Third national operator, broadband abandoned

Johannesburg, 16 Aug 2001

Communications minister Ivy Matsepe-Casaburri yesterday announced that government has shelved plans to issue broadband licences and that a third competitor to Telkom will only be introduced by 2005 at the earliest.

The announcement, backed by trade and industry minister Alec Erwin and public enterprises minister Jeff Radebe, reverses what was billed as the final policy directions published three weeks ago, and comes after objections by, among others, Telkom and M-Cell.

The single Telkom competitor is to be licensed in May next year, after the JSE listing of Telkom, and will still be allowed to share the Telkom network for its first two years of existence. A choice is to be made between parastatals Esi-Tel and Transtel, and the consortium that wins the licence will be forced to include only one of the companies as a shareholder, not both as originally envisaged.

There will be no legislative cap on the foreign ownership in such a consortium, although Matsepe-Casaburri did not exclude the possibility that such a restriction could be specified in the invitation to apply for the licence.

A third operator may be licensed in 2005, but that would depend on the outcome of a feasibility study to be conducted at the time.

The abandonment of broadband licences will mean that all Internet service providers and other data carriers will have to source the infrastructure they use from either Telkom or its competitor, while voice over Internet protocol (VOIP) technology use will still be restricted only to those two operators.

Number portability and carrier pre-select services, for which the Independent Communications Authority of SA (ICASA) has already started the process of compiling regulations, will also be postponed until 2005.

Sentech`s role `clarified`

And, in what is billed as a clarification and not a change, Matsepe-Casaburri announced that parastatal Sentech will indeed be issued with a licence to operate an international gateway for voice traffic, but will be a "carrier of carriers" and will not be allowed to provide services directly to consumers.

"What we simply have done is to clarify what it [Sentech] will be able to do and what it will not be able to do," Matsepe-Casaburri said in response to a question, and Erwin said the original policy had "just been too unclear". Yet part of the July policy reads: "The Act shall be amended to license Sentech to provide international telecommunications services direct to customers as determined by the minister from 7 May 2002."

The March intended policy included the words "direct to customers" in relation to the Sentech licence, and at the time director-general of communications Andile Ngcaba said the intention was to allow the natural convergence between television signals to homes and telephony to the home to take place.

Facing reality

Matsepe-Casaburri said the changes had been made as part of Cabinet`s "commitment to ongoing consultation" and in the understanding that policy directions are not legislation.

Asked what had led to the changes, Erwin said Cabinet had undertaken long debates, but looked at reality in its decisions. "What came to bear was probably the judgement of ministers."

Erwin was seen as the main player in the push for broader liberalisation of the market, which led to the three operator policy, but said yesterday the new directions would create a more ordered environment which would facilitate the cash flow from the privatisation of Telkom and the sale of government`s stake in M-Cell, both planned for early next year.

It appears that the show of solidarity by the ministers was meant to send a clear message that there would be no further changes to the policy.

"This press conference reflects the last will and testament of Cabinet," Radebe joked. He also said that the Telkom listing was still planned before the end of the fiscal year, as he expected the necessary amendments to the Telecommunications Act to be adopted soon after Parliament reconvenes in September.