Gartner: Let ICASA off the leash

The best way for government to solve the troubled second national operator (SNO) issue is to let the regulator, the Independent Communications Authority of SA (ICASA), do its job, says Gartner analyst William Hahn.

Hahn was commenting on news that another African country, Algeria, had also failed to get significant foreign investors into its own SNO process and was now looking at alternatives that could include the licensing of voice over IP operators.

The Department of Communications, through ICASA, was supposed to have licensed the SNO by May 2002, when Telkom`s protection expired.

After having failed to entice a foreign investor to buy 51% of SA`s SNO, the Department of Communications has allowed a hybrid consortium consisting of five companies, plus a warehoused government shareholding, to apply for the licence.

The SNO shares have been divided as follows: 15% each for Transtel and Esi-Tel (Eskom), 19% for Nexus Connexion and 13% each for the two consortiums (CommuniTel and Two Consortium) which came through the SNO Working Committee`s pre-approval phase, and the balance was warehoused.

Much criticism has been levelled at the hybrid SNO, illustrating the investors` frustrations.

Eskom Enterprises, which looks after the power utility`s telecommunications business, reported a loss of R804 million in 2003. It said this was largely due to an R800 million programme to install a 4 800km fibre optic cable network in this country for the arrival of the SNO.

"ICASA has never been allowed to enforce its rulings against Telkom, which has taken advantage of the malaise to hike its tariffs and really entrench itself in the market," says Gartner`s Hahn.

He says the regulator`s role is to restrain the incumbent and allow the new SNO time to get off the ground and become a real competitor.

"ICASA should have already had a two-year track record of resolutions and court cases demonstrating its prowess as a regulator, but this has not happened because whenever it took Telkom to task, the Department of Communications stepped in. ICASA has never had a significant win against Telkom."

Hahn says part of the problem, which affects many other African countries, is that governments tend to talk about privatisation and liberalisation of the telecommunications sector, but do not actually follow through.

"It is not a sin not to privatise and many other countries have refused to do so, but they have ensured their state-owned telecoms operators provide the required connectivity. However, one cannot be liberalised and state-owned at the same time," Hahn says.

A balance between social and economic delivery can be found and Hahn advocates the introduction of a "Universal Service Fund" that would pay for the connectivity for underserviced areas and as a means of bridging the digital divide.

"SA must also realise that it plays a significant leadership role in Africa. This means that other African countries, which are tired of following the European model of doing things, will look towards it for an answer to their own situations," Hahn says.