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Neotel

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Title: Neotel


1
Neotels Presentation to the Portfolio
Committee on Communications on the Draft
Electronic Communications Amendment Bill GG NO
3030701st November 2007
2
Structure of Presentation
  • Introduction
  • Policy Framework of ECA
  • Infraco Bill
  • Ministerial Directive
  • ICASAs Licensing Powers
  • Lack of Certainty
  • Creation of parallel Licensing Regime
  • Under-Sea Cables
  • Conclusion
  • QA Session

3
Introduction
  • Notice issued on the 17th September 2007
  • Objective of the proposed amendment
  • Impact on Neotel
  • - erodes business case
  • - delay in roll-out
  • - Impact on competition
  • Purpose of Legislative Enactments- repeal of
    Telecommunications Act, Promulgation of ECA

4
Policy Framework of ECA
  • Publication of White Paper
  • Adopt a Process of Managed Liberalisation
  • Telecoms Act - was the basis for reform
  • - provided for Licensing of SNO
  • ECA progressive liberalisation of the
    Communications sector
  • Objective of the proposed amendment- reduce costs
    of telecommunications
  • Universal Service and Access
  • Improving Government Service Delivery

5
The Infraco Bill
  • To facilitate the Licensing of Infraco
  • Further state owned Telecommunications service
    provider- is this consistent within the context
    of Governments policy towards a liberalised
    competitive sector
  • Concept of Public Entities- is it intended to
    facilitate the licensing of Municipalities
  • Provisions of section 5(d) of ECA- state entity.
    ownership interest of greater than 25 of share
    capital
  • Licensing is adequately dealt with by ECA

6
Policy Digression
  • Creation of SNO Licensing Structure

SNO (NEOTEL)
SEPCo 51
SOECo 30 Eskom Transnet
BEE 19 Nexus Connection
7
Policy Digression
  • SOEs contribution to shareholding
  • Effect of the contribution
  • Enabling Neotel to obtain time - to - market
  • Introducing effective competition-ability to
    compete effectively
  • New products and services
  • Neotel not prepared to counter policy change
  • Delay in roll-out- no long distance network

8
Ministerial Directive
  • Current state participation in Licenced
    operators-Telkom, Vodacom, Neotel - has this had
    a positive impact on the licensees ability to
    perform in the market place
  • Sec 3(2) of ECA permits Minister to issue
    policy directives consistent with ECA - relate
    only to enquiries, determination of priorities
    and consideration of matters within ICASAs
    jurisdiction, placed before the Minister
  • Does not cover the ambit of granting, amending,
    transfer, renewal, suspension or revocation of
    Licence
  • The amendment seeks to confer on the Minister
    this power to make such policy directions.

9
ICASAs Licensing Powers
  • The licence sought is an individual licence
  • Infraco requires such a licence to Operate and to
    sell ECN services on a RETAIL OR WHOLESALE basis
  • Needs to await the issue of an ITA by ICASA
  • ITA needs to concisely stipulate the qualifying
    criteria
  • Infraco need to comply with each of the criteria
    before it can obtain a licence
  • What if it does not satisfy this criteria - Can
    ICASA refuse to issue a licence?

10
Lack of Certainty
  • Power to be conferred on the Minister is vague
  • Could intervene or make any policy directions to
    ensure strategic ICT infrastructure development
  • A delegated discretionary power- should not be so
    broad to the extent that it does not define the
    nature and scope of the power conferred
  • This could lead to arbitrary exercise of the
    delegated power
  • As drafted currently the power to the Minister is
    so broad that there is no limit to the steps
    which ICASA could be directed to take

11
Creating a Parallel licensing Regime
  • Amendment creates a separate licensing regime for
    public entities to the disadvantage of private
    operators
  • No basis in the ECA for licensing procedures to
    be different
  • Objective of the ECA is to eliminate differences
    and preferential treatment
  • Sentech, Telkom and SABC are also Public
    Entities- they can be licensed on a separate
    basis in terms of this policy directive
  • What is the scope of the definition of a public
    Entity

12
Under-Sea Cables vs Infraco
  • Infraco to be part of the Nepad broadband
    initiative to link Africa with Latin America
    Europe
  • Ministerial intervention on private cable
    development initiatives
  • Impact of such intervention - Foreign direct
    investment/investor confidence

13
Recommendations
  • Infraco may not have a preferential licensing
    regime-has to follow process set out in sec 5 of
    ECA
  • Will have to apply for an individual licence
    pursuant to an ITA
  • ITA to stipulate criteria to be complied with
  • Criteria to include technical, financial and
    empowerment criteria to be evaluated
  • Publish draft terms and conditions that will be
    applicable to the licensee
  • ICASA is required to give notice of the
    application (sec 9)
  • Allow for public representations-in the interest
    of transparency and non-discrimination

14
Conclusions
  • Further state-owned operator unlikely to achieve
    the desired objectives
  • Establishment of Infraco militates against
    competition-undermines Neotels efforts t
    establish itself as a viable competitor
  • The amendment is far to vague, broad and
    uncertain- impacts on investor confidence
  • Blurs the distinct roles of executive and
    legislative branches of government
  • Creation of a separate licensing regime for
    Public Entities

15
  • THANK YOU

16
QUESTIONS AND ANSWERS SESSION
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