Stakeholders veto telecomms duopoly

By Phillip de Wet for Telkom
Johannesburg, 05 Feb 2001

A gathering of more than 300 stakeholders in the telecommunications field this weekend in Midrand came out in overwhelming support for the introduction of two or more fixed-line operators at the end of Telkom`s exclusivity.

The delegates, drawn from service providers, manufacturers, industry associations and other interest groups, found that a duopoly, as suggested by Telkom, would create a "cosy environment" lending itself to price fixing and general collusion.

[AUDIO]In reporting back to the full gathering, four of the working groups` delegates recommended the introduction of two or more new operators, while the remaining two groups were undecided on the matter.

"[A] duopoly does not promote sufficient competition," one group reported after four hours of discussion. "There should be a minimum of three facilities or infrastructural operators and broad competition allowed in services."

Telkom, in its written submission to the colloquium, argued for a duopoly as the only manageable market structure for SA, and noted that its network was not ready for services-based competition.

The Congress of South African Trade Unions (Cosatu) was one of the few dissenting voices, arguing not only against multiple licences, but against the basic assumption that competition is required.

"We have considerable scepticism about competition in this sector where there is a need for infrastructure and an equitable distribution of services," said Charley Lewis, the head of Cosatu`s IT unit. "In our view, unbridled competition will simply lead to cherry picking, with everyone installing lines in Sandton, but nobody in the rural areas."

The majority of delegates were also in favour of "beauty contest" licensing rather than auctions, despite the example of the third cellular licence process where the issue of the licence has been delayed by several years. The main stated reason was fear that auctioning would not allow the promotion of social and political objectives.

Some argued for a hybrid licensing model, with a pre-qualifying "beauty contest" to ensure compliance with black economic empowerment principles, followed by an auction to raise funds. Others opposed auctioning outright, saying the costs of such a process cripples companies and are eventually handed down to consumers.

Input from the colloquium is to be presented to minister of communications Ivy Matsepe-Casaburri this week.