Cabinet approves telecoms duopoly

Johannesburg, 15 Mar 2001

The ministry of communications says a cabinet meeting yesterday approved the broad outline of the telecommunications policy direction proposed by minister Ivy Matsepe-Casaburri, including the introduction of a single competitor to Telkom.

Cabinet`s policy decisions include the licensing of a second national operator to provide international, national and local services, with at least one more similar licence to be issued within five years. This is in accordance with Telkom`s argument that a duopoly must be maintained until 2007.

In 2005, the market is to be assessed again to determine the viability of more operators.

In the interim, the minister will be able to grant licences to small and medium enterprises and telecoms collectives in under-serviced areas with low telephone penetration, while signal distributor Sentech`s licence is to be extended to allow international long distance telephone services.

Despite calls from Telkom for facilities-based competition, the government said the new operator will be allowed to use Telkom infrastructure to provide its services for a maximum of three years "to enable competition and benefit the consumer".

Both Telkom and the second operator are to be licensed for fixed-mobile services with technology-neutral licences, while all operators, including MTN and Vodacom, are to be given access to the data-rich 1800MHz GSM frequency spectrum at a fee. All operators are also to be offered third-generation licences at an unspecified future date.

In terms of empowerment, all major licences will be expected to have a 30% "set aside" for the previously disadvantaged, while "mechanisms supporting broader participation through retails" is also stipulated. A maximum 49% foreign ownership will be allowed in these licences.

The ministry says the proposals are based on policy input from the telecoms industry, recommendations from advisors and input from a colloquium held early in February. But at the colloquium, stakeholders came out in support of two or more licences after the end of exclusivity, saying a duopoly would create an environment conducive to price collusion.

Policy directions resulting from the cabinet meeting are to be published in the Government Gazette by 23 March, after which it will be open to public comment for 30 days. Department of Communications spokesman Robert Nkuna says policy directives will be published by the minister soon after that period, with necessary amendments to the Telecommunications Act being referred to the parliamentary portfolio committee on communications.