Naivet'e compounds USALs` problems

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 14 Mar 2006

Business and technology naivet'e has compounded under-serviced area licensees` (USALs) operational problems, the Universal Service Agency says.

Two areas of concern have been raised in workshops conducted by the Universal Service Agency and USALs, says agency CEO Sam Gulube, namely, the lack of technological and regulatory expertise, and a misunderstanding of corporate governance issues.

"If one is going to run any telecommunications company, then one must have a strong regulatory arm," he says.

Gulube says the agency`s presentation before the Parliamentary Portfolio Committee on Communications recently may have given the wrong impression.

The report said USALs were beset with problems, including the misuse of their annual R5 million subsidies. In addition, it said two out of the seven USALs, licensed in 2004/05 were technically bankrupt and a remaining five will see their licences expire this year.

In an interview with ITWeb, Gulube clarified the situation: "We don`t have complete information and we only estimate that some may be in default of the service level agreements, in other words, the agreements they signed for the subsidies. Hopefully this report will help clear up that situation as well."

Gulube says most of the USALs are people who previously operated community service telephones, which in most cases were containers equipped with public payphones connected to one of the cellular operator`s networks.

USALs are a key part of government`s overall strategy of bringing coverage to areas that have traditionally been neglected, mainly by fixed line operator Telkom, because they are considered uneconomical to service.

In terms of the licence conditions, which are valid for 25 years and allow for any type of connectivity, USALs are subsidised to the tune of R15 million, paid over three years by government, through the agency. The subsidies are mainly funded from the licence payments made by the fixed line and cellular network operators.

Gulube says e-lawyer Lisa Thornton, along with research firm BMI-TechKnowledge, has been commissioned by the agency to study the problems and to come up with recommendations on how the licence holders may be more effectively helped in future. The report should be ready within a few weeks and will be presented to the minister of communications and the Parliamentary Portfolio Committee on Communications.

"Hopefully an independent study will help us and them better understand their businesses," he says.

Gulube says the study will also help work out how many subscribers the USAL holders have.

"Most of the USAL holders have developed roaming agreements with the cellular operators using the 085 prefix," he says.