Fury and ire fuel Icasa-WBS fire
And the struggle for millions in outstanding fees has gone to court. But whether the regulator has the grit to follow through with its tough-love approach is yet to be seen.
In an unprecedented move, Icasa finally showed its teeth at 11am on April 3 when it swooped in on noncompliant licensee and business services provider WBS – the sister company of iBurst – which is said to owe the authority more than R60-million and is accused of operating radio links illegally for several years.
The Icasa inspectors, aided by the police service, raided the telecommunication company's premises in Gallo Manor and its head office in Bryanston, where it seized radio equipment that included core fibre switches, vital to the running of its business services.
At the time, WBS chief executive Thami Mtshali told mybroadband.co.za that Icasa inspectors with "malicious intent vandalised iBurst's network equipment", causing damage of at least R40-million to R50-million. No sooner had Icasa seized the assets used to operate these radio links, and which affected 80% of WBS's services, an interdict was granted on April 5 and all equipment was returned so that services to clients could continue.
The loss in connectivity for more than 48 hours resulted in WBS facing "significant claims" from subscribers who may have incurred financial losses while their connection was interrupted.
Execution of the warrant
MTN, a WBS client, said the execution of the warrant had an effect on 210 customers and the issue was now receiving attention at a senior level in MTN to find a solution to a sustainable, uninterrupted service.
Vox Telecom wrote to WBS the same day and complained that it was "experiencing a major loss in connectivity to around 30 of its corporate customers, and more than 5 000 consumers."
WBS claims servers, routers switches and an SMS switch, which are not part of the radio equipment as per the warrant, were taken and subsequently affected its billing system.
WBS said it is in the process of quantifying the damage and revenue loss and, depending on the outcome, may choose to sue. In court documents, WBS said Icasa's actions were causing "significant financial and reputational loss" to WBS and to many of its subscribers on a "tremendous scale".
The seizure and subsequent interdict is the most recent in a feud between the regulator and WBS. The spat heated up in November when, after Icasa received its third consecutive qualified audit, responsibilities related to compliance and enforcement were taken away from the authority's chief executive and assigned to Icasa councillor Joseph Lebooa.
Hijacked and threatened
In January, the Mail & Guardian reported that Lebooa alleged that he had been hijacked and threatened with his life to drop a case against WBS. He claimed the telecoms company owed hundreds of millions in unpaid licence fees and penalties for rolling out radio links.
WBS denied any involvement in the attack and, in February, laid a complaint of crimen injuria – an act of both intentionally and unlawfully impairing the dignity or privacy of another person – against Lebooa. Now, further details have emerged in WBS's notice of motion, which indicates conflicting ideas not just between Icasa and the licensee, but also within the regulator itself.
Sheila Bhengu, head of marketing at iBurst, the sister company of WBS, said the raid was entirely unexpected. "We received correspondence from Icasa dated March 11 that indicated that it was still investigating how much WBS owed and would confirm a date to meet to discuss the settlement figures. [But] at that stage Icasa had been granted a warrant on March 7, which some of the councillors seemed not to be aware of."
In a founding affidavit, WBS chief executive Thami Mtshali said even Icasa's chairperson, Stephen Mncube, was unaware that the raid was being planned.
"[Mncube] indicated to me that he was not aware of the search and seizure operations that had been conducted on WBS's premises. He informed me that he was under the impression that the issue of outstanding licence fees was the subject of continued negotiation between the parties," Mtshali said.
"Thus, even while Icasa was applying for a warrant, it was engaging in ongoing discussions with WBS. This … raises serious questions about the lawfulness of Icasa's conduct in executing the warrant as it did."
Illegally rolled out
But an industry expert, who asked not to be named, said Icasa's inspectors are not required to consult its council or even the chief executive when planning such a raid.
The Democratic Alliance's spokesperson for communications, Marian Shinn, also said the regulator had every right to go in and seize the equipment. "From my understanding of the [Icasa] Act, it entitles the authority to go on to any premises at any time to monitor and ask to see the current licence certificate. And if you cannot produce it, they are legally obliged to disable the equipment."
Icasa has said that WBS has not paid its licence fees for existing licences and has also illegally rolled out more than 1 000 radio links. Meanwhile, the matter remains in the legal system. WBS has prepared an affidavit that dismisses any suggestion that it has been operating illegally and focuses squarely on the amount in dispute.
WBS claims to owe R8.5-million and Icasa has asked for R60-million. But a source within Icasa said neither figure accurately reflects the penalties and accumulated interest, which would amount to hundreds of millions.
In the WBS affidavit, Mtshali, said: "WBS does not dispute that it is liable for the payment of licence fees. The dispute between WBS and Icasa concerns the precise amount of fees payable."
