Controversial bill back for discussion

March 8th, 2018, Published in Articles: EngineerIT

Robert Nkuna, director general of the Department of Telecommunication and Postal Services.

The Department of Telecommunications and Postal Services (DTPS) and industry stakeholders met in early March 2018 in a stakeholder consultation workshop. DTPS director general, Robert Nkuna, said that one of the main reasons for public consultation was to assess socio-economic benefits of the Electronic Communications Amendment (ECA) Bill and evaluate which proposals are workable. “At the end of the day, we need to quickly process laws which will enable us, for an example, to allocate spectrum in the next financial year,” he said.

The workshop followed closely on the heels of the pronouncement by President Cyril Ramaphosa during the 2018 state of the nation address to “finalise engagements with the telecommunications industry and other stakeholders to ensure that the allocation of spectrum reduces barriers to entry, promotes competition, and reduces the cost to consumers”.

During the workshop there were several references to combining DTPS and the Department of Communications (DOC), and returning to the old dispensation, but no official statements were made.

There was general opposition to many aspects of the bill, with many speakers accusing the DTPS of undermining the Independent Communications Authority of South Africa (ICASA). Instead of strengthening the Áuthority, the bill would turn it from a regulator to an administrator and proposes another frequency regulatory authority reporting to the Minister. Many aspects of the draft ECA bill are in conflict with the current ICASA bill. One speaker said that the DTPS should table all seven proposed bills so that industry could have an opportunity to assess the overall impact on the communications environment in South Africa.

Instead of diluting ICASA’s regulatory ability, the Authority should be better resourced to enable it to work independently. It was said several times during the workshop that there is bad blood between DTPS and ICASA, stemming from the notion that the DTPS believes spectrum allocation to be a government issue, and only the assignment of it a regulator issue.

In his presentation, ICASA CEO, Wellington Ngwepe, told the workshop that the authority is best suited to continue to manage spectrum as an independent regulator. “The dilution of ICASA is inconsistent with international best practice. The proposed wireless open access network (WOAN) is monopolistic and contrary to the policy of fair competition. ICASA recommends a model of infrastructure sharing to enhance competition.”

The draft bill proposes that incumbent operators must give back spectrum to be reallocated to the wholesale open access network (WOAN). The DTPS was severely criticised for this provision. Vodacom and MTN said this amounts to expropriation, which would reduce, if not end, all future investment in the industry. The current licences expire in 2028 so legally it would not be enforceable till then, however the mere notion that when a licence expires a company loses its spectrum allocation is absurd.

Many respondents questioned what had happened to the discussion held last year where the Minister agreed to a hybrid model, where the current operators would continue their operations and would take up 30% of the capacity of the WOAN.

There is no clear indication who will own and operate the WOAN. Nkuna said that it would not be the government, but that it has to be owned by a consortium of operators. But who? Telkom and Cell C were the only two companies that supported the WOAN and most aspects of the bill. Is Telkom planning on becoming the monopoly it once was?

Vodacom, MTN and several other companies said they would support a hybrid model but rejected the proposal of expropriation of spectrum and that all currently unassigned high demand spectrum be allocated to the WOAN. MTN said that if government was serious about reducing the cost of communications it should immediately make a portion of the high demand spectrum available to the current operators.
Another major bone of contention was the notion that contributors to the WOAN must do so on a cost basis. The question was: if a company is in business for profit why would it want to contribute anything at cost?

What next?

To prepare for DTPS’s discussion with cabinet and parliament later this year, Nkuna urged the companies who made presentations at the workshop to make additional submissions focused on, amongst others: a hybrid model, the power of the ministry vs. ICASA; price regulation; the licensing model; infrastructure sharing; return of spectrum, and a partnership programme.