Competition and Regulation in the Telecommunications Industry in ...

Competition and Regulation in TelecommunicationsThe purpose of SATRA/ICASA is to regulate the industry in terms of theTelecommunications Act (1996) and pursue any new policy directions that areissued by the Minister of Communications as long as they are consistent withthe broad objectives expressed above and if prior consultation has takenplace. Many aspects of the Telecommunications Act provided only limitedguidance and regulatory principles and so much of the initial work ofSATRA/ICASA was to put some concrete guidelines together for the purposeof regulation. The regulatory aspects left to the discretion of the regulatorincluded interconnection, facilities leasing, GPMCS (global personal mobilecommunications services) and licence conditions.Despite this show of independence, the Act permits the Minister ofCommunications to amend, withdraw or substitute any decision by theregulator. This provision has already been used by DoC to withdraw SATRA’sguidelines on interconnection and facilities leasing. Further, the implication ofthe Minister setting policy means that the shape of deregulation is left to theMinister. Although the White Paper provides guidelines for deregulation, it issubject to review by the Minister who also is entrusted with setting the datesfor which segments of the market are opened for competition, and the numberof new entrants. The regulator role is merely to call for tenders for licencesand issue licences according to fair and transparent criteria.SATRA/ICASA has lost credibility in the industry as both independent andeffective through failure in a number of crucial regulatory episodes. The firstincident occurred shortly after the passage of the Act, when Telkom claimedthat the Internet was a basic service and therefore fell under its exclusivityagreement. Although SATRA eventually ruled that this was not the case,Telkom took the challenge to the courts ensuring that the matter dragged onanother 6 months.The second major incident was the as yet unsuccessful issuing of a thirdcellular licence through a ‘beauty contest’ process. SATRA made arecommendation for Cell C to be awarded the licence, going against theexternal consultant’s recommendations. One of the losing bidders, Nextcom,challenged the outcome and has succeeded in delaying the process in thecourts for over a year. In the process, it has been alleged that there waspolitical interference in the licensing process, eroding the credibility of SATRAas an independent body.Finally, Telkom accused VANS operators of illegally providing telephony totheir clients in contravention of the Act. The action it took was to deny furthercapacity to them and in some cases withhold services. SATRA ruled againstthe unilateral action by Telkom but was duly ignored by the operator. Theissue has been partly resolved after AT&T threatened to take the issue to theWTO where South Africa has committed to an opening of the VANS sectorand to a telecommunications reference paper that upholds action against anticompetitivepractice by industry players.28