He said the disagreement centred on the method of calculation of the outstanding fees, as well as on whether WBS should bear the costs of a "band migration", which was allegedly proposed by Icasa and undertaken by WBS.
He claimed WBS "has never received a notice to the effect that its licences have expired or were revoked".
Compensation for a ban
In the affidavit, Mtshali said WBS would pay the amount of R60-million in equal monthly instalments over the next three years until the amount has been settled. He said a similar arrangement had been reached with another licensee.
The offer, however, is subject to the reservation that WBS has the right to dispute the amount owed and claim compensation for a ban on a migration process, which was allegedly prompted by the authority. But the amount owed is not the point in this legal battle, the Icasa source explained.
"The system does not release a licence [for spectrum that can be used] unless it is fully paid … For WBS to clear its name it just needs to produce each and every licence."
The source said that the question of how much money is owed is irrelevant and that the case must be argued based on whether WBS is legally permitted to operate. "Icasa should not be talking to illegal operators."
Shinn said the raid and the resulting legal debacle was necessary for the tide to turn at the regulator. "I don't think Icasa entered into this activity lightly; I think they had come to the end of their tether in trying to negotiate with WBS … Something like this had to happen; there had to be some kind of shock treatment."
Shinn said Icasa has been underfunded from the treasury to buy the monitoring and billing equipment it required, but also would not be given extra funds until it became more effective at collecting licence fees.
"This has led to a lot of stuff being done manually, and a lot of errors and disputes," Shinn said. "Some people have taken advantage of this chaos; they dug their heels in and played hardball."
She said the move may make clients check whether they are dealing with a legally licenced company. If not, "it is tantamount to buying stolen goods".
Icasa spokesperson Jubie Matlou said the authority is not in a position to comment on this matter as it is already in the hands of the court. Lebooa also declined to comment on all court matters as they were sub judice. He did however say that, in a recent council meeting Mncube, noted that he and the communications minister, Dina Pule, were close to reaching a solution to stop “the leakage of information” on the WBS matter.
Who is WBS?
Wireless Business Solutions Holdings is the holding company of the South African internet companies Wireless Business Solutions (WBS), iBurst and Broadlink.
iBurst, the brand most familiar to consumers, provides wireless internet solutions for personal and home users. It uses wireless technology that is generally recognised as an alternative to DSL (digital subscriber line) connections – high-speed internet connections that use telephone wires.
WBS's second company, Broadlink, is aimed at the corporate market. It offers a range of solutions, such as voice over internet protocol systems (VOIP), fibre infrastructure and wireless "last mile solutions". This refers to internet technology that combines radio, wireless networking and modems to produce fast, reliable connectivity, according to technical expert Robert Valdes on HowStuffWorks.com.
An Ellipsis telecoms expert, Dominic Cull, said this attracted many of WBS's high-profile clients.
"As a business, particularly in South Africa, you're looking for a reliable internet connection with a service-level agreement," he said. Companies had two options – either a leased line from Telkom, which guaranteed quality but required the physical laying of cables for infrastructure, or the alternate option offered by Broadlink – a leased line "replacement". "It's the same thing but in a wireless configuration. It's a lot quicker to install, because you're putting in radio devices rather than a line, and less expensive," said Cull.
Broadlink trades the product both as a retail provider and as a wholesaler.
It has attracted the likes of big business such as MTN and Anglo American. A video released by IBM in May last year claimed that iBurst has about 100 000 customers, but Cull said it was difficult to determine its share of the internet connectivity market because accurate statistics were unavailable. However, Broadlink occupied a strong position in the market, he said.
"They've found a niche and done very well in developing their business and becoming an integral part of the corporate connectivity landscape." But recent connectivity interruptions have riled customers, some of whom have complained about iBurst's lack of response to support calls.
Legal bid to counter Icasa
Wireless Business Solutions, in the first part of its application brought before the South Gauteng High Court, asked that its equipment be returned and that Icasa be interdicted from taking any further action against the company.
In the second part, WBS said it would ask the court to declare it is licenced to construct and maintain a radio network in six frequencies it operates in. It would also seek to have the suspension or cancellation of its licence to transmit set aside, as well as the search and seizure warrant granted to Icasa.
WBS said it would file a supplementary affidavit in respect of this motion within the next 10 days and, if opposing it, Icasa would need to make its intention known within five days and provide an answering affidavit within 15.
In his founding affidavit, WBS chief executive Thami Mtshali denied all the alleged contraventions of the Electronic Communications Act as set out in the warrant for search and seizure.
A previous version of this article incorrectly quoted Icasa spokesperson Jubie Matlou, which has now been corrected.