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Broadband licences could be under threat

By Phillip de Wet, ,
Johannesburg, 13 Aug 2001

Broadband service licences, which were to be issued next year to enable small operators to build their own data infrastructure in restricted geographic areas, may be abandoned this week as government seeks to placate the telecoms industry.

Industry watchers agree that the broadband licences are likely to be the first aspect of the recently released final policy directions to be abandoned if government wants to address concerns raised by Telkom and M-Cell.

Two weeks ago, the monopoly operator and probable bidder for a second national licence to operate fixed-line services jointly said they were not happy with the policy directions.

In a statement, the companies listed plans to issue licences to both a second national operator and a third national operator as its chief concern, saying it is questionable that the local market could sustain more than one licence. Also highlighted as problem areas were the proposed international gateway licence planned for parastatal Sentech and the broadband licence issue.

Communications minister Ivy Matsepe-Casaburri, public enterprises minister Jeff Radebe (who is responsible for the privatisation of Telkom), and trade and industry minister Alec Erwin, are due to announce any changes to the final policy later this week.

Government is seen to be under pressure to offer some form of compromise on the policy, as the much-needed income from Telkom`s listing could be reduced as a result of a pro-competitive environment. It also faces the possibility of offering two new licences with no qualified bidders coming forward to take up the offer.

The communications ministry, on the other hand, has tied itself to a market with three operators, saying consumers would benefit from increased competition. At least one political analyst says it would be dangerous for the government to be seen giving in to industry pressure.

In the middle stand the broadband licences, a clause of the directions included between the release of the first draft and the final document`s release. The licences have elicited little excitement from the Internet industry, as the licence conditions and geographic restrictions are likely to make them of nominal value.

Meanwhile, pressure to keep to the spirit of the final directions has also started to build. The Cape Telecommunications Users Forum today issued a statement calling on Cabinet to stand by the directions.

"We note that opposition to the decision to license three national operators has come almost exclusively from incumbent operators, their shareholders and industry members with a vested interest in limiting competition," the body says. "Those interests, powerful as they are, are not in the interests of the majority of South Africans."

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