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    Home » Duncan McLeod » Want competition? Do this, Icasa

    Want competition? Do this, Icasa

    By Duncan McLeod16 March 2014
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    Duncan-McLeod-180-profileCommunications regulator Icasa this week kicked off a high-level formal inquiry into the state of competition in South Africa’s information and communications technology sector.

    In the coming months, the authority, which regulates the telecommunications, broadcasting and postal services sectors, has promised a broad-ranging probe into everything from network neutrality to the allocation of radio frequency spectrum.

    The inquiry is long overdue. The competitive landscape is distorted in many areas thanks in part to historical legacies that need to be corrected.

    In the subscription broadcasting market, for instance, Icasa has been too hands-off in using its regulatory powers to tackle the dominance of MultiChoice, which owns DStv. It would be wrong to punish MultiChoice for being a highly successful enterprise (which it is), but some intervention is needed to give new entrants a leg up.

    And in telecoms, Icasa needs to be more innovative in bringing more competition to Vodacom and MTN, especially as the mobile industry moves from the voice era to one where broadband data predominates. One way to do this is to create a dynamic wholesale data market. Another is to open up spectrum to new players.

    Of course, nothing Icasa does will be easy. And the industry’s vested interests will challenge regulations they regard as being against their interests. We’re already witnessing this with Vodacom and MTN’s challenge of the agency’s call termination regulations, which are skewed deliberately in favour of smaller operators. They’ll face off with Icasa at the high court in Johannesburg later this month as they seek to have the regulations overturned pending a judicial review.

    There’s so much more that’s needs tackling.

    In broadcasting, top of Icasa’s agenda has to be finding ways of nurturing competition to MultiChoice. Its efforts to license new subscription broadcasters a few years back largely failed. Of five new licensees, only one, On Digital Media (ODM), came to market. Yet ODM, which owns StarSat (formerly TopTV), quickly ran into financial trouble and is now in business rescue.

    Icasa is right when it says it needs to understand why its efforts to crack open the subscription broadcasting market to competition were not successful.

    It’s a complex issue. But one remedy seems obvious: addressing the way MultiChoice subsidiary SuperSport has sewn up broadcasting rights for South Africa’s main sporting codes. This is arguably one of the biggest impediments for new market players trying to lure sports-mad South African viewers.

    At the very least, Icasa needs to force the Naspers-owned broadcaster to re-sell some of this sports content to rivals at fair market prices. The Competition Commission may tackle the issue soon, after ODM complained that MultiChoice management blocked a plan, agreed to by SuperSport, to sell access to two of its channels.

    More radical intervention may indeed be necessary, including forcing MultiChoice to spin off SuperSport as a separately managed commercial entity that provides content to DStv and other broadcasters on a fair, equal and non-discriminatory basis.

    In telecoms, Icasa is already attempting to tackle competition in the voice market, though it may have to go back to the drawing board if Vodacom and MTN are successful in their bid to stop the implementation of the call termination regulations. But it needs to do more, especially in mobile broadband.

    Icasa may have to unbundle SuperSport from MultiChoice to help new entrants emerge in pay television
    Icasa may have to separate SuperSport from MultiChoice to help new entrants emerge in pay television

    Here, some of the interventions required are obvious. Icasa needs to encourage the development of a market similar to the one in fixed-line broadband, where aggressive competition between resellers has forced down prices dramatically.

    The mobile operators have been reluctant to provide wholesale access to their data networks to Internet service providers. Icasa should force them to do so.

    Access to spectrum is a more complex issue. The agency would be wrong not to provide additional access to the big incumbents (after all, they have the resources to invest in new networks), but it must also find innovative ways of giving new players access.

    The high-level inquiry should give Icasa a much clearer view how it should tackle these and the myriad other roadblocks standing in the way of an efficient, dynamic and competitive market.

    As a stronger Icasa begins asserting itself, baring its teeth to the industry’s dominant players, one hopes government is prepared to back it up by provide additional funding to what has historically been a chronically underfunded and under-resourced agency.

    • Duncan McLeod is editor of TechCentral. You can find him on Twitter
    • This column is first published in the Sunday Times


    DStv Icasa MTN MultiChoice Naspers ODM On Digital Media StarSat SuperSport TopTV Vodacom
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