Competition and Regulation in the Telecommunications Industry in ...

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Competition and Regulation in TelecommunicationsTable 3.1: Rollout Targets for Telkom in terms of License1997/8 1998/92001 2002 Total1999/2000Total new access lines 340000 435000 575000 675000 665000 2690000bought into serviceNo. in under-serviced 265000 318000 359000 357000 378000 1677000areasNo. for priority 3240 3845 4055 5060 4046 20246customersNo. of villages served 510 610 610 800 644 3174No. of payphones 20000 25000 25000 25000 25000 120000No. of replacement lines 20000 13000 65000 551000 603000 1252000Source: JEDPIn addition to these rollout targets, Telkom is committed to upgrading thenetwork and its service record. This involves upgrading the entire network todigital by 2000, lowering the waiting period for installation, lowering thenumber of faults per 100 lines and reducing the time to fix faults. The licencealso allows for restrictions on price increases introduced by Telkom to ensurethat its monopoly position is not abused during the exclusivity period. Theseare set for a bundle of services (including local, long-distance andinternational) and are restricted to the CPI -1.5% for the first three years, afterwhich SATRA will set price caps.The White Paper on telecommunications suggested that once exclusivity hasended, then initially the local loop should be open to entry with operatorsconnecting to the PSTN of Telkom (see figure 3.1). The thinking was thatentry was unlikely anyway but co-operative organisations or SMMEs might bewilling to connect specific communities and so be encouraged. After a furtheryear, it was envisaged that a full switching network could be licenced incompetition to Telkom, providing the local exchanges too. The exact shape ofderegulation is currently under review. However, the timing of issuing asecond PSTN licence is bound in the WTO and must be complete before theend of 2003.30
Competition and Regulation in TelecommunicationsFigure 3.1: Proposed path of deregulationEnd ofTelkom’sexclusivity1 2 3 4 5 6Radio (paging, trunking, etcCellular NetworksCPEVANSFullCompetitionNational long distance servicesResaleLicenced carriersLocal LoopBusiness LLTelephony LLInternational servicesSwtiching NetworksRepresents Telkom exclusivitySource: White Paper on Telecommunications3.3.2 Long-distanceLong distance was bundled together with local access in the granting ofexclusivity to Telkom until a review of policy and a subsequent call from theMinister to proceed with licensing. The initial thinking in the White Paper wasto introduce the licenced resale of long distance facilities operated by Telkomby 2000. Two years later it was envisaged that the regulator could licencelong-distance carriers with their own facilities but who connected to theTelkom PSTN. Finally, a full service PSTN would be licenced by 2003.Currently the resale has not materialised and we await the decision on otherlicencing. Any licence holder would be eligible for universal service fundcontributions, human resource contributions and a licence fee of 1% ofturnover. There may be additional conditions attached but these are unlikelyto exceed any that Telkom would have to bear.3.3.3 Value-added Network Services (VANS)Value added network services by definition do not have facilities of their ownbut lease from network providers. The sector has been open since 1993 withlicence holders required to lease Telkom capacity and are prevented from theresale of capacity and of carrying voice traffic, until a date set by the Minister.The White Paper envisaged resale to commence in year 4 of exclusivity(2000) but it has not materialised. The licence conditions also include noundertaking of anti-competitive practices and adhering to practices thatprotect the customer. They are also eligible for a universal service and humanresource fund contributions.31
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