Ivy derails conversion process

Johannesburg, 19 Sep 2008

The telecommunication industry's joy was short-lived, as it emerged that communications minister Ivy Matsepe-Casaburri today lodged an appeal against a recent High Court judgment, allowing value-added network services (VANS) to self-provide.

Following an application by Altech Autopage Cellular, the High Court ruled, on 29 August, that VANS licensees could obtain individual-Electronic Communications Network Service licences under the Independent Communications Authority of SA (ICASA) licence conversation process.

However, in a statement released this afternoon, the Department of Communications (DOC) argues that if VANS licensees are allowed to obtain individual-ECNS licences under the licence conversion process, "government's managed liberalisation policy will be seriously undermined, to the detriment of the ICT industry".

"In addition, the minister will commence a process to issue a policy direction to ICASA, in terms of section 3, read with 5(6) of the Electronic Communications Act (ECA), directing ICASA to issue an invitation to apply for a number of new individual-ECNS licences, in accordance with the implementation of the managed liberalisation policy."

Section 5 (6) reads: "In consideration of the implementation of the managed liberalisation policies, the authority may only accept and consider applications for individual-ECNS licences, in terms of a policy direction issued by the minister in terms of section 3."

The DOC says it will also expedite an amendment of the ECA to "remove any ambiguity around managed liberalisation and to make it clear that VANS licensees are not entitled to individual-ECNS licences" under the licence conversion process.

Reaction

Responding to the announcement, Carla Rafinetti, Altech's lawyer and director of law firm Edward Nathan, said the appeal means ICASA's licence conversion process will be suspended immediately, pending the outcome of the appeal.

ICT lawyer Dominic Cull slammed the move. "The appeal is totally unnecessary, because it will bring more uncertainty into the market, as it means the conversion process cannot be completed by 19 January 2009, as stipulated by the ECA."

While ICASA does not have all the details of the appeal as yet, chairman Paris Mashile says that, according to legal process, everyone has the right to appeal. "The ball is not in our court."

He says ICASA will have to wait until the DOC and the legal system have issued a final ruling.

"It is common sense to assume the conversion process will come to a stop," he adds. VANS will once again have to wait for the courts to issue a ruling before the conversion process can either be scrapped or begin once more.

Initially, the regulator said it would not appeal the High Court judgment.

More frustration

The initial High Court ruling had many VANS ecstatic at what has been considered a landmark judgment. The same VANS are likely to be infuriated by Matsepe-Casaburri's last-minute appeal. Analysts have stated the court process has had many VANS restless to get on with business and the court ruling essentially gave them the chance to start developing business models around i-ECNS licences.

At the time, Siyabonga Madyibi, head of regulatory affairs at Internet Solutions, said: "We are delighted at the outcome. At the end of the day, only a few companies will be able to build their own national telecommunications networks, because of the cost, but it means that small players will be able to develop niche markets that the larger companies will not go for."

He added that the time it took to arrive at the judgment could have hurt the industry. "It is a pity that we have wasted three years. The market would have been on a different level if this point had been sorted out earlier. It has potentially put the country behind on its preparations for the 2010 World Cup."

Alan Levin, COO of ISP Vanilla and a prominent Internet activist, said: "The ruling has restored my belief in the justice system. Now with this under our belts, we can get down to the real business of bridging the digital divide."