In a landmark decision today, the High Court of South Africa ruled that everyone in possession of a Value Added Network Service (VANS) license was entitled to “self-provide”. What this means is that every Internet Service Provider (ISP) in South Africa is entitled to compete with the likes of Telkom, Vodacom, MTN, and Neotel. In one fell swoop, the market has gone from 4 players to conceivably over 600 players.
At the root of this change has been the dispute around how existing VANS licenses should be converted in the context of the “new” Electronic Communications Act of 2005. The Minister of Communications has argued that only some VANS licenses should be converted to full “infrastructure” licenses which would allow companies with VANS licenses to build out their own infrastructure. In essence, this was an attempt by the Minister to perpetuate the “managed liberalisation” process that began almost 14 years ago.
That attempt appears to have backfired on the Department of Communications and their Minister. The Minister could have issued a general invitation for companies to apply for an infrastructure license (i-ECNS license) and considered each application on its own merits. Instead, by attempting to influence the license conversion process which is the purview of the regulator (ICASA), they provoked a court challenge from one of the companies in the conversion process (Altech).
The court decision, handed down this morning, utterly rejected the validity of the Minister’s attempt to influence ICASA’s handling of the conversion process and completed validated the Altech’s contention that VANS should be able to self-provision.
Since, the Act states that all licenses must be converted on terms no less favourable than their existing terms, this means that ICASA is bound to grant infrastructure licenses to all 600 VANS licensees. Great news for telecoms competition in South Africa!
Unfortunately this is just a battle won but not the war. There are many other issues to be addressed. For a start, the fees associated with the telecom infrastructure licenses. Given that only a short time ago Neotel paid R100 million Rand for their license, I can see some drama brewing on what sort of annual fees should be charged to the newly converted licensees. The ideal scenario in my opinion would be to have fees tied to revenue and only have the fees kick in after a certain threshold of revenue had been reached. This would contribute to lowering the bar to market entry.
Another and perhaps more significant issue to be addressed is the allocation of spectrum. There are lots of lessons learned from around the world. Why can’t spectrum be auctioned in South Africa in a transparent and open manner. Lack of transparency must surely be one of the biggest barriers to investment.
However, one battle at a time. You can see the general expressions of joy from the South African community. Arthur Goldstuck’s Oh Frabjous Day is worth reading as is the general outpouring of joy by likes of Dominic Cull and Ant Brooks (and a few hundred others) on the mybroadband.co.za discussion list.
Ellipsis have posted a copy of the judgement. Can’t wait to see how the DoC and the Minister react.