At the beginning of this year, Telkom made a bid for Business Connexion (BCX), one of South Africa’s leading ICT companies. The bid was subsequently accepted by BCX and was approved by the High Court, but as with all mergers and acquisitions of this size, under the Competition Act the deal is conditional upon the approval of the Competition Authorities. Telkom announced in June that the High Court had sanctioned the scheme of arrangement, however it was “subject to the competition authorities approving the proposed acquisition . . . by 15 December 2006, or such later date as may be agreed between BCX and Telkom’. A number of ICT companies, as well industry associations such as the Internet Service Providers Association (ISPA) have lodged objections to Telkom’s acquisition of BCX, claiming that such an acquisition could potentially pose a risk to the ICT industry.

These parties point to Telkom’s legacy in the competitive arena, where its behaviour over the years has resulted in a number of anti-competition cases being lodged against it at both ICASA and the Competition Authorities. One such case was referred to the Competition Tribunal, together with a recommendation from the Commission that a punitive fine be levied against Telkom of up to 10% of its annual revenue for its anti-competitive practices in the market place.

It would appear that it is cases such as this that make certain players in the industry wary of deals which would serve to dramatically enlarge Telkom’s market share as well as to enhance the scope of services it can offer. Telkom and BCX argue on the other hand that the scale that will be gained as a result of the merging of their respective businesses stands to benefit consumers through a reduction in prices and by providing customers with a one-stop shop ICT provider, able to supply services and solutions from the level of basic telecommunications infrastructure all the way through to the management of the end-user’s desktop and applications.

It now remains to be seen if the Competition Commission will recognize the pro-competition efficiencies and benefits to be gained from a merger between the two companies and recommends to the Tribunal that it be allowed to go through, whether it agrees with those objecting to the merger and recommends that the merger not proceed, or that it recommends that the merger be permitted to proceed but subject to certain conditions which will mitigate the potential for Telkom to abuse its even greater dominance in the markets in which it now operates.

The Competition Tribunal granted the Competition Commission an extension to file its recommendations on the proposed takeover until October 17. The extension, according to reports, is the third in the process and was granted because the commission had to replace its lead investigator, outstanding third-party information and the need to bring in independent experts.

CUASA has no objection to the proposed merger in principle, providing strict conditions are in place which force the two company accounts to be separated.

However, it appears that various VoIP service providers have been allocated numbers by ICASA, to enable them to provide public VoIP services. These numbers are apparently all in the 087 number range. This is perhaps a bad choice, considering the baggage these numbers have from the old Premium Rate days, but that’s another story.

The interesting aspect of the allocation of 087 numbers is that you apparently can’t yet actually use any of these 087 numbers, as Telkom and the mobile network operators haven’t yet decided how to charge for calls to these numbers. Check by trying to find what Telkom’s rate is for calls to 087 numbers, or ask the mobile networks and see what they say. This is nineteen months after the VoIP service providers should have been able to start offering these services.

It appears that the lack of interconnect agreements is the cause of at least part of the delay. Furthermore, it appears that the fixed and mobile network operators are somewhat reluctant to sort this out, as they don’t know how these VoIP services will affect their existing cushy arrangements and high income derived from routing calls between the existing (traditional) networks. We can only hope that Neotel will see the light and will exert some pressure to get decisions and arrangements in place for the new wave of voice services which the legalising of VoIP will inevitably bring to the market.

Come on networks. Let’s get some action on this front!

Then we also have to exercise a word of caution. It is likely that the networks will try to keep the cost of calls to 087 numbers as high as they can. This could well be by agreeing to high interconnect rates. If this happens, ICASA will need to step in to regulate and control these rates. We see no good reason why the cost of calls to 087 numbers should not be equal to or lower than the cost of calls to normal fixed line numbers. Our concern is that the wheels at ICASA turn very slowly, so don’t hold your breath.

In the meantime, we’re all waiting in anticipation!

Mobile Number Portability (MNP) is now scheduled to be introduced in the South African market on 10 November this year. The most recent delay, announced in mid September, resulted in numerous complaints from various parties in the industry, not least of which was Virgin Mobile.

The impact of MNP and the effect it will have on the local market are anyone’s guess. However, most believe that it will introduce some real competition in the South African mobile market. There is no doubt that it will give users choice.

CUASA’s recommendation to anyone whose contract is up for renewal is to wait a month or two and see how smoothly MNP requests are processed and also what possible new offerings and specials emerge. Christmas is traditionally a period when many attractive offers are made to existing and potential clients. The beauty of MNP is that you will now be able to also seriously consider offers from the other two (or is that three) networks?

Another aspect to bear in mind regarding MNP is that this could negatively affect the complexity and call cost savings achieved by those using cellular Least Cost Routers (LCRs). Speak to your LCR supplier about how you can minimise you call changes.

For additional information, please see ICASA's Media/Stakeholder Release.

NEW FINDINGS, JUDGEMENTS AND ANNOUNCEMENTS

ICASA

• Icasa has published on its website a copy of the decision of the high court in Aerosat CC v Icasa and Others regarding, among other issues, Icasa's regulations in respect of radio frequencies that may be used without a licence and the restrictions placed on such use.

