After months of hopeful speculation that Allied Technologies (Altech) will build an incumbent competing network with its hard won ECNS licence, the company says this is not on the cards.
Speaking yesterday at an announcement that will see Altech's East African operations gain a boost from a partnership with Seacom, CEO Craig Venter said the South African regulatory environment has made it impossible for the company to have a shot at competing as an operator.
Altech dominated the telecoms headlines last year in its battle against the then and late communications minister, Ivy Matsepe-Casaburri, to gain the right to become a self-providing operator.
In November, the company won its battle, in what became the first step to liberalising the market and giving roughly 400 new operators the opportunity to build their own networks. Since then, the industry has been closely scrutinising Altech, hoping it would make use of the new licence.
Altruism
However, yesterday Venter dashed these hopes, saying the stand it took then was one of principle. “We were aware as a company and as a board that the ICT industry in most countries can contribute up to 2% of GDP. We also knew that it could not be attained in SA, without liberalisation. We wanted to play some role in liberalising the market.”
He added that most of the newly-licensed companies did not have the resources to take the fight to the courts and make a stand.
While Venter says the company will still make use of its licence, it will only really target gated communities and corporate office parks with infrastructure. “We are not, as Altech, going to build a WiMax or any other technology network.”
SA is too hard
While many were hoping the deals would be a boon for SA, Altech is firmly focused on using most of the bandwidth to grow its East African operation through Kenya Data Networks.
Venter says it's no longer viable to compete in the same way in the South African market. “We believe that the other players are large and the cost of building a network in SA is heavy. Our emphasis and our focus is now East Africa.”
He says that, if the regulator had liberalised the market and awarded spectrum three years ago, it might have been a different story. “There might still have been a window of opportunity. But the regulator still hasn't decided what to do with spectrum. And while time ticks on, the existing players become more entrenched and it becomes less likely for anyone else to compete.”
East is best
According to Venter, the East African market is far more liberalised than SA and it is reaping the rewards that South Africans could have if the market locally was more competitive. Seacom says that data usage in Kenya went up 200% since Seacom came in.
Seacom CEO Brian Herlihy says he is disappointed with SA's response to undersea competition. “It's ironic to see East Africa become larger and faster moving than the South African market, especially since East Africa was supposed to be a secondary market.”
Herlihy says the dramatic response from the region is indicative of its innovation and the understanding that using technology for business can only be a good thing.
Both Herlihy and Venter agree that SA's neighbour has a far more reasonable regulatory environment, and companies are responding to the access with vigour. “Kenya is getting five times the speeds on their 3G networks, while in SA there have only been a few announcements. There needs to be a market disruptor here,” adds Herlihy.
Meanwhile, Altech says it hasn't given up on SA entirely. Venter says the company's newly-acquired Internet service provider, Technology Concepts (TC), is working on several opportunities, although he would not elaborate on what these are.
He also says that some of the additional bandwidth it has gained over the last few months will be used at TC and could be passed onto the company's customers.
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