Telkom, SNO at odds over deregulation

Johannesburg, 22 Oct 2004

The colloquium on the liberalisation of the telecoms market, hosted by the Independent Communications Authority of SA (ICASA) earlier this week, has seen differing views put forward by the incumbent operator, Telkom, and the proposed second national operator (SNO).

According to Karl Socikwa, chairman of the interim SNO board, although it is not within ICASA`s ambit, there is a need for a national broadband policy, to ensure SA remains competitive in the ICT services sector.

"With the changes announced by the minister, unbundling of the incumbent`s local loop has now become imperative," says Socikwa.

"As most fixed-line access facilities ('last mile`) remain in the hands of a single player, and most individual lines remain narrowband, this will severely limit competitive access to converged services, regardless of the number of service providers."

Telkom, on the other hand, says that while the regulator poses some questions relating to the unbundling of the local loop, no reference is made in the ministerial determinations with regard to this.

"Section 44(7)(b) of the Act explicitly states that no PSTS licensee shall be required to unbundle its local loop for the period of two years after the commencement of the SNO licence," says spokesman Ravin Maharaj.

Socikwa says that in the absence of any rules, operators with significant market power will simply get stronger, and many new entrants will fail, therefore it is essential that ICASA provides clear, unambiguous interpretations of the policy.

"The degree to which investors will be willing to invest in telecommunications infrastructure will depend on the level of regulatory certainty that can be achieved," he says.

Big bang

The monopoly believes that if the ministerial determinations are interpreted in the context of the Telecommunications Act of 1996, they will have a relatively minor impact upon the regulatory framework.

However, if the 'big bang` interpretation were taken, which appears to be the approach being adopted by the value-added network service (VANS) providers, then some major and complex regulatory implications would result.

Maharaj says the most important of these would be that the provision of standalone voice telephony by VANS - by means of voice over IP (VOIP) - would have major implications for the national numbering plan, carrier selection and pre-selection, number portability and the interconnection regime, which would require careful regulatory attention.

"Also, the self-provisioning of telecommunications facilities by VANS and mobile operators would have major implications for the use of the radio frequency spectrum, the use of rights of way, and the facilities leasing regulatory regime," he says.

Telkom also takes a viewpoint that is at odds with the majority of the telecoms industry when it claims that in the context of the Act, the provision of telecommunication facilities is a telecommunication service and can only be provided by persons licensed to provide them.

"Since neither the VANS nor the mobile licences authorise the licensee to provide such facilities, in Telkom`s view they are not, therefore, allowed to self-provide such facilities."

In terms of the carrying of voice traffic by VANS, the monopoly states that in its view, the Act clearly provides that, as of 1 February 2005, the carrying of voice "by that (the VANS) service" shall be permitted.

"The Act therefore provides that, while VANS providers will be permitted to carry voice in the course of providing VANS, they will still not be permitted to provide voice as a self-standing service," says Telkom`s statement.

Need for competition

Socikwa says the lifting of the restriction on the carrying of voice by VANS providers brings SA into line with most other markets.

"Debates around the regulation of voice over data facilities are happening all around the world, and we are no exception, so the regulator will have to place particular emphasis on the rules for interconnection and the issues of voice quality, appropriate numbering, and interception and monitoring.

"There is now a greater need than ever for a strong telecommunications facilities provider - such as the SNO - to compete with the incumbent, as in the absence of such a strong player, competition will be limited to many niche players, and most customers will not benefit directly," he says.

Mandla Langa, chairman of ICASA, said in his closing remarks at the colloquium yesterday that thanks to the enthusiastic participation of some 350 representatives of the telecoms sector, the colloquium had helped the regulator to focus on the various issues.

"The exchanges here allowed for heated debate on issues of national importance and were very productive for ICASA, as they focused on certain issues, raised some new ones and will ultimately help us to further develop the industry," he says.

"ICASA will take into consideration all the issues raised and questions asked by all the various parties as we work through our task of developing regulations to drive the industry forward.

"We will also ensure that there will be an ongoing consultative process with the telecommunications industry," says Langa.

He says the authority will publish a report summarising the views canvassed and comments received during the two-day colloquium, and he expects most of the information to be available on the ICASA Web site by Monday.