Industry fears heavy-handed ICT policies

The last few months have seen a frenzy of activity on the part of the Department of Communications (DOC). The launch of a much-publicised Green Paper on e-commerce - responses for which were invited by 31 March - was followed in early February by a colloquium on telecommunications leading to recently announced policy directions. Obscured behind these high-profile initiatives are policy proposals on government-run certification and domain naming authorities.

Common to virtually all policy discussions is the wish that government will proceed with a light touch approach.

"The overriding concern," according to business consultancy Grant Brewer, director of e-commerce at Ernst & Young, "is the government`s apparent intention to over-regulate and be involved in too many issues. They should sit back, set the framework, and let business self-regulate."

While this is a common thought among many industry players, many - including Brewer - temper this view by adding that key ingredients for success in the various policy processes underway is that policy is well-considered, that stakeholders` views are incorporated, that potential investors are given certainty about the future of the ICT environment, and that South African policy is in line with the demands of globalisation.

Legal experts on telecommunications and e-commerce readily suggest that the government should start with simple but important measures, such as recognising the legal validity of digital signatures. However, Wim Mostert, manager of electronic law solutions at Deloitte & Touche, raises the question on whether - once the government recognises such basic elements of e-commerce - it should set standards as well.

Technology neutrality seems to be a key ingredient in the government`s policies and proposals. However, in many cases this will leave the law vague and prone to challenge in the courts. This is not in itself a serious problem, argues Michael Silber, an attorney at Aurica Legal Services, but suggests that specialist courts - or at least specialist judges within the current legal system - would be desirable.

One area of policy, regulation and legislation where light touch was hardly expected, was in the re-regulation of the telecommunications sector.

Few expected the market to be thrown open in a big bang approach. Indeed, few called for such a move, if the attendees of the second national telecommunications colloquium on the weekend of 2 February were any indication.

However, almost all the working committees at this talk-shop suggested that the appointment of at least two new full-service operators is what is needed to spur the competition that South African business has been waiting for since the Telecommunications Act of 1996 bestowed an exclusive PSTN licence upon Telkom.

To the dismay of many in the ICT industry, only one additional licence will be issued in the short-term - as Telkom itself requested. A services-based competitor (ie one that will be allowed to interconnect and lease network bandwidth from existing operators) will be allowed after a review of the sector to be conducted in 2005, according to the director-general of the department, Andile Ngcaba.

"The overriding concern is the government`s apparent intention to over-regulate and be involved in too many issues."

Grant Brewer, director of e-commerce, Ernst & Young

Contrary to Telkom`s wishes, the new licence will not require pure facilities-based competition licence. Instead, the new operator will be allowed to use Telkom`s infrastructure for a period of two to three years, during which it can build its own network.

According to Arif Hussain, senior manager of telecommunications at M-Cell (a potential participant in the second national operator), facilities-based competition would have led to a new operator taking at least that long to bring services to the market.

Two surprising elements of the telecommunications policy announcement were the proposed issuing to Sentech of a licence for international voice traffic, and a renewal of the ban on the deployment of voice over IP (VOIP) technology by all but selected SMMEs in highly under-serviced areas.

Representatives of the highly vocal ISPs and VANS licence holders said this amounted to a "bolt from the blue", and intend expressing strong objections to the move in their official response.

However, Ngcaba said that allowing VOIP in under-serviced areas would enable small businesses to experiment with and develop the technology. He hopes to see this technology grow the country`s telecommunications infrastructure "from the other end", since it is unlikely that the big operators will be able to devote sufficient resources towards closing the so-called digital divide.

This meets two of the fundamental objectives of government policy on the subject, which Ngcaba pointed out as lowering input costs - not only for the operators, but also for consumers - and increasing access to dial tone and other communications services.

Ngcaba cautioned attendees of a recent summit on entertainment, technology and communications that in considering the policy processes at hand, care should be taken to distinguish between the different elements of policy presentation. Five such instruments exist: law, policy directions, regulation by the Independent Communications Authority of South Africa (ICASA), invitations to apply for licences, and the licences themselves.

