Capacity boost for USALs

By Paul Vecchiatto for USAASA
Johannesburg, 25 May 2007

Cash-strapped underserviced area licensees (USALs) will now be able to privately raise the investment funding they need to build their networks and improve their operations.

The scope of their operations has also been extended, with USALs operating in the same province expected to merge into one entity.

In her budget speech in Parliament yesterday, communications minister Ivy Matsepe-Casaburri said the percentage of ownership and control by companies or persons interested in investing in USALs must not be more than 49%.

Previously, investors who are not from historically-disadvantaged communities, could only hold a 5% shareholding in USALs. This hindered the USALs' ability to obtain investment funding.

Matsepe-Casaburri also announced a policy decision to merge USALs in provinces where there is more than one and issued a provincial underserviced area network operator (Pusano) licence.

Reducing USALs

Each Pusano would be licensed for individual electronic communications networks and services. This, in theory, allows it to provide the same services Telkom and Neotel will be licensed to provide under the Electronic Communications Act.

This will reduce the number of institutions formed specifically to operate in underserviced areas from 27 to nine. To date, seven USALs have been issued with licences. An additional three USALs were granted licences, but it is not yet clear whether those licences have been issued.

It is also unclear what impact the policy decision will have on the licensing process.

Government's policy to have one USAL per province would get them out of towns and into rural areas, says Cassandra Gabriel, chairman of the Universal Service and Access Agency of SA.

"We have to encourage the USALs to focus on areas that the main network operators won't go and for them not to be mere resellers of pay-as-you go cards," she notes.