armstrong says planned regulatory interventions should be geared towards improving the overall health and sustainability of the industry for the benefit of consumers, and "must promote competition, promote investment, and ultimately, deliver universal access, reduced costs to communicate and enhanced consumer choice".

MTN, Vodacom and Cell C have so far all remained silent on their views on the policy, which was finally published by government at the beginning of this month.

Telkom says it has noted the policy's attempt to balance universal access with the need to innovate and grow the industry, but believes a number of policy proposals pose a risk to current and planned investment, and ultimately, the overall health and sustainability of the industry.

Risky business

The fundamental problem is you have spent millions on the network and then have to return it. We need industry engagement on this issue.

Brian Armstrong, Telkom

One key area that Armstrong sees as problematic is the policy's proposal for operators to return the currently assigned International Mobile Telecommunications (IMT) spectrum, which he says "goes against international best practice, where there is a reasonable expectation of spectrum renewal".

"The fundamental problem is you have spent millions on the network and then have to return it. We need industry engagement on this issue," Armstrong says.

"The withdrawal of IMT spectrum compromises the operator's anticipated return on invested capital and disincentivises future expenditure towards network upgrade and maintenance. The result is that the network coverage footprint will stagnate, innovative new services will fail to materialise and the quality of service will deteriorate. This is contrary to the policy objectives enshrined in the Integrated ICT Policy White Paper."

The white paper also calls for the deployment of a wireless open access network (WOAN), which it says will be "a public-private sector-owned and -managed consortium". Analysts have already voiced their scepticism about how successful the deployment of a WOAN would be in SA.

"What we are not enthusiastic about in the policy is the assumption that a single access network will also be good for a well-functioning market, as we have in urban areas. We don't believe this is the best way to go for efficiency and competition in the metros. It will also disincentivise investment," according to Armstrong.

Telkom says infrastructure-based competition should be preserved in the areas that are currently well served. It does, however, support the idea of a WOAN as a means to extend coverage and promote service-based competition in underserved areas, where the duplication of network infrastructure is economically unfeasible.

"The principles of such a wholesale open access network are not yet clearly defined. This includes how existing networks have access to it, who pays for what and who shares what. Issues of demarcation have not been clearly defined. The debate on this is just starting," says Armstrong.

In terms of a fixed context, Armstrong sees open access as unnecessary in a market he believes operates efficiently, and will discourage investment towards the expansion, upgrade and continued maintenance of the fixed network.

Telkom adds while it supports the notion of an "open Internet", the establishment of "indiscriminate and unfavourable Net neutrality regulations could pose threats to the quality of service delivered to consumers, stifle innovation, and may compromise the functionality of the Internet, which is inherently counterproductive".

Positives

Armstrong did, however, highlight a few positive policy proposals, including government's commitment that planned future interventions in the ICT sector will be evidenced-based; and plans to restructure the regulator, which Telkom hopes "will foster a greater degree of alignment between policy and regulation".

"The policy recognises that wireless solutions will often be the appropriate manner in which to provide access to rural areas. Telkom has long had the view that rural connectivity should be anchored to key points, such as schools and government departments, by a fixed network. Beyond these points, connectivity should be provided via mobile wireless solutions.

"This is recognition that fixed and mobile have an important part to play and it's not just about fibre. The open access principles are sound and recognise that mobile is as important for access as fixed," says Armstrong.

Telkom also supports the measured approach towards the possible regulation of over-the-top services, saying regulatory intervention should not compromise innovation, investment and competition.

"It is important that we engage as an industry on these matters. We are heartened by the department's openness for discussions on the policy. Any policy should provide predictability and certainty, and drive alignment across the sector.

"We can't start the process using one set of rules and then, a few years later, have another set of rules that applies. The process of regulation must be legally and procedurally sound and focused on what we want to achieve as a country," concludes Armstrong.

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