The Department of Public Enterprises (DPE) yesterday called for Parliament to speedily license Infraco, as well as amend the Electronic Communications (EC) Act to accommodate it.
The DPE was presenting before the parliamentary portfolio committee on public enterprises. It was told in October to reconsider and strengthen its case for the creation of government-owned broadband infrastructure provider Infraco.
Portia Molefe, DPE director-general, led her department's presentation by saying "the logical conclusion to lower the cost of broadband in SA was for urgent state intervention".
The case presented by the DPE says the current licensing framework would take too long. It would also have the ultimate effect of maintaining the status quo - Telkom's monopoly over the international and long-distance communications market, it notes.
The route the department wants to follow is for Infraco to be "deemed" to have a licence. This would bypass the sections of the EC Act that require the minister of communications to issue a policy directive and regulator ICASA to issue an invitation to apply, followed by public hearings and then setting the conditions for the licence.
Established shortcut
ICASA chairman Paris Mashile said the issue of "deeming" a licence applied to organisations that were in existence before legislation was drafted and passed, and that it would not apply to Infraco as it does not exist yet.
"The 'deeming' is called 'grandfathering' in this industry; where an organisation is already in existence and the law is then passed afterwards," he said.
His view was countered by that of the state law advisor, who maintained "deeming" was an established method to shortcut lengthy processes, used historically in a number of different spheres of government.
The DPE emphasised Parliament has the power to issue a deemed licence and to amend the EC Act, as long as it meets the test of constitutionality and lawfulness.
Molefe points out that Neotel, Internet Solutions and other role players favour a faster licensing process.
"The country is in urgent need of more and cheaper international bandwidth capacity. My department has done exhaustive studies into this and we believe that SAT-3 [the Telkom-controlled West Coast undersea cable] should be considered fully-utilised as we understand that it would only have a maximum capacity of 128GB," she says.
Stronger competition
Molefe says SAT-3 capacity is already insufficient for a number of large government-sponsored projects, such as the proposed Square Kilometre Array (SKA) telescope.
Even for the SKA demonstration project, the Karoo Array Telescope, the current capacity is not enough, as it already requires 100GB, she notes.
Molefe says the intention for the proposed law to govern Infraco was never to create a weak Neotel. Rather, the aim was to strengthen competition in the market, especially at the local long-distance and international connectivity levels.
Her department opposes the creation of a duopoly, namely Telkom and a fully-licensed Neotel. It believes a duopoly would not give the second national operator (SNO) an incentive to lower its prices considerably below the incumbent, and also creates a danger of collusion.
"We see Infraco as being a national highway, if you will, providing the national backbone for other operators to use as well."
She says the four-year exclusivity deal signed between Neotel and Infraco will ensure the SNO comes out at the end as a strong and profitable company.
The DPE is arguing for a change in the EC Act that currently prohibits exclusivity clauses by operators considered to have significant market power.
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