DG allegedly drives VANS appeal

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 22 Sep 2008

Department of Communications (DOC) director-general Lyndall Shope-Mafole is the driving force behind the appeal against the court ruling that effectively allows value-added network services (VANS) to build their own networks, sources say.

Furthermore, the state`s appeal was done without the initial knowledge of communications minister Ivy Matsepe-Casaburri, or her deputy, Roy Padayachie, both of whom only found out the appeal had been lodged after the fact.

On Friday (the last day the appeal could be lodged), the DOC issued a press statement saying it was appealing the 29 August ruling. It stated 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.

The same sources also allege telecommunications utility Telkom provided Shope-Mafole and the state attorney with a legal brief on how to argue against the judgment.

"Despite having been given advice by the PIAC on ISAD [Presidential International Advisory Council on Information Society and Development], the advice of their [DOC`s] own internal and legal advisors and the fact that the regulator [ICASA] had decided not to appeal the ruling, the director-general was adamant the ruling was 'an attack on the policy of managed liberalisation`," a senior government source says.

Sources have described the situation as being a replay of what happened in 2004 when Matsepe-Casaburri issued her policy directives that were interpreted by ICASA and the industry to mean that VANS were allowed to self-provide.

A press statement issued in Matsepe-Casaburri`s name in January 2005 stated it was not her "intention" that VANS be allowed to do so and sent the industry into turmoil, leaving telecoms prices high.

Telkom instigates

Sources say Telkom was the main instigator behind the legal action, as it was also not happy about the High Court ruling giving VANS the right to self-provide. However, it could not appeal the ruling as it was not party to the Altech action from the beginning.

"Telkom`s strategy is now to stay far away from direct legal action and so it would rather participate via another party," a source within Telkom says.

Last week Monday, the DOC`s executive committee, chaired by Matsepe-Casaburri and including all of the department`s senior management, discussed the ruling, its implications and whether to appeal. Sources say Shope-Mafole was not physically present, but participated via telephone.

"The prevailing view was that the ruling should be left alone. Because by appealing it, it means the department is set against ICASA, which is the sector regulator, and that is an untenable situation," a source present at the meeting says.

The issue was not resolved at that meeting, as the minister had to leave and discussions did not resume later in the week as they were supposed to, because the minister was ill. However, according to sources, Shope-Mafole insisted the state attorney lodge the appeal. It is understood that Altech`s and the lawyers of the other 22 firms cited in the original case learnt about the development only when the press release had been issued.

Market speculation is that second national operator Neotel was unhappy with the court ruling, as it directly impacted its business case. However, Neotel has officially denied being involved.

Another government source says the appeal is an issue that is in danger of being drowned out by the noise of the political events of the past week that culminated in president Thabo Mbeki resigning.

"Suddenly, many of the Cabinet ministers and department director-generals have bigger things to worry about," the source says.

Neither Shope-Mafole nor Telkom had responded to questions by the time of publication.