USALs told to stop complaining

By Damaria Senne for USAASA
Johannesburg, 31 Aug 2006

Underserviced area licensees (USALs) have been told to take action and not rely on what government and other institutions can do for them, a panel member at the Convergence, Broadcast and Telecommunications Summit said yesterday.

Speaking during a panel discussion on the viability of USALs, Universal Service and Access Agency of SA (USAASA) board member Bibi Khan insisted USALs must take responsibility for their sustainability. They should not rely solely on what USAASA, the Independent Communications Authority of SA or government can do for them, she noted.

"I`m tired of being in workshops where we discuss the problems that USALs are facing." Khan added that, sometimes when she saw a USAL, she wanted to "run away".

The reality is that government had good intentions in forming USALs, and, unfortunately, that plan did not work out, she said. It didn`t matter whether USALs were intended to be entrepreneurs or development projects - their management had to stop complaining and find innovative ways to raise the funds that will ensure their sustainability, she added.

Sustainability report

According to a sustainability report presented by BMI-TechKnowledge at the conference, USALs have had limited success gaining and retaining customers. Mandla Kuzwayo, a director at BMI-T, said seven licensed USALs collectively gained a total of 17 000 subscribers, with an average of 3 000 per USAL, since they began operations.

Three of these USALs have collectively generated revenue of R2.4 million in their first year of operations, while two USALs did not disclose their revenue and one USAL is still not operational, he noted.

One of the major problems, however, is that the licensing provisions, which were intended to protect local shareholders from takeover bids from commercial enterprises, also limit USALs` ability to raise funding, Kuzwayo said. The provision of the annual R5 million grant, from the USAASA, is that it only be used for capital expenditure, which leaves the USALs without access to operational capital.

Too small

Tebogo Khaas, president of the SMME Forum, noted that the annual grant allocated to USALs was too small to be effective, even for capex.

"Vodacom spends over R4 million for their CEO awards, and we think the R5 million capital expenditure grant gives USALs a chance?"

Tebogo Thupatlaase, legal and corporate affairs manager at USAASA, was unable to commit firmly that the agency would provide USALs with the technical, business and legal advice. The BMI-T report noted that this assistance was "sorely lacking", as the USAASA already has capacity and resource problems.

Khan said, in her private capacity, that ICASA was premature in granting licences to 14 additional USALs, in view of issues impacting the sustainability of the initial seven USALs not having been addressed.

The USAL sustainability report will be made available on the USAASA and ForgeAhead Web sites.