Competition and Regulation in the Telecommunications Industry in ...

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Competition and Regulation in Telecommunications• Under non-discriminatory terms,• In a timely fashion under conditions that are transparent and fair, and• At rates determined by ICASA. These will be set at the long runincremental cost (LRIC) of building and maintaining a network by anefficient telecommunications provider, including an average return oncapital. The information required for setting such rates, will be determinedby the Chart of Accounts and Cost Allocation Manual (COA/CAM) that isobligatory for all network providers to submit.ICASA reserves the right to settle disputes over interconnection and enforcethe minimum requirements established above for interconnection agreements.Similar guidelines have been established for facilities leasing, anotherimportant practice for furthering competition in the telecommunicationsindustry.The numbering plan has yet to be finalised by ICASA though a proposedpolicy document has been released which provides us with an insight into theprinciples that ICASA is working with.For local access, the competition concerns revolve around number portability.Consumers face a cost of switching local access providers if they have tochange their telephone number. This represents a barrier to entry and limitseffective competition from any new entrant. The switching costs includeinforming all associates of the change and, for businesses, adjusting anyletterheads, business cards and informational material that has the number onit. These costs are significant enough to prevent numerous changes occurringand so initially provide the incumbent with some market power. ICASA hasnot made a decision on this or provided any direction. The key problem is thatit does come with costs to the network provider because their networks needto be upgraded to operate number portability. ICASA is putting aside a blockof numbers in case number portability does not materialise and the newentrant requires its own numbers.For long-distance network providers the preferred outcome is that a customercan pre-select a long-distance network provider and so there is no need todial additional digits first. Again, ICASA has not made policy on this butsuggests that pre-selection “may be a requirement under the new regulatorystructure” (SATRA 1999). An interim measure is to use as short as possible‘carrier access code’ until pre-selection is available. The recognition is that theshorter the access code, the less inconvenience to customers and so the lessdiscrimination against the entrant. In order to allow consumers the flexibility toselect an alternative provider for individual calls, it is preferable to have preselectionoverride codes too. The issue of offering pre-selection concerns theupgrading of Telkom’s networks.For long-distance service providers who resale leased capacity, the accesscodes will be necessary. Maintaining these as short as possible is a means tomake them more convenient to customers. If regulation allows serviceproviders to be pre-selected too, then these would not be necessary.34
Competition and Regulation in Telecommunications3.6 Public Interest ConsiderationsTwo important social objectives of telecommunications policy are universalservice and human resource development. These are given concrete supportin the Act through the formation of two funds and a supervising agency foruniversal service.3.6.1 Universal ServiceThe Universal Service Agency (USA) has been established with the goal ofinvestigating and recommending ways to achieve universal service. Thisincludes defining what the universal access or service targets are. TheAgency has two tools with which to influence universal service. First, they mayrecommend licence conditions that help bring about universal service/access.Currently, both the cellular network providers and Telkom have significantobligations to provide services to under-serviced areas, as discussed above.While these conditions remain, new entrants will be given similar conditions toensure no competitive advantage is given to them.Second, the Universal Service Fund (USF) was established to subsidise"needy persons towards the cost of the provision to or the use by them oftelecommunications services", and to repay Telkom and other licence holderswith universal service obligations for extending their services to poorly orunserviced areas and communities. For now, Telkom will receive most of themoney as it rolls out to these areas. The fees are non-discriminatory and havebeen set by SATRA at 0.16% of turnover per annum for network providers,R1500 per annum for VANS and R1000 per annum for private networks.3.6.2 Human Resource DevelopmentThe Department of Communications will manage the Human Resources Fundwhose goal is to "promote the provision of adequately skilled humanresources at all levels of the telecommunications sector in sufficient numbers... in such a manner as to redress past unfair discrimination in education,training and employment". The annual contributions to this fund are half thoseto the universal service fund and are similarly non-discriminatory.The Act makes provision for a wide range of applications for which this Fundcan be used, from training in schools through to postgraduates, from unskilledto artisans. The funds may be used for applications from bursaries toupgrading teaching staff and facilities in selected institutions.35
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