| Legislative
changes in the telecommunications sector are opening the doorway
to competition, but what does it all mean for business and
the consumer?
 Communications
Minister Ivy Matsepe-Casaburri's welcome and surprise market
liberalisation announcement to Parliament recently has turned
the industry upside down, according to CUASA's Ray Webber.
However, understanding exactly what will soon be allowed in
terms of the Telecommunications Act and what it all really
means to business and the consumer is not completely clear,
he says.
“One
aspect of the announcements which needs to be considered is
the timing. CUASA can't help feeling that these essentially
'pull the rug from under the feet' of the participants in
the SNO process,” says Webber. “The SNO, the licensing
of which is now more than two years behind schedule, was expected
to have some benefits from being awarded their PSTS license.
But it appears that they are now essentially going to have
to compete against more than just Telkom.
"Some parties to the protracted SNO process must be wondering
whether or not the whole thing is worth the effort. Continuing
this thought, one cannot help but wonder if the Minister has
made such a mess of the whole SNO process, that she simply
decided to, more or less, open up parts of the market and
allow market forces decide. Regardless, the announcements
are indeed welcome,” he says.
The
Minister announced the following points to parliament and
CUASA's Ray Webber responds with comment:
- Mobile
operators may utilise any fixed lines that may be required
for the provision of the service. This includes fixed lines
made available by Telkom or any other organisation with
a Public Switched Telecommunication Service (PSTS) license
Although
mobile operators Vodacom, MTN and Cell C utilise GSM technology
to provide cellular phone connectivity to their sites, the
routing of their calls from those sites are generally carried
out by land-based (currently Telkom) lines. It would appear
that this provision is to allow mobile operators to make use
of the pending SNO for the same service. It's important to
note, however, that the Minister's announcement stipulates
the provision of a PSTS license which, one assumes, limits
the provision of these services to Telkom and the SNO for
the immediate future. The impact of this provision may, or
may not, have much impact on the overall cost of communications
in South Africa. Perhaps the overall cost of mobile calls
can be reduced if the direct costs associated with those calls
is reduced through competition. However, even with three mobile
operators, we don't currently see their offerings competing
much on price. It is not clear if these operators will be
good enough to pass such savings on to their users.
- Anyone
may apply for a license to provide public pay phone services
in any area in South Africa
All
over South Africa, small informal businesses are re-selling
Telkom and cellular telephone usage to consumers. You see
a lot of these kinds of businesses in our city centres and
even in the suburbs. Such businesses typically run a standard
telephone line onto the pavement and charge users to make
calls. Currently, it appears that most of these businesses
are operating illegally. However, as of February next year,
they will be legally entitled to provide such services with
the proviso that they obtain the necessary licensing. Of course,
what would be really good for the consumer is if these businesses
had the opportunity to purchase their services at wholesale
rates and to be able to repackage telecommunications services
to the public at more or less normal telephone rates. In addition,
it is likely that South Africans will see the introduction
of more automated coin or phone card public pay phone solutions
which will be provided by private companies.
The
reduction in the restrictions regarding the operation of public
payphones is long overdue and welcome, but it obviously does
not go far enough. The need for licenses to provide payphones
should be abolished, as these restrictions have in any event
been largely ignored for many years. Payphone provision restrictions
merely limit access to telephones and telecommunications for
citizens, and free market forces should be permitted to operate
in this industry. As CUASA has repeatedly stated, if regulations
can't or are not being enforced, they should be done away
with.
- Value
Added Network Suppliers (VANS) will be entitled to carry
voice over any protocol and to make use of communications
facilities other than those provided by Telkom or the Second
Network Operator
The
lifting of absurd restrictions on the use of VoIP is possibly
the most dramatic announcement made by the Minister. However,
much more clarity is needed in terms of this announcement,
especially in terms of business use. As of 1 February 2005,
users will be legally entitled to make use of VoIP applications
such as MSN Messenger and Skype to carry voice over the internet.
