Industry 'extremely critical` of minister

Johannesburg, 03 Feb 2005

With telecommunications deregulation taking effect this week, the industry had great expectations for a liberalised market, until the communications minister announced that it was not her intention to allow value-added network service (VANS) operators to self-provide.

Since then, industry players and watchdog bodies alike have fiercely criticised her statement and the timing of the announcement.

"It seemed the telecoms industry would become a benchmark for collaboration between government and the private sector in the interest of a truly competitive environment that would have spill-over benefits for end-users," says Desmond Seeley, GM for telecommunications services at T-Systems.

"However, the announcement by minister Ivy Matsepe-Casaburri just a day before deregulation was due to come into effect has effectively changed this."

The Communications Users Association of South Africa (CUASA) also believes there is something strange about the timing of the minister`s announcement.

"Why would she make such a statement just a day before the implementation date, considering the original determinations were issued on 3 September 2004, a colloquium was held on 20 and 21 October, and the regulator`s interpretations thereof were issued on 22 November?" asks CUASA spokesman Ray Webber.

"One would have expected that she, or one of her aides, would have closely watched the entire process unfold, to see how her determinations were being interpreted, particularly as it was obvious that there were many uncertainties and aspects which needed clarification.

"Once again, despite our initial cautious optimism, it appears as though the one hand doesn`t know what the other is doing."

Erring on caution`s side

Webber says CUASA suspects the issue came to a head during the recent public hearings on VANS licensing, when enough people probably rattled the regulator`s cage to make it reconsider the issue and err on the side of caution and conservatism.

Seeley believes part of the problem lies in the fact that, while the minister has limited the right of VANS to self-provide by specifying that they must obtain telecoms facilities from `licensed operators`, she has not actually clarified which operators are considered to be `licensed`.

"This move from government has not only effectively stifled the innovation of new telecoms offerings, but it has also succeeded in confusing the market," he says.

By prohibiting VANS providers from obtaining telecoms facilities directly from original suppliers or manufacturers, while not clarifying which licensees are entitled to provide this service to the VANS, Seeley believes she is saying that only Telkom is authorised under its licence to supply telecoms facilities to VANS.

"This will not only prohibit the effective provisioning of telecoms services to end-users, but it is also a serious blow to the entire spirit of deregulation."

According to Webber, while CUASA is particularly unhappy with the timing of the minister`s announcement, the organisation is nonetheless grateful that the remainder of her determinations appear to be going ahead without any problems.

"CUASA now expects the focus to shift to the Convergence Bill, as well as the draft regulations on interconnection and facilities leasing guidelines, which we hope will once and for all provide the necessary clarity on the self-provision aspects, and result in some additional real competition in the sector," he says.

Seeley says that instead of creating a layered, healthy telecoms market with opportunities for both suppliers and consumers alike, the minister`s announcement means the sector remains in what is effectively a slightly altered, but still monopoly-controlled landscape.

"The question that begs to be answered now is what has really changed in this `deregulated` market?"