Don't build another monopoly, Facebook urges SA gov't - TechCentral

Don’t build another monopoly, Facebook urges SA gov’t

Social media giant Facebook has joined the chorus of criticism of government’s Electronic Communications Amendment Bill, warning in a submission to the department of telecommunications & postal services that creating a monopoly wholesale open-access network (Woan) will damage the industry.

It said government should conduct a feasibility study prior to implementing the Woan and ensure that the new network isn’t allowed to distort competition.

“It would be disappointing if, after the laudable efforts that have been taken in South Africa during the last 20 or so years to create an open and competitive regulatory environment, the creation of a single Woan inadvertently undermines these efforts by creating a monopoly,” the company said.

Government has been criticised by a wide range of companies and industry organisations, including Vodacom, MTN, the Free Market Foundation, the GSMA and Research ICT Africa, over a plan to reserve a significant chunk – if not all – spectrum for an unproven Woan.

“Facebook is concerned that the establishment of a single Woan – and conferral of significant competitive advantages on this entity alone, such as rights to key spectrum bands that are useful for 4G and 5G services – will have a detrimental impact on current and future competition and investment incentives in the telecoms industry in South Africa.”

It said there is a risk that a competitive industry will be replaced by a monopoly access provider “in stark contrast to the position being taken in many jurisdictions around the globe where regulators are making conscious efforts to avoid or break up monopolistic structures”.

“Creation of a single Woan with preferential access to high-demand spectrum and other advantages (such as reduced or waived spectrum access fees, minimum 30% capacity purchase commitment by private sector operators, state funding, etc) risks distorting existing competition in the marketplace and dampening technology and infrastructure competition,” Facebook said.

‘Other ways’

“Requiring the Woan to provide cost-based access (rather than allowing a stipulated return on investment) … significantly reduces the incentives for both the Woan and other providers to invest in broadband roll-out or engage in network upgrades,” it added.

Instead of establishing a Woan along the lines proposed in the amendment bill, Facebook wants government to focus on “other ways to achieve its goal of developing an inclusive, people-centred and developmental digital society”.

“To do this, Facebook supports policies that promote both the capacity and coverage of networks,” it said. “This might include, for example, bolstering existing minimum coverage and/or quality of service requirements in licences, additional universal service obligations on private sector operators to secure a minimum level of functional broadband, and/or retail price caps.”

Access to spectrum in urban areas could be made contingent on meeting build-out obligations in rural areas, or spectrum auctions could award bidders committed to speeding up build-out to rural areas, the company said. Other wholesale models could be explored in rural areas where providers have yet to deploy.

“In such a model, we respectfully suggest government could support multiple rural infrastructure providers and help to broker agreements between such providers and existing mobile network operators for spectrum access in rural areas.”

Consumers will be harmed if only the Woan is given access to bandwidth in key frequencies such as 700MHz, 800Mhz and 2.6GHz, it said.

“…Rather than allocating high-demand spectrum to the Woan, the department could usefully seek to award future spectrum rights on the basis of open and transparent processes. Structured correctly and with the right protections – minimum spectrum rights / maximum spectrum caps, minimum spectrum access and ongoing licence fees, minimum roll-out and coverage obligations – this can inject additional competition into the market and contribute to the overall economy.”

It said there is a real risk of inefficient allocation of spectrum to the Woan, which will be exacerbated if trading of high-demand spectrum is prohibited. Spectrum trading should apply to all spectrum rights, it said.  — © 2018 NewsCentral Media

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