The legislation prohibiting the use of these and similar applications
was absurd because some users with sufficient bandwidth were
using the services without the Minister's blessing. From a
business perspective, VANS will now legally be entitled to
provide voice traffic through their networks and this could
reduce the cost of communications, particularly for those
businesses which have to communicate extensively with satellite
offices in cities and towns throughout the country or indeed
with offices located around the world. That said, more clarity
is needed before one can make real plans in terms of this
opportunity.
CUASA
has always believed that there should be no restrictions which
limit the effective and efficient use of telecommunications
services and infrastructure. We have often commented on the
absurdity of the restrictions on voice over the Internet,
as it's use has essentially been undetectable. Furthermore,
we are not aware of a single case of any action having been
taken against anyone using any of these applications in the
past.
The
most exciting of the policy changes, for business users, is
allowing the provision of voice by Value Added Network Service
providers. This means the effective creation of alternate
network providers and the introduction of some choice for
users. However, there is no free lunch. Issues such as voice
quality, reliability and costs will need to be determined,
before it would be wise for any businesses to start using
and relying on such services in the near future.
There is no question that Telkom's voice services are of a
high quality. The problem is the high cost charged by Telkom
for voice calls. It's probably safe to say that Telkom's current
voice services are superior to most VoIP offerings. We know
what to expect from Telkom, whereas the new entrants and VANS
voice offerings are as yet unknown.
The counter argument is that users will often accept poorer
quality because of convenience, mobility and/or cost savings.
An example of this is that the quality of cellular voice calls
is undoubtedly inferior to Telkom's voice service. However,
mobile phones are more convenient to use and have proved extremely
popular. The fact that the number of mobile phones, even at
significantly higher costs than most fixed call costs, has
far outstripped Telkom's teledensity in a matter or about
ten years, proves the point.
Some users are likely to be overwhelmed and possibly confused
by the options which will likely be presented in the near
future. But, the reality is that these developments will almost
certainly start reducing the voice/telephony costs for users,
although changes may well take some time to start materialising.
- VANS
will also be entitled to cede or assign the right to use,
sublet or part with control or otherwise dispose of the
telecommunications facilities used for the provision of
their network.
- Private
telecommunications network operators will be entitled to
resell spare capacity and facilities or to cede or assign
their rights to use such facilities.
These
announcements will enable VANS and those with Private Telecommunications
Networks to resell spare capacity to other individuals or
organisations. One assumes that groups of businesses will
be able to lease large capacity lines in bulk and subsequently
reduce their overall network costs although, again, more clarity
is needed on these announcements before business can effectively
plan for these possibilities.
That
said, the reality is that most PTNs are provided to save money
and/or to enable additional functionality which is not available
over the public network. They are often a "pain"
to operate and manage, as they are not what the PTN owners
really want to be doing. They just want or need the benefits
and operating a PTN has been a means to an end. Having sufficient
PTN capacity to be able to offer some to third parties is
unlikely to be practical for most PTN operators. But at least
one now has that choice, should one want
to do so.
- As
of 18 January, 2005, public schools and public further education
training institutions will be entitled to a 50% discount
on all calls to an Internet Service Provider (ISP) and for
any fees charged by an internet service provider for accessing
the internet or transmitting and receiving any signals via
the internet.
The
50% discount on calls to ISPs and ISP charges is a positive
move to assist public schools and public education facilities
to become part of the Information Society and to enable scholars
and students access to Internet and related services. However,
there is some uncertainty in the announcement whether or not
discounts on services such as ADSL and MyWireless are included.
We urge the Minister to include all access methods and technologies
in this discount entitlement.
It remains to be confirmed whether or not ISP's will be forced
to offer services at discounted rates to educational institutions.
CUASA will be requesting a meeting with the ministry/Department
of Communication and ICASA to discuss the implications of
the recent policy announcement and to clarify uncertain aspects
of the Minister's statement. Members will be invited to a
feedback session after these meetings have taken place.
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