Icasa insists companies bidding for WiMAX spectrum must be 51% Black-owned but it's open to argument

Internet

Strict empowerment demands that prevent most technology companies from winning a licence to offer high-speed Internet access are not open to negotiation, the regulator says.

The Independent Communications Authority of SA (Icasa) stunned the industry last week by declaring that any company bidding for a WiMax licence must be 51% black owned. Last week its spectrum manager Mandla Mchunu said the conditions were final.

Industry players say no company with the skills and cash to roll out a national network has so much black ownership, while black owned companies that could apply lack the financial clout to succeed. Mchunu said there was nothing to prevent people from making suggestions, but the document setting out the licence conditions was final.

He admitted it would be a challenge for the firms that met the criteria to succeed in building a national internet business. "It will be quite difficult for them to raise the necessary funds. I guess Icasa will need to find a balance." Mainstream players could bid for a licence anyway, and might present a compelling enough case to win despite not being black enough, he said.

Icasa says it is using the opportunity to empower black people, so the most crucial criteria are 51% black equity and a high degree of black management. That eliminates the big players hoping to use WiMax to expand the capacity of their networks, including MTN, MWeb, Internet Solutions, Altech and Verizon. WiMax can cover large areas and handle high volumes of traffic relatively cheaply, although constructing a national network would cost hundreds of millions of rands.

Internet Solutions's chief regulatory officer Siyabonga Madyibi had hoped Icasa would relax its empowerment stance, which clashes with previous demands that telecoms licence holders be 30% black owned.

Internet Solutions was about 30% black owned, and Madyibi was not aware of any company able to do the job that met the 51% criteria. "It's going to make it very difficult for anybody to apply. We are going to try to convince Icasa that 51% empowerment isn't workable," he said.

"We are slightly perplexed," said Tim Lowry, MD of MTN SA. MTN was empowered, but fell short of the 51% mark. "That's the sort of clarification we will need from Icasa," he said.

Business Day Johannesburg