Press release: The VANS self-provision debate is over

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South African businesses and consumers should soon benefit from increased choice and lower costs as a result of a High Court ruling that effectively opened the industry to more competition and the announcement on Friday by the Minister of Communications that she would not be petitioning the Supreme Court of Appeal for leave to appeal that decision.

That’s according to Mike Silber, regulatory advisor to the Internet Service Providers’ Association of South Africa (ISPA). He says that the High Court ruling effectively turns South Africa into one of the most progressive and competitive telecoms markets in the world and dispels the regulatory uncertainty that has stifled the industry since 2005. As many as 500 but more likely only 50 or so new players could enter the telecoms infrastructure market, many of them regional operators that tailor their services to the needs of local communities as a result of the shift in the regulatory landscape, adds Silber.

The Pretoria High Court judgment recently found in favour of telecommunications group Altech in a case that found that value-added network service (VANS) licensees are allowed to build their own networks in competition with the incumbent operators. The High Court subsequently refused the Communications Minister, Ivy Matsepe-Casaburri, the right to appeal against its judgement.

It appears that the Minister will not be pursuing an appeal in the Supreme Court, the last avenue she can follow in an attempt to have the High Court ruling overturned.

“We are pleased that the Minister seems prepared to accept the Court’s decision. Our members are eager to start transforming the market to make it more open and competitive to the benefit of consumers and businesses,” says Silber. “If entrepreneurs are empowered to build networks, we can expect to see an outcome for the common good of the country and its citizens.”

Silber says that the High Court’s ruling upholds ISPA’s view that VANS licensees have in reality had the right to “self provide” their own infrastructure since the 1st February 2005, according to the Electronic Communications Act.

This is despite the Minister’s attempt to “clarify” the Act and nullify the self-provisioning clause by issuing an extra-legal press statement two days before it took effect, Silber adds. Many pioneering independent networks are already operating and the High Court ruling will allow them to attract investment and expand their networks.

“ISPA welcomes the news that ICASA has already announced its intention to issue electronic communications network service (ECNS) and electronic communications service (ECS) licences to VANS following the high court ruling,” says Silber. “We trust that the regulator will now start looking at the other challenges that face the industry, such as frequency spectrum allocation. We hope that ICASA and the incumbents will cooperate in efficient usage of this national resource.”

ICASA has asked VANS that want to convert their licences into an ECNS licence to provide details about their network rollout and to commit to implementing their networks within 12 months of receiving their licences. While VANS are not legally obliged to meet these requests, most are likely to cooperate with the regulator, says Silber.

ISPA also urges ICASA to define realistic cost structures for these new licences as soon as possible. A 30-fold mooted increase in licensing fees from 0.1% of revenue from licensed activities to 3% seems extreme, says Silber. There is a danger that these costs will be passed on to consumers.

ISPA is pleased however, that because of the High Court’s decision there will no cost associated with licence conversion, which removes a big potential barrier to entry for new telecoms providers.

Concludes Silber: “Government still clearly wants to be involved in network infrastructure projects through state owned enterprises such as Sentech and Infraco. The rest of the world has shown that an open market leads to greater efficiency, more choice, and lower cost for consumers than a government-dominated one. However, an open market does not preclude government from targeting areas where it can address gaps left open by entrepreneurs.

“If government is truly prepared to accept the High Court ruling, then this marks big bang deregulation of the market and exciting times lie ahead for consumers, businesses and the industry alike.”

Further Information

For further information, please contact the ISPA secretariat on the Contact ISPA page.