South Africa: Cabinet Overrules Icasa On Infraco Licence

Telecoms

The South African Cabinet is forcing the Independent Communications Authority of SA (Icasa) to grant a second licence to state-owned telecoms agency Broadband Infraco. Last week, the Cabinet said it had approved a policy amendment to allow the licence to be granted, contradicting Icasa, which refused last week to issue an electronic communication services licence to Broadband Infraco to enable it to provide Internet and other data services.

In refusing the licence, Icasa said that Infraco had failed to show how it would contribute to affordability as it planned to focus on providing services mainly to the government. Although Infraco does not plan at present to offer retail services, the licence will enable it to do so in future, adding to competition in the sector.

Icasa spokesman Paseka Maleka said last week it was not yet aware of the policy directive, but would look into the matter as soon as it received the directive.

Broadband Infraco was formed more than three years ago to lower the wholesale prices of telecommunications, especially for the long-distance network, which Telkom had dominated. Infraco is 26% held by state- owned investment company the Industrial Development Corporation and 74% by the Department of Public Enterprises.

By law, Infraco is entitled to two licences. The first, which it already has, allowed it to set up and take over infrastructure such as a 12,000km fibreoptic network, once owned by Transnet and Eskom. At present, it mainly sells capacity on its infrastructure to Internet service providers and other businesses.

The second is needed for it to provide telecoms services, in particular to government departments, its main clients. Once it has the second licence, it could also expand into providing broadband services to the retail market, and so help to push prices down.

Icasa's refusal to grant the second licence also highlighted the comparative advantage Broadband Infraco enjoyed. The regulator said that Broadband Infraco could discriminate "unduly" against other similar licence holders such as Neotel, which are obliged to offer services to all consumers and not just "cream-skim" from big clients like government departments.

Neglecting individual customers and small businesses would mean that Broadband Infraco did not contribute to universal access. It has to provide bandwidth for projects such as the Square Kilometre Array Telescope.