ITWeb :A SNO train that's not running

So the Independent Communications Authority of SA (ICASA) has left me with egg on my face.

Last week I stuck my neck out and made a prediction as to which bidder I thought would be awarded the second network operator (SNO) licence, only for the regulator to prove me wrong, by instead choosing not to nominate either bidder for the coveted 51% stake.

A colleague pointed out to me that it was not so much the prediction where I erred, but in my statement that “we will see the licence awarded, and probably sooner, rather than later”, which he says is far too optimistic, considering that one should never use the term “sooner” when it comes to government processes.

Ivy's turn

What can our communications minister, whose term has been littered with messes of her own making and a growing list of unmitigated disasters, do to resolve this particular problem?

How right he was. Who knows when – if ever - we will see the SNO licence awarded now that ICASA has recommended that the minister close the process and seek alternative ways of stimulating competition.

The SNO debacle – because no other (polite) word sums it up better – is bound to have endless negative repercussions for the country as a whole.

Foreign investors will think twice about putting their money into any developments in this country, as they will, rightly, believe that there are far too many incompetents running the show over here.

Telkom, much to the man in the street's disgust, will continue as a de facto monopoly, using its hold on the industry to further entrench its position, so that if – I won't say when, because I'm not sure it'll ever happen – a rival is licensed, it will simply be swamped by the incumbent.

There is also the threat of legal action from one or both of the bidders, who appear to have a good case in claiming that the Next Generation report, upon which ICASA placed a lot of emphasis, was both flawed and overstepped its mandate.

Meanwhile, the holders of the remaining 49% of the licence, state-owned enterprises Transtel and Esi-Tel and BEE group Nexus Connexion, are making noises about being allowed to go it alone, despite the fact that Transtel initially denied wishing to do this and notwithstanding the rumours that Nexus's funding is not quite up to scratch.

However, I cannot see the point in this.

If they are licensed to go on their own, all this will mean is that the government will have a large stake in all three major players in the telecoms industry, as it already effectively controls Telkom and Sentech, and would have a majority stake in an SNO that involved Transtel and Esi-Tel too.

Minister's options

So the question is, what can our communications minister, whose term has been littered with messes of her own making and a growing list of unmitigated disasters, do to resolve this particular problem?

There are several options open to her.

She can choose to overrule ICASA's decision, and award the licence to one of the bidders anyway, although this seems to be a far too logical step for our esteemed minister to make.

She can call for another round of bidding, although the fact that South Africa's World Trade Organisation obligations require us to have a duopoly by the end of the year pretty much precludes another drawn-out bidding phase.

She can try and drive through the convergence legislation quickly, which – if it moves the licensing set-up from one of vertical licences to that of horizontal licences – could well do away with the need for an SNO.

Driving this through would allow numerous smaller players to enter the market, as and when they wish, leaving the door potentially open for both CommuniTel and Two Consortium to enter the playing field.

However, there is one way she could at least begin stimulating competition that will simply require her to get off her backside and actually approve certain items of legislation that have been waiting for her signature.

Four simple steps

According to Ant Brooks, co-chairman of the Internet Service Providers Association, there are just four simple, positive steps that Ivy can take to improve both South Africa's telecommunications policy environment and her own track record.

He says that all she needs to do is the following:

Publish a notice in the Gazette setting the date from which VANS operators may provide their own facilities. [s40(2)(b)];
Publish a notice in the Gazette setting a date from which VANS operators can carry voice. [s40(3)(a)];
Publish a notice in the Gazette setting a date from which VANS may cede/sublet/etc. facilities. [s40(4)(a)(i)];
Publish a notice in the Gazette setting a date from which PTN providers may cede/sublet/etc. facilities. [s41(5)(a)(i)]

These are all existing provisions of the legislation and implementing them will not require lengthy consultative processes. Furthermore, since the provisions already exist, the intention must have been for them to be used.

Given the total failure of the SNO process, now would seem like an ideal opportunity to use them.

Minister, we believe this is a mess all of your own making and the blame must lay squarely at your feet. South Africa now requires you to be firm and decisive in making a decision that will lead to a competitive environment for telecommunications.

Please don't mess it up again.