Government's long-awaited National Integrated ICT Policy White Paper has been met with more opposition than the Department of Telecommunications and Postal Services (DTPS) would have hoped for, with many analysts and industry players voicing their concern over large chunks of the document.
“I think everyone in the industry is in agreement over the objectives of the policy. Clearly it will be better for the sector and the country to have a greater penetration and uptake of digital communication and ICT services. However, the proposed mechanism of achieving this appears to be at odds with the policy objectives,” says Richard Hurst, director of enterprise research at Africa Analysis.
IDC's research manager for IT services Africa, Jon Tullett, agrees, saying that the department has 'tried to boil the ocean with this policy' rather than breaking it into numerous smaller sections and allowing each to go through green paper discussions and industry engagement.
“The all-or-nothing approach has set the policy paper up for broad criticism, which may detract from the parts that are likely to get more ready approval, and thereby further delay the process,” adds Tullett.
The recently published policy framework aims to be an overarching policy framework for 'the transformation of South Africa into an inclusive and innovative digital and knowledge society'. It replaces the White Papers on Telecommunications (1996) and Postal Services (1998) and will require amendments to the Electronic Communications Act and Electronic Communications Transactions Act.
However, a number of sections have already ruffled some ICT industry feathers and are likely to cause more controversy.
A key worry is the future of the Independent Communications Authority of SA (Icasa), as the document proposes to split regulatory powers for broadcasting content and infrastructure and networks into two new regulators. The 195-page document also calls for the Universal Service and Access Agency of South Africa (USAASA) to be dissolved, and proposes policies to protect the open internet ? including a net neutrality framework ? among other changes.
The policy shake-up around the way radio frequency spectrum will be allocated in future has met with the most criticism so far – with the document calling for an 'open access regime' through the deployment of a wireless open access network (WOAN).
"Historically, spectrum for mobile has been assigned to individual licensees who are then given exclusive rights to it for a defined period in a defined geographic area. The new spectrum management regime set out in this policy encourages that licensees work together as far as it is practicable. This includes through the deployment of a WOAN," DTPS minister Siyabonga Cwele said while outlining the new policy.
But analysts are sceptical about the practicality of such a network and mobile operators are strongly opposed to the idea.
“The WOAN model is unworkable in South Africa, since we have no clarity as to exactly how this open access entity will be structured, how it will attract investment and when it will go live,” says Hurst.
"Personally, I think the idea of a WOAN is likely to fail, mainly due to practicality issues. I am not saying a WOAN cannot work, or even be useful. However, it’s not the only approach, and is certainly not a tried and tested approach, hence it carries far greater risks," says BMI-TechKnowledge director Brian Neilson.
“This is a bleeding-edge concept at a time when South Africa can ill afford to be at the bleeding edge, especially if the entity should fail. The country should be focusing on who would be best positioned to invest further in the 4G spectrum and open the market up to additional users and services,” adds Hurst.
The suggested WOAN will be 'a public-private sector-owned and -managed consortium', and will consist of entities that are interested in participating. A major issue is that there are no proven examples of where such a network has been successful in the past. The White Paper uses WOANs in Mexico and Kenya as examples, but admits that they have been established 'with mixed results'.
BMI-T says its research 'has found no case studies where a WOAN similar to that proposed for South Africa has worked or shown positive benefits', while Research ICT Africa (RIA) has warned that SA 'should exercise caution in enforcing such an open access model', saying that leading WOAN network trials and early implementation in Mexico, Kenya and Rwanda have 'not taken off'.
“Turning high-value spectrum into a national asset to be administered will require enormous reengineering on the part of the regulatory structure and the incumbent providers. It may also make the sector less attractive to investors. However, those concerns don’t mean the ideas are unworkable, just relatively high-risk. The strategy is well-intentioned, if nothing else,” says Tullett.
The White Paper argues the new regime will accommodate more players and open up the market for more competition. It says that although over 400 players hold ECNS licences in SA – which would give them the right to apply for available spectrum – only six have been assigned mobile broadband spectrum.
"The outcome is an oligopoly – a highly concentrated market where only a few firms dominate," the policy says.
However, according to RIA, globally, there is `little evidence that mandatory open access networks have contributed to public policy objectives of increased competition in services, decreased pricing and higher levels of demand stimulation’. In fact, the research group believes open access wireless networks threaten competition and investment.
MTN SA CEO Mteto Nyati agrees that the creation of a WOAN will be anti-competitive and says it is 'nothing other than the creation of a monopoly'.
"It seems to be counter-intuitive that South Africa has spent the past 22 years creating the regulatory environment for competition to flourish only to revert back to a monopoly. MTN knows of no other country where such a structure has been implemented or is successful," he says.
Tullett says that overall, the White Paper appears to be a push towards much greater government oversight and control, rather than what industry might have preferred: a more explicitly supportive role for government along with the regulatory overhaul.
“It’s unclear how that will benefit a market that has so far thrived despite government intervention, not because of it.”
Telkom chief commercial officer Brian Armstrong has similarly voiced the telco’s concerns over the idea that operators would have to give back costly spectrum already allocated, saying it “compromises the operators' anticipated return on invested capital and disincentives future expenditure towards network upgrade and maintenance.”
Nyati adds that a scenario where mobile operators will not get any more spectrum and must hand back what they have is `untenable and unacceptable’.
“The concept of a WOAN has and will continue to be an extremely contentious issue, especially for the network operators. The simple reason is that the operators regard their access to spectrum as one of their major assets in being able to differentiate themselves in the market and their ability to serve their customers. It is the core reason for most of their network infrastructure investment,” says Hurst.
“The creation of a WOAN is likely to have dire consequences on network investment and overall investment in the telecoms sector, something the policy is theoretically championing,” he says.
“As with any policy that requires extensive transformation of policy and legislative frameworks, you should expect legal challenges at each stage of implementation. That’s a feature, not a bug; that is how problematic areas are challenged and potential pitfalls addressed before it’s too late,” Tullett says.
“The new roles and agencies described in the White Paper are still unclear, and the devil really is in the details. However, the country has something of a track record of rapidly changing ministers and we’ve restarted the policy programme several times, so it’s also far from clear that any of this will find its way into law at all.”