Communications minister Dina Pule's proposed changes to the Electronic Communications Act could limit the number of telecommunications licensees that can self-provision, which will curb competition, to the detriment of consumers.
Amendments in the proposed Electronic Communications Bill could also undermine Altech's hard-fought court win to force government to allow about 543 value-added network service licensees to self-provision.
Altech's victory was hailed as a win for the consumer, as it allowed the industry to go ahead with planned investments to develop infrastructure that would likely bring down the domestic cost of telecoms by increasing competition against the established operators, such as Telkom, Vodacom, MTN, Cell C and Neotel.
However, in an explanatory note attached to the proposed Bill, signed by Pule, it notes that proposed changes to section 20 of the law are a bid to limit the application of chapter four of the Act to specific licensees. Chapter four deals with infrastructure rollout and self-provisioning.
Not practical
About four years ago, JSE-listed Altech took on late communications minister Ivy Matsepe-Casaburri in a lengthy court battle to force government to allow value-added network service providers to build their own networks.
It is not clear how many of these smaller companies have made use of their licences since the win. According to ICASA's 2011 annual report, 33 licences were transferred that year, and companies such as Altech plan to use their licences to take on communication heavyweights to increase competition in the sector and force prices lower.
However, the licence-conversion win could be undone if suggested changes to the 2005 Act are passed.
In the memorandum on the objects of the proposed changes to the law, the Bill says the change to the law aims to “limit the application of chapter four to specific ECNS licensees as prescribed by the authority [the Independent Communications Authority of SA] since it is currently impractical”.
The change also aims to make better provision for the regulation of ECNS licensees that exercise any rights and obligations under chapter four.
Challengeable
Dominic Cull, owner of Ellipsis Regulatory Solutions, says the suggestion will limit competition and will not benefit consumers. He points out that SA needs to enable any company that wants to put down infrastructure and offer communications services instead of limiting the number.
The solution is to enable, not to limit, says Cull. He notes that the department should rather focus on guidelines in terms of infrastructure sharing and coordination, which would bring capital expenses down. “I can't see the benefit for consumers at all.”
The department seems to think the problem is that there are too many licensees, when the issue is that, six years down the line, there are no guidelines for rapid deployment and sharing of infrastructure, says Cull. He points out that roads in busy metropolitans have been dug up numerous times by different operators laying cables.
Cull says the solution is legally challengeable and will adversely affect some of the licence-holders.
He says there is no basis for delineating which licensees will enjoy certain rights, and which will not. Cull adds there is no guidance as to how the department will implement this concept, and the explanatory note is not backed up by the Act.
The Altech judgement is clear, and ruled that licences under the 1996 Telecommunications Act, which was replaced in 2005 with the Electronic Communications Act, cannot be converted under lesser terms, Cull explains. The memorandum seeks to remove these rights and convert licences on lesser terms, he notes.
Former VANS licensees were automatically converted to have IECS and IECNS licences, and given the right to construct their own networks and self-provide, Cull notes.
The pending legislation was gazetted on 18 July and interested parties have 30 days during which to comment.
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