Underserviced area licensees (USALs) are beset with problems, including the misuse of their annual R5 million subsidies for operational, rather than infrastructure expenditure, the Universal Services Agency (USA) told Parliament yesterday.
The range of issues that has impacted a key part of government`s plans to ensure that areas, mostly rural, are connected to the information society astounded members of the Parliamentary Portfolio Committee on Communications.
This prompted committee chairperson Metjapane Lekgoro (ANC) to ask for further hearings into the issue later this month.
According to USA CEO Sam Gulube, two out of the seven USALs licensed in 2004/05 are technically bankrupt and a remaining five will see their licences expire this year as they have not used their subsidies as intended. This will mean there will only be 14 USALs operating rather than the target of 21.
"We have found that some of the USALs have used the R5 million subsidy for operational expenses rather than infrastructure development, while others have just put it in the bank and are not using the money at all," he said.
In breach
Members of Parliament pointed out that if the USALs are not spending their subsidies as intended, they could be in breach of the Public Finance Monitoring Act, which states that earmarked monies cannot be used for other purposes.
Another problem is that many of the USALs are looking at using possibly out of date equipment to provide wireless voice services. This equipment includes CDMA services operating at the 800MHz spectrum, which is unable to offer broadband services.
Gulube said the USA has commissioned a number of consultants, including local research firm BMI-TechKnowledge, to investigate the problems with the USALs and this research should be ready by the end of March.
"If we find conclusively that they are not using the annual subsidy for what it is intended, then we will hold this year`s instalment," he said.
Revisiting policy
Hawa Khan, a USA board member, said the USAL policy should be revisited. "USALs are start-up SMEs [small and medium enterprises] that are still trying to find their feet with regard to business plans and technology. They also have to cope with a fast-changing regulatory environment, which is extremely difficult. Maybe we should ask ourselves if there is a case to continue with the concept of USALs. If not, then what could be a better model to bring access to these [rural] areas?"
Linden Petzer, another USA board member, in response to a question by ANC MP Randy Pieterse, said there is concern that foreign-owned equipment suppliers are looking to dump some of their obsolete equipment with the USALs.
Petzer said the USA is in a difficult position, because it could only advise the USALs and not dictate what they should be doing.
MP Dene Smuts (DA) said: "The USALs should not be in this position, because they have fantastic licence conditions that allow them to do almost anything."
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