PENDING PROCEEDINGS - REPRESENTATIONS DUE

ICASA

• Icasa has published the list of licenses to be converted in terms of the Electronic Communications Act at http://www.icasa.org.za/Documents.aspx?Page=134. Due date for responses from industry is 13 October 2006.
  
• Icasa has invited applications for new community sound broadcasting licenses. Due 31 October 2006, and thereafter, every April and October.
  
• Icasa has instituted an enquiry into spectrum allocations in respect of RFID technologies/uses. Comments on the Discussion Document are due 20 November 2006.
  
• Icasa has invited persons to apply for low power sound broadcasting licenses on the application form published by Icasa. No specific deadline has been set.

DEPARTMENT OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT
Most private bodies must comply with the Promotion of Access to Information Act requirement to compile an information manual by 31 December 2011.

TENDERS
The SAPS has requested tenders for a digital radio communication network for the SAPS in the Eastern Cape Province. Due date 9 November 2006.

PENDING PROCEEDINGS - OUTCOME AWAITED

PARLIAMENT

• Appointments to the Icasa Counsel.
  
• Appointments to the Board of the Media Development and Diversity Agency.

MINISTER OF COMMUNICATIONS

• Regulations regarding alternative dispute resolution in terms of the ECT Act.
  
• Approval of the ICT Charter regarding BEE. A copy of the charter can be found at www.ictcharter.org.za.
  
• Guidelines for Recognition of Industry Representative Bodies in terms of Chapter XI of the Electronic Communications and Transactions Act.
  
• Approval of regulations regarding short-range radio devices.
  
• Approval of regulations relating to an operator's entry, construction, maintenance, deviation or alteration of any telecommunication facilities and works upon any land.
  
• Approval of regulations relating to the height of telecommunication wires and cables and telecommunication facilities, pipes, tunnels and tubes.
  
• Approval of regulations on the manner of determining fees and charges for mobile cellular telecommunication services.
  

MINISTER OF COMMUNICATIONS/ICASA

• Underserviced area licenses (second round).
  
• GMPCS licenses.
  

ICASA

[Please note that pending decisions about individual licenses and complaints have not been included in the following list.]

• Findings in respect of a study into the sharing of channel 65 and 66 between broadcasters and telecommunication services providers.
  
• Commercial satellite and cable subscription broadcasting licenses.
  
• Regulations in respect of mobile handset subsidization.
  
• Regulations with regard to the functional specification for geographic number portability.
  
• Findings in section 27 enquiry into a satellite licensing framework.
  
• Findings in section 27 enquiry into the use of the frequency spectrum band 5725 - 5875 MHz for broadband fixed wireless access.
  
• Regulations in respect of the ordering system specification for mobile number portability.
  
• Findings in respect of the Discussion Paper on the Review of Community Sound Policy.
  
• Regulations for the provision of ADSL service.
  
• Regulations in respect of the ordering system specification for mobile number portability.
  
• Findings in respect of the Discussion Paper on the Review of Community Sound Policy.
  
• Findings in section 27 enquiry reviewing mobile cellular telecommunication services prices.
  
• Decision regarding Icasa's notice of intention to include any licensee with market share of at least 35% of a  market, in the category of major operator in terms of the supplementary interconnection guidelines.
  
• New interconnection and facilities leasing guidelines (regulations).
  
• Radio regulations regarding new standards for telecommunications equipment.
  
• Regulations / lists of standards that telecommunications equipment will have to abide by.
  
• Regulations with regard to telecommunications equipment approval.
  
• Regulations with respect of personal locator beacons.
  
• Regulations in respect of standards for analogue terminal line equipment.
  
• Regulations regarding amateur radio.
  
• Regulations for the resolution of complaints in terms of section 100 of the Telecommunications Act.
  
• Decision in respect of section 27 inquiry regarding the transition to LRIC pricing for interconnection.
  
• Supplementary interconnection guidelines in respect of provisioning charges and quality of service between PSTS operators.
  
• Regulations regarding local television.
  
• Decision regarding the right of a provider or user of a telecommunications service to utilize a telecommunications facility made available in terms of an international treaty.
  
• Audit on Telkom's roll-out and service target obligations.
  
• Regulations prescribing new telecommunication service license categories.
  
• Regulations in respect of telecommunication services that may be applied for only pursuant to and in accordance with an invitation to apply issued by the Minister of Communications, namely local access telecommunication services.
  
• Decision on whether to conduct a study on the need to share broadcasting frequency spectrum with telecommunication wireless local loop systems and link equipment, in the frequency band 790-854 MHz.

.ZA DOMAIN NAME AUTHORITY
Adoption of policy document regarding the structure of the .za domain and the use of the .za domain.

SOUTH AFRICAN LAW REFORM COMMISSION
Report on Privacy and Data Protection.


DEPARTMENT OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT
Ratification of the Council of Europe's Convention on Cyber crime (dealing computer-related fraud and forgery and infringement of copyright). An additional protocol regarding racist and xenophobic acts committed through computer systems has yet to be signed by South Africa.

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