Search

 

Cablegate: Telecommunication Liberalization Moving at A

VZCZCXRO4355
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #0271/01 0420558
ZNR UUUUU ZZH
R 110558Z FEB 08
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 3418
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

UNCLAS SECTION 01 OF 03 PRETORIA 000271

SIPDIS

SENSITIVE BUT UNCLASSIFIED
SIPDIS

DEPT FOR EB/CIP/BA
USTR FOR CATHERINE HINCKLEY

E.O. 12958: N/A
TAGS: ECPS ETRD USTR SF
SUBJECT: TELECOMMUNICATION LIBERALIZATION MOVING AT A
SNAIL'S PACE

1. (SBU) Summary. ICT Officer met with Independent
Communications Authority of South Africa (ICASA)
officials to discuss implementation of the Electronic
Communications Act (ECA). Market analysis, licensing,
and spectrum management were identified as the main
focus for implementation. ICASA experienced high
management turnover after the promulgation of ECA, but
the situation has since stabilized. Officials
identified spectrum management as a concern that could
hamper telecommunication liberalization. Officials
noted that, despite additional licenses to satellite
television service providers, the market was "not
likely to become competitive any time soon". ICASA
wants to increase competition in satellite
broadcasting, but is also concerned about protecting
public broadcasting. Although ICASA has made some
strides in liberalizing the South African
telecommunication market, market entry is still
difficult for smaller service providers. End Summary.

-------------------
ECA Implementation
-------------------

2. (U) ICT Officer met with Independent Communications
Authority of South Africa (ICASA) officials on
February 4, 2008, to discuss the regulator's role in
implementing the Electronic Communications Act (ECA)
of 2005. Councilor Dr. Tracey Cohen described the ECA
as heralding a new regulatory framework for
liberalizing the telecommunication market in South
Africa. Cohen stated that market analysis, licensing,
and spectrum management were the three areas of focus
for ICASA as it began implementing the ECA. According
to Cohen ICASA took "a very EU-style, ex ante approach
towards market regulations." This approach required
ICASA to conduct market analysis after the ECA was
passed. ICASA identified approximately "forty-one
distinct communications markets in South Africa and
decided that fourteen to fifteen of those markets
would require regulatory attention" for ECA
implementation.

3. (SBU) Licensing. Cohen stated that all
telecommunication licenses are required to be
converted under the new ECA regulatory regime. (Note:
A service provider cannot broadcast in South Africa
without a license.) ICASA Chair Paris Mashile
emphasized that the agency is "working around the
clock to meet tight deadlines for converting existing
licenses". The statutory framework for ECA provided
the agency with two years to complete this conversion
process. Cohen noted that "a six-month extension is
built into this requirement and no sanctions will be
applied if ICASA misses this deadline". Cohen
expected the process to be completed by the end of
2008 at the latest. (Note: The statutory deadline
called for the conversion process to be completed by
June 2008.)

4. (SBU) Spectrum Management. ICASA officials noted
that spectrum management is the area of greatest
challenge for ICASA. The agency is looking for
equitable ways to distribute remaining spectrum.
ICASA discussed the possibility of creating a spectrum
auction mechanism with the U.S. Federal Communications
Commission (FCC) during consultations in Johannesburg
in 2005. However, Cohen believed that South Africa
"did not have a lot of appetite for an auction
method". She commented that despite increases in the
numbers of licenses under the new regime, "big
licenses are still not available" in South Africa.
The large national fixed-line and mobile operators
such as "Telkom, Neotel, Vodacom, MTN, and Cell C had
no problems in obtaining a converted license."
Qno problems in obtaining a converted license."
However, Cohen stated that smaller internet service
providers (ISPs) and value-added service providers
(VASPs) would have a tougher time. Approximately
eighty of these ISPs/VASPs would like to obtain
licenses, "but the spectrum capacity does not exist to
provide more than one or two of them" with licenses.

-------------------------
ICASA Management Turnover
-------------------------

6. (SBU) ICASA experienced high management turnover

PRETORIA 00000271 002 OF 003


after the promulgation of ECA. On the operations
side, ICASA lost its entire executive management team
in a year. (Note: Press reports indicate that some
left as a result of interpersonal disputes with the
new Chairperson and others because they thought the
agency lacked independence.) Officials stated that
all of the vacated posts have been filled. Dr. Cohen
commented that most of the vacancies were filled from
outside the agency and a few individuals were promoted
internally. Therefore, she thought "the operational
management team as a whole would need time to get up
to speed". She believed that ICASA's concern with
high management turnover is an issue of the past.
Cohen noted that there were also discussions to reduce
the size of the ICASA Council, its regulatory
decision-making body. Currently nine Councilors are
appointed by the South African President to serve
four-year terms. She indicated that discussions are
underway to reduce the number through attrition as the
councilors' terms expired.

