ITWeb :Bun fight at the ICASA corral

The new year has begun in all its glory, and it seems that 2005 will be a year of change in the ICT industry.

Deregulation is set to take place at the start of February, the Convergence Bill is due to be shuffled through its paces later in the year and the second national operator (SNO) looks likely to finally see the light of day, with rumours abounding that Indian investor Tata Africa is shortly to be announced as the holder of the remaining 26% of the SNO's shareholding.

However, despite the ministerial determinations aimed at liberalising the sector and stimulating competition and choice, there could be a long hard road ahead for value-added network service (VANS) providers – at least if the incumbent voice players have their way.

Last week, all interested parties were asked to make submissions to the Independent Communications Authority of SA (ICASA) with regard to the issue of VANS licences, and the greatly varied points of view on offer showed what a difficult task the regulator has ahead of it.

The Internet Service Providers Association (ISPA) was most concerned with the authority providing clarity on exactly what constitutes a VANS provider, so that its members could decide whether there was even a need for them to apply for licences.

However, along with fellow industry body, the Communication Users Association of SA (CUASA), it also raised critical questions about the 30% shareholding by historically disadvantaged individuals (HDIs) that any VANS applicant needs to have.

Both bodies claimed – justifiably, in my opinion – that the necessity of a 30% HDI shareholding is at odds with the requirements laid out by the ICT empowerment charter, and that it would be discriminatory to single out VANS for specific HDI targets that were not applied to other licence-holders in the industry.

They also argued that the sudden increase of the licence fee from R6 000 to R30 000 was not only unjustifiable, but would seriously impede new players coming into a market where the majority of businesses are small, medium or micro enterprises (SMMEs).

Obviously, the idea is to stimulate competition in a sector that has been crying out for it for years, but a fee that is 10 times ISPA's annual membership fee – which the organisation claims is even too much for some SMMEs – will achieve the opposite of what the minister surely intended.

Monopolistic response to threat

Face-off

While those of us hoping for more competition were happy to see an organisation facing down Telkom for a change, IS's presentation smacked a little of opportunism itself.

Perhaps the most surprising part of the hearings was that Telkom actually agreed that the licence fee could conceivably be too steep, although it did state it wasn't sure what it would cost the regulator to process a licence application, which is the reason a fee exists in the first place.

However, apart from that concession, it was a case of business as usual, with the monopoly insisting that VANS should not be allowed to provide voice as a standalone service, ably backed by Vodacom. (Not that Telkom's substantial shareholding in the mobile operator had anything to do with that, I'm sure.)

It is obvious that, despite the constant repetition of the “we welcome the idea of competition, as it will be good for us too” line, Telkom will do anything it can to prevent its hold on the market being eroded in any way.

One of Telkom's representatives at the hearings kept prefacing his statements with the phrase “in other words”, which made me think it seems the monopoly always has other words, although none that ever indicate anything positive for consumers.

It is, however, understandable why it would try anything in its power to maintain its massive market share – that's just good business, after all – and Telkom was not alone in aggressively trying to force its points home.

Hardcore business strategy

Internet Solutions (IS), a company that stands to gain immensely from the deregulation of the industry, went on the attack from the first sentence of its presentation to the regulator, suggesting there was nothing to prevent VANS carrying voice as a standalone service and generally denigrating the opposition as monopolistic opportunists, trying to protect their extensive market share.

While those of us hoping for more competition were happy to see an organisation facing down Telkom for a change, IS's presentation smacked a little of opportunism itself, since the company is one of the biggest players in the VANS field, and as such stands to gain the most from a liberal view of deregulation.

Naturally, the reality of the situation is that it was nothing more than hardcore business strategy from the players involved, and while it is also incredibly interesting for those of us reporting from the sidelines, spare a thought for the ICASA councillors.

They are walking a tightrope between the requirements of big business, the need for meaningful competition and the press, who are waiting to pounce on any decision that the fourth estate may feel adversely affects the industry.

Having attended the hearings, I do have to say I was impressed with the intelligence and commitment of the councillors, and believe they will do what is best for the long-term future of the industry.

Please, ladies and gentlemen, don't let my faith be misplaced.