Applying lessons from pay TV

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 28 May 2008

The Electronic Communications Act (ECA) is expected to provide small and medium business (SME) with new opportunities, but the regulator says they must learn from the mistakes of pay TV licence applicants.

Speaking at ITWeb's ICT for SMEs conference yesterday, Independent Communications Authority of SA (ICASA) councillor Dr Marcia Socikwa said the ECA is intended to foster competition and grow small business and entrepreneurs. However, companies need to adhere to certain principles in terms of licensing in the communications services space.

During the process of licensing pay TV operators, ICASA identified the common mistakes that start-up businesses make in licence applications.

"Companies must have solid financial backing. It is the authority's responsibility to see companies succeed and, without the correct financing, that will not happen. Pay TV and the under-serviced area licensees (USALs) were proof that a licence does not guarantee success," said Socikwa.

She said many of the pay TV applicants only had partial funding from banks or investors, making the start-up of a licensed station almost impossible. "When you are talking about a billion-dollar industry, partial funding was not enough. It could take R150 million, at least, to start-up an operation like this."

Businesses must also know the demand for the technology they would like to implement, as well as have knowledge of the technology itself. "Many licence applicants don't even know what frequency band to apply for, or the type of service they would like to provide."

The final aspect to consider is the skills pool surrounding the service a company would like to implement. "Licensing all 18 pay TV operators would have had a large impact on the availability of the skills. Already, the applicants that did apply were talking about skills poaching strategies, mostly from the SABC," she added.

ECA opportunities

"There is no longer a distinction between specific services. The electronic communications services (ECS) and electronic communications network service (ECNS) licences are technology-agnostic and services are no longer restricted to the incumbents," she said.

SMEs applying for ECS or ECNS class licences would face a shorter registration period, which could help inject competition into the services market, said Socikwa. "The old licensing process was prolonged and not efficient. The ECA allows registration of class licences within 60 days. This is significant in view of the number of monopolies which have settled in the country; companies like MTN, Vodacom and Telkom."

ICASA has identified two licence forms, with class licences covering regional area access and individual licences covering national area access, each of which carry their own privileges and costs. Socikwa said SMEs should consider the class application both in terms of cost and demand. "Start-ups don't have pockets that incumbents have, but if a sustainable business can be encouraged, then we will [encourage it]."

"We do believe that licensing the VANS will increase the prospect of much needed competition in the market. It will bring the expansion of ECNS, as well as the provision of a variety of other services," she said.

Socikwa said she would have liked to discuss the value-added network service providers (VANS), however, because of the court proceedings with Altech Autopage Cellular, the authority could not discuss the details around the licence conversions.