---------------------
Areas for Improvement
---------------------

7. (SBU) Cohen identified spectrum management as an
issue that could hamper telecommunication
liberalization. In her personal view, "South Africa
should set-up a spot spectrum trading market to allow
companies to exchange surplus capacity." However, she
thought this approach was "too market-based" to be
successful in South Africa. She noted that "Telkom
had more spectrum allocation then it could ever hope
to utilize." Other companies could benefit from
access to this spectrum. According to Cohen, this is
a "vestige of the monopoly status Telekom used to
enjoy" under the old regulatory regime. Cohen
expressed the view that Telkom would be approached to
give up some of its surplus spectrum allocations. A
new policy to address spectrum management would take
at least three to five months to develop. Cohen
underscored the benefits of the 2005 FCC consultations
for ICASA. She expressed a need for ICASA to invite
the FCC to conduct a third workshop on spectrum
management.

8. (U) In a statement dated January 30, 2008, Paris
Mashile implied that conversion to digital
broadcasting would increase the availability of
spectrum in South Africa. He stated that the South
African Government announced its intention to switch
over to digital broadcasting on November 1, 2008,
years ahead of the International Telecommunication
Union (ITU) 2015 deadline. Mashile hoped that
conversion to digital technologies would free up
spectrum for a variety of uses such as e-government
services.

--------------------
Digital Broadcasting
--------------------

9. (SBU) Cohen noted that despite approving additional
licenses to satellite TV service providers, satellite
broadcasting in South Africa was "not likely to become
competitive any time soon". ICASA ran public hearings
on digital broadcasting licenses as a part of the ECA
implementation process. The hearings resulted in a
recommendation to grant five new licenses. However,
she noted that e.TV (the first privately owned but
free-to-air television station in the country) decided
not to pursue its satellite broadcasting license and
that the remaining four recipients serve very "niche
market segments such as Christian broadcasting". She
added that Telkom Media, a subsidiary of Telkom, would
like to enter the satellite television market since
Telkom is "desperate to diversify". Nonetheless,
QTelkom is "desperate to diversify". Nonetheless,
MultiChoice has a strong hold on the market through
its existing exclusivity rights. Multichoice has made
statements in the press that "any attempt to undermine
the principle of exclusivity would lead to less
investment, lower quality, and less content."

10. (U) ICT officer inquired about the regulatory
environment for foreign satellite operators.
According to Cohen, South Africa has tried to "develop
a regulatory framework for satellite operations for

PRETORIA 00000271 003 OF 003


ten years now without much progress". Foreign
satellite operators are required to establish a
majority stake (51%) local presence or partner with a
local company under the current regulatory
environment. Cohen indicated that this was unlikely
to change since the "current GATT framework only calls
for a maximum of 49% foreign ownership" and "no
country anywhere has the appetite for full ownership
by foreign entities". However, she stated that this
is a policy issue and any changes would have to be
decided by the Department of Trade and Industry.

----------------------------------------
Controversy over Free-to-Air Broadcaster
----------------------------------------

11. (SBU) Responding to a question about the clash
between ICASA and United Kingdom-based broadcaster
Free2View, officials said Free2View does not have the
authority to provide satellite signals without a South
African license. (Note: Free2View launched a
satellite service in January 2008 to provide free-to-
air service requiring consumers to make a one-time
satellite dish and decoder purchase). An ITU
satellite operations memorandum of understanding
required satellite operators to obtain government
approval before it "can have a footprint in a
country". ICASA has threatened Free2View with a court
interdiction if Free2View does not obtain a license or
wait for ICASA to finalize its free-to-air
broadcasting framework. (Note: ICASA is not expected
to finalize a regulator framework for free-to-air
broadcasting in the next year.)

12. (SBU) The Free2View case highlighted a dilemma
facing ICASA. Cohen expressed the view that ICASA
wants to increase competition in satellite
broadcasting, but is also concerned about protecting
public broadcasting. She hoped that free-to-air
broadcasters would help increase competition without
increasing costs to consumers. Cohen stated that
there was an Interim Consent provision in the old
regulatory regime that allowed free-to-air
broadcasters to operate without licenses on a
discretionary basis. The ECA did not include a
similar consent provision. She added that in her
personal view Free2View should be allowed to
broadcast, but emphasized that she was in the minority
among the councilors. She believed that ICASA would
either refuse to approve Free2View's dish and decoder
or seek a court interdiction. Cohen noted that the
courts had established precedence for action against
unlicensed broadcasters in a case involving another
unlicensed free-to-air broadcaster that was illegally
utilizing MutliChoice equipment to broadcast
pornography.

13. (SBU) Comment. ICASA has made some strides in
liberalizing the South African telecommunication
market; however, lots of obstacles exist for further
progress. Established entities such as Telkom and
Multichoice secured market share under prior monopoly
regimes, which makes it difficult for new entrants to
offer competitive services. A number of smaller
mobile service providers have entered the market, but
most have yet to turn a profit. Additionally, ICASA
has been slow in converting licenses and establishing
regulatory frameworks for free-to-air broadcasting and
satellite operations that would increase competition.
The agency appears to be the need to increase
competition with regulatory concerns. Scarcity of
spectrum is an area of concern that will require
creativity to manage. The agency could benefit from
incorporating lessons learned from FCC's management of
Qincorporating lessons learned from FCC's management of
spectrum distribution. Hopefully, ICASA will have an
opportunity to do this if and when they host the FCC
for a third regulatory consultation. End Comment.

END TEXT

BOST

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO:

 
 
 
 
 
 
  • Pacific.Scoop
  • Cafe Pacific
  • PMC