"Don`t expect to see what should be in one instrument, in another," he said. Issues that will be addressed in instruments other than the current policy documents are the cost to operators for access to the 1800MHz spectrum, and the details of the participation of Eskom and Transtel in the second national operator.

"We haven`t yet completed the merger of SATRA and the IBA. They`re still divisions of ICASA, but we`re restructuring."

Ne"el Smuts, ICASA

Ne"el Smuts, a member of ICASA, similarly pointed to the need for distinction between regulatory and policy issues. Policy is set by the government in terms of law, and amounts to instructions to the regulator. This is a political process, while the regulator operates at a secondary level.

He explained that ICASA has been very stretched, as it had to address ongoing matters from day one of its inception.

"We haven`t yet completed the merger of SATRA and the IBA," he said, referring to the telecommunications and broadcasting regulators of old. "They`re still divisions of ICASA, but we`re restructuring."

Smuts highlighted the resource constraints under which the regulator was labouring. This would inhibit it in its ability to undertake the arduous and costly task of monitoring, for example the restriction of VOIP to SMMEs in designated areas of teledensity less than 1%. However, he added that the penalty to a licence-holder of violating these restrictions are "pretty severe" - they forfeit their licence.

Ngcaba added that the broad policy directions specifically aim to address resourcing the regulator.

Mike van den Berg, chairman of the VANS Association, raised a popular concern that dogged the previous regulator, SATRA. He suggested that it might be desirable to limit the ability of participants in the industry to take the regulator to court - although he questioned the practicality and constitutionality of such a move.

Smuts said that while in the past some players sought legitimate clarity on interpretation in the courts, other cases were brought because due process wasn`t followed. "We definitely intend to tighten up on that; to make the process consistent."

Ngcaba echoed the concern: "If you end up with three or four cases in court, it stretches you and adds unbudgeted costs. However, when the 1996 law was drafted, everyone, including the industry, wanted the courts to be the last recourse. Perhaps that should be reviewed, but the danger is a perception of rights infringement."

He agreed with suggestions highlighted earlier that should the final recourse be the courts, the bench should be qualified to deal with the issues. He highlights the writing of interconnect agreements, tariff arrangements and other advanced regulations as challenging even to the regulators themselves, and suggested the provision of ongoing training initiatives to keep regulators suitably skilled and up-to-date.

While these high-profile policy debates and decisions are taking place, several other policy issues are being addressed.

Ngcaba recently presented to the World Intellectual Property Organisation his department`s views on the governing of a top-level county-code domain name (like .za). The views expressed surprised many observers of and participants in the local Internet industry.

"Government should sit back, set the framework, and let business self-regulate."

Grant Brewer, director of e-commerce, Ernst & Young

Among the many issues over which concern was expressed was the fact that the DOC felt the need for a "new model" - as the title of the presentation suggested. Few have ever expressed dissatisfaction with the way the .za domain space was managed to date. Questions are also raised about the size and complexity of the structure that seems to be under consideration, and the kinds of issues - familiar ones, like the digital divide, lack of access to infrastructure, and so on - that the DOC believes it can address by setting up a new ccTLD governance structure.

The Green Paper on e-commerce suggests that similar thinking is prevalent regarding the nature of certification authorities. These are "trusted entities" that can validate someone`s electronic identity. Many in the industry believe that such authorities should either be privately run, or established as non-profit, non-governmental organisations.

In all these policy issues, the fear of heavy-handedness, bureaucracy and the risk of stifling opportunities for economic growth and competition loom large. In some cases, the fears are probably justified. In others, a knee-jerk reaction against government involvement is blatantly apparent.

In considering its responses to these processes, the ICT industry and the public in general have to keep in mind that a certain level of legislation is necessary. Policy frameworks can indeed encourage growth and facilitate dispute resolution. But at the same time, the DOC - the government`s voice in the policy processes under consideration - needs to address the concerns of industry players, and must allay the often-expressed fears, based on historical fact, that private sector views will be heard, but not heeded.