Government has embarked on a thorough review of its telecom legislation, with the aim of replacing it with a more market-friendly framework. The proposed framework - the convergence bill - is the product of discussion between government, operators and other telecom industry stakeholders.
The bill, which is expected to be tabled in parliament next year and take effect in 2005, aims to change telecom licensing from a horizontal structure to a vertical one, and create a stronger regulator. It will also promote universal access to broadcasting and telecom services and content.
Communications Users' Association of SA (Cuasa) spokesman Ray Webber says the convergence bill amounts to the first re-examination of telecom policy since 1994. Subsequent changes in the SA telecom market have made the 1994 Telecom Act largely redundant since it didn't envisage the rapid growth of cellular telephony or the speedy evolution of the Internet.
Webber says the act was prescriptive and aimed to protect the business of the incumbent, holding back rather than stimulating growth. By contrast, the convergence bill could stimulate competition across the telecom industry, providing it is carefully implemented.
The most important proposed change is the shift from horizontal to vertical telecom licences - an acknowledgement of the ways in which the boundaries are becoming blurred between services such as voice, video and data; between once separate industries such as broadcasting, telecoms and IT ; and between infrastructure technologies such as satellite, cellular and fixed line.
Government plans to issue general licences that do not tie operators into any single technology. This will allow infrastructure providers to operate without limitations on the technologies they can use and allow service providers to select infrastructure providers most appropriate to their needs.
The big players in the SA communications space are broadly supportive of the main goals of the convergence bill, though there are differences in opinion about how it should be implemented and the timeframe in which it should take effect.
Most agree that the SA telecom landscape is in desperate need of a stronger regulator, competition at both the services and facilities levels of the industry and a technology-neutral licensing regime. However, some observers caution that the introduction of the bill when government has not yet been able to conclude the licensing of the second network operator (SNO) may cause further uncertainty and confusion in the telecom market.
"Horizontal licensing is geared towards more innovation. Over the years, we have had many queries about the provision of voice over Internet protocol (VoIP), for example, and I hope the new framework will lift such restrictions," says Webber.
Not everyone share's Webber's enthusiasm. Those who have the most to lose, should the convergence bill be successful in stimulating competition, would prefer to see it introduced slowly and cautiously.
"We do not believe in big-bang changes to telecom policy because they create uncertainty and undermine facilities-based competition," says Telkom regulatory and public policy group executive Nkenke Kekana.
Transtel chief technology officer Angus Hay also supports a gradual phasing in of the bill. He says it is likely the SNO will be licensed before the bill is passed, meaning that the new operator could face a change in the conditions of its licence only a few months after it starts operating.
"We don't have a problem with [the bill] in principle, but we need to know what the environment is that we'll be competing in ahead of time. We're quite comfortable competing in a converged environment, though. If the Internet service providers could offer VoIP, it wouldn't undermine our business plan," says Hay.
"By its very nature, the SNO will be a convergent operator. Most phone calls in the country are made on cellphones, and the driver of fixed-line growth around the world is broadband rather than telephones."
Telkom, too, has positioned itself as a communications company offering an array of technologies and services, and is fit to compete in a converged market, says Kekana. For example, its asymmetric digital subscriber line (ADSL) service is capable of carrying voice, data and signal traffic.
It seems the market is evolving towards converged services with little regard for telecom law. For example, convergence between cellular and fixed-line worlds has taken place, says BMI-TechKnowledge director Brian Neilson.
The differences between fixed-line and wireless networks are disappearing and the proportion of revenue that Telkom generates from connections between fixed lines is declining equally fast.
"If it wasn't for its stake in Vodacom, Telkom's numbers wouldn't look as good as they do now. Much of its growth comes from the cellular industry - directly, through revenue from interconnecting cellular calls to its fixed-line infrastructure, and indirectly from its shareholding in Vodacom," says Neilson.
He questions whether there is room for an SNO in a market where fixed-line revenue is dropping so fast. It makes sense to stimulate competition at the service layer of the telecom industry rather than at the infrastructure layer, he says.
One aspect of the convergence bill welcomed by all big players is its emphasis on beefing up the resources and power of the regulator. Even Telkom, which has often challenged rulings that Independent Communications Authority of SA (Icasa) has made against it, recognises the need for a stronger regulator.
"The key to a successful convergence policy is a regulator that is able to treat all players in a balanced manner," says Kekana.
"If we have a strong regulator that is able to stabilise the industry, we're in a better position to predict and plan for the future."
Webber goes a step further by suggesting that Icasa should not have to report to the communications minister, so it can act independently of government influence.
