Cell operators take issue with telecoms draft policy

Johannesburg, 04 May 2001

Incumbent cellular operators MTN and Vodacom, and third licence hopeful Cell C are concerned by a number of points in the recently published government policy directions on telecommunications, according to submissions made this week.

The deadline for written submissions on the policy, published in March, passed on Wednesday, and by Thursday the communications ministry had received 34 submissions, some running into 50 pages.

"The people here will not be getting sleep," said Department of Communications spokesman Robert Nkuna.

Competition concerns

MTN, Vodacom and Cell C believe the directions will allow Telkom and the second national operator (SNO) to act as cellular providers, and none of the three are enthused at the idea.

At the publication of the draft policy, Department of Communications officials said the term "fixed-mobile" was meant to denote wireless local loop technology, which allows fixed-line operators to use radio frequencies instead of copper cable to deliver services.

The cellular operators disagree. "The definition of fixed-mobile services clearly means that the SNO and Telkom will be authorised to provide both fixed PSTS [public switched telephone services] and mobile cellular telecommunications services," Vodacom said in its submission.

MTN and Cell C use words such as "anti-competitive" and "subverts" to describe the issue.

Both MTN and Vodacom say that allowing Telkom and its competitor access to mobile services would have to be balanced by allowing them to operate international gateways and provide direct connect services to customers.

The Sentech situation

International gateways are much on the minds of current operators, with the provision in the policy directions of an international gateway licence to be granted to Sentech, the government broadcast signal distributor.

Many telecoms players described the Sentech provision as a rather direct way of increasing the value of the enterprise, due to be sold off in the government privatisation process. Telkom said Sentech would be allowed to skim the cream off the telecoms market, as international calls are among the more lucrative business opportunities in the sector.

But both MTN and Vodacom see opportunity in the possibility of a third carrier from which to obtain international services.

"Vodacom recommends that Sentech be authorised to provide wholesale international call services to mobile cellular operators," Vodacom`s submission reads. "If mobile cellular operators have a third wholesale service option, as well as the option to establish and use their own gateways, a highly competitive wholesale and retail international call market will result."

MTN, on the other hand, expressed concern at the apparent lack of universal service obligations for Sentech, and requested clarity on the "multimedia services" it is to be allowed.

1800MHz and interconnect

MTN and Vodacom also closed ranks on the issue of 1800MHz spectrum allocation. The directions link the spectrum, required for high-speed data services, to "new conditions of licence and a new interconnection regime". Telkom has been trying to re-negotiate the current interconnect agreement between it and the cellular operators for some time, and last year said it would lower increases in its tariffs if negotiations were successful.

In its submission, MTN calls for a "de-coupling of the assignment of 1800MHz and regulations for a new interconnect regime," while Vodacom is forthright in its take on the regulations. "It would appear that the real purpose of the direction may be to pressure - by way of delaying critical spectrum assignments - a hurried negotiation of unfavourable terms of interconnection with Telkom," the company`s submission reads.

Cell C, on the other hand, sees 1800MHz as a tool to give it an advantage over the established players. "At the very least, Cell C should be allocated GSM 1800 spectrum ahead of the other licensees, particularly given the intended policy directions linking spectrum allocation to other considerations such as interconnection," it says.

Numbering, directories

Other shared concerns among the cellular operators include number portability and the costs associated with such functionality, and the maintenance of directory databases.

Both Vodacom and Cell C recommended that so called "new number announcements" be maintained by all operators. This, they say, would stimulate competition by allowing subscribers to change providers without fearing a change of numbers, without the cost of real number portability.

MTN and Vodacom are concerned about a proposed single director of telephone users, to which access must be provided free of charge. Operators will also not be able to issue a number without positive identification of the recipient.

"To draw a parallel, imagine if a person went into the Post Office to purchase a prepaid envelope, aerogram or postcard, and was told that he or she may not purchase it without identification, and that when it is sent, it will be recorded against his or her name," Vodacom argues in its submission. "Obviously, this would be unreasonable."