Core telecoms competition difficult

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 01 Sep 2006

Creating competition in the core telecommunications network has been an extraordinarily difficult task for most countries and usually the incumbent ends with the greatest market share, says Andrew Barendse, an Independent Communications Authority of SA (ICASA) councillor nominee.

He was speaking during a telephonic interview on Wednesday with the Parliamentary Portfolio Committee on Communications. Barendse, an associate professor of regulatory affairs at the University of Delft, in Holland, said even in highly-liberalised economies, such as Denmark where there are six competing telecommunications operators, the incumbent only lost 13% market share.

Barendse was the last of 19 nominees to be interviewed by the committee for the five vacant ICASA councillor posts. The committee will recommend eight nominees to the communications minister, who will then select five for eventual Parliamentary approval. Parliament will debate its eight candidates on Tuesday, 5 September.

"Regulators generally only have a limited set of tools available to them. These are price controls, interconnection regulations and cost accounting methodologies. However, competition to the incumbent often comes from alternative infrastructure competition, such as cable TV, as we have seen in Holland," he said.

Barendse spent 15 years as a Telkom employee, including more than three years in its regulatory department, before leaving to study in Holland five years ago.

He noted that local loop unbundling, especially in Europe, delivered unexpected results.

"Local loop unbundling, especially in the last two years, only made a big impact in the area of broadband roll-out, but it had very little, if any, impact on voice."

In reply to a question from Dene Smuts (DA), Barendse said that in the European Union, only one country, Finland, met all the requirements of identifying all its market segments, the significant market players in them, and instituted the remedies to increase competition.

Barendse described the underserviced area licensees (USALs) "as being victims of time", in reply to a question by Randy Pieterse (ANC).

While there may still be a business model for USALs, they will need greater support, he added.