Interaction with Underserviced Area Licensees

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Communications

13 February 2007
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
13 February 2007
INTERACTION WITH UNDERSERVICED AREA LICENSEES

Chairperson:
Mr G Oliphant (ANC)

Documents Handed Out
Underserviced Area Licensees: Status Report

Audio Recording of the meeting


SUMMARY
The scheduled reports on the Plenipotentiary Conference in Turkey and the International Telecommunications Union (ITU) 2006 World Telekoms Conference in Hong Kong were postponed until the next Committee meeting. Members were briefed by a collection of underserviced area license (USALs) owners about the problems facing rural telecommunications roll-out. The USALs expressed concern about their sustainability in a highly competitive market. The USALs requested that the Committee, in conjunction with the Department, the Independent Communications Authority of South Africa (ICASA) and the Universal Services and Access Agency of South Africa (USAASA), work out a viable plan to keep the USALs viable and operational. Members requested clear recommendations from the USAL owners so that a solution could be found in the near future, and expressed concern about the sustainability of USALs.

MINUTES
Briefing on Underserviced Area Licensees
The collective USAL owners had made it clear that they were not intent on targeting certain organisations in their remarks. The status report was meant to highlight the environment they operated in and the strong competition with bigger telecommunication operators.    

Mr Dumisani Balman, Director at Talknet, noted that the collection of five of the seven USALs faced tremendous obstacles while trying to establish themselves. The main problem areas were licensing, terms and conditions, funding, regulatory mechanisms and market forces. Due to the serious nature of these problems, five USALs were facing liquidation and a non-functional trade-status. He noted that the problems could be overcome if government, the Independent Communications Authority of South Africa (ICASA), the Universal Services and Access Agency of South Africa (USAASA) and the USALs could cooperate to manage liberalisation, revise USAL licenses, assist with research with development and help USALs recruit and retain skilled workers.

Mr Owen Mondans, Managing Director of Bokamoso B-Tel, along with the other USAL owners outlined the specific challenges posed by ICASA, USAASA and other operators. The problems included lack of clarity, poor infrastructural development, licensing conditions, unfair competitive practices and an unfair interconnection regime. The USAL owners requested that the study by Lisa Thorne be taken into consideration as government assisted the USALs in the future. The main recommendations included that telecommunications in rural areas be treated as a development issue, a revision of licences within a shareholding structure and an assessment of regulatory issues such as interconnection.

Discussion
Mr Truman (ANC) noted that USALs should operate like a business, because they could not be continually subsidised. He stated that policy issues related to this had to be assessed and dealt with.

Adv P Swart (DA) stated that the telecommunications environment had changed substantially since the licences were issued. He noted that the briefing contained no specific recommendations for the Committee. He questioned whether the USALs were still viable in the current highly competitive environment.

Mr R Pieterse (ANC) stated that there were serious obstacles for the USALs in the competitive environment.

Mr Balman replied by concurring that running the USALs was the same as running a business. He noted that meetings had taken place with the municipalities but they were unproductive. A detailed list of recommendations would be given to the Committee. He noted that the Committee should liaise with USAASA concerning additional grants for the USALs.

Ms L Yengeni (ANC) stated that she was experiencing difficulty with understanding the problems USALs were facing. She stated that the Committee should be provided with detailed expenditure by the USALs so that constructive feedback could be provided. She stated that the USALs had to be self-critical and assess internal problems.

Mr K Khumalo (ANC) stressed that accountability was needed if the USALs were to receive assistance from the Committee and the Department of Communications.

Ms M Smuts (DA) asked how the Sentech telecommunication roll-out would affect USALs.

Mr Balman responded that the USALs did accept responsibility for the failures they have encountered. He noted that a lack of skilled workers was one of the biggest problems facing the USALs in rural areas.

He noted that Sentech would not penetrate the rural areas because it was not financially advisable. It was therefore the Department’s responsibility to assist the USALs to sustain themselves so that rural citizens could have access to telecommunications. He noted that the USALs were not pleading for subsidies, but were rather looking for a joint effort between the Department and the regulatory bodies to help USALs provide telecommunication services to rural areas.

Committee Report on International Conferences
The scheduled reports on the Plenipotentiary Conference in Turkey and the ITU 2006 World Telekoms Conference in Hong Kong were postponed until the next Committee meeting.

The meeting was adjourned.


 

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