/ 9 May 2002

Telkom’s monopoly finally ends

SOUTH AFRICA issued two telecoms licences to state-owned signal distributor Sentech on Monday in a move heralding the end of state-controlled utility Telkom’s fixed-line monopoly.

Willie Currie of the Independent Communications Authority of South Africa (Icasa) said the regulator had issued a multimedia licence and an international gateway or ”carrier of carriers” licence to Sentech on Monday.

They are effective on Tuesday, when Telkom’s official so-called ”period of exclusivity” ends. But Sentech is not yet ready to roll out its services and will not, in any case, offer the full range of fixed-line services provided by Telkom.

A second full-scale network operator will only be licensed later this year after numerous delays, when Telkom will finally face real competition.

Once Sentech is ready to roll out services, also later this year, it could start luring some of Telkom’s corporate clients away with multimedia or high-speed broadband telecoms services including e-mail and other data communications offerings.

It could also start carrying wholesale international call routing for other phone operators, including mobile firms.

Low licence fee

Currie said Sentech would pay an upfront licence fee of R25-million for each permit, a fraction of the costs initially proposed by the regulator.

ICASA had proposed an initial fee of R250-million for the broadband licence. It had also planned to charge R75-million for the international telecoms gateway permit.

But Sentech, which provides terrestrial broadcasting and satellite links for radio and television stations, had argued for no up-front fees, saying it would be difficult to compete with Telkom when it started providing services directly to end-users for the first time.

Currie said Sentech would also have to pay an annual licence fee of 0.5% of net operating income, and contribute to a fund to extend phone services in rural areas.

Sentech’s broadband licence would also come with community service obligations to roll out 500 computer rooms in rural schools over the next five years.

No Sentech officials were immediately available to comment on the licences, the full details of which are due to be released on Tuesday.

In just one of many contentious issues in South Africa’s tortuous 2001 telecoms policy process, the government initially planned to give Sentech an international call licence.

But that was shot down by potential bidders for a full-service licence to rival Telkom. – Reuters