South Africa’s telecommunications industry has seen significant regulatory changes, however, spectrum and pricing issues need to be addressed for market liberalisation to have a tangible impact on lower prices and increased access for end users, said Neotel head of regulatory affairs Tracy Cohen.

Cohen added that because Value Added Network Services (Vans) providers now have the legal right to compete directly with telecoms incumbents, there would be a definite and inevitable increase in merger and market consolidation activity.

Yet, she emphasised that spectrum and pricing issues, which fell under the Independent Communications Authority of South Africa (Icasa) needed to be addressed. “For example, the license itself, while a welcome start for increased competition, is not sufficient in itself to significantly alter the dynamics of our local market,” noted Cohen.

Key for real change was how many of the new infrastructure licensees would ultimately use these licenses in their current form. “Even though a review of access regulations is currently under way in different processes, it is imperative that the interconnection framework, essential facilities and termination rates get urgently addressed for there to be any major shift in the South African market. Regulatory certainty is going to be critical and the rules of the game need to be well defined and the playing field needs to be leveled,” Cohen said.

She said that other factors slowing market entry included the issue of funding, which was a challenge to secure in the current global economy, and the current lack of progress on spectrum policy and allocation, especially high demand spectrum, which needed to be urgently addressed by Icasa.

“There is enormous talent in the local sector that needs to be unleashed in a liberalised market where clear and definite rules exist and incentives are in place to facilitate new entrants,” she stated.

Of course network build-out is extremely capital and skill intensive, said Cohen, and was viewed as extremely unlikely that many, if any, Vans would build networks. “Differentiation through product offerings and service levels will be key, but this will also depend on how joint ventures and strategic partnerships are formed and on these partnerships finding a specific strength to leverage,” she added.

“Efficient, equitable and effective spectrum allocation and numbering resource allocation requires urgent attention if new entrants and smaller players are to compete effectively with incumbents, but these interventions must be based on sound commercial and economic realities that will serve the public interest and the sector as a whole,” she said.

Regarding carrier pre-select and its implications for the industry and local business, Cohen said it was “overdue” and was required by law in 2006.

While carrier-preselect (which gives consumers a choice as to which service provider would carry their call) will certainly be welcomed by most in the South African telecommunications landscape said Cohen, adding that termination rates urgently needed to be addressed to make it a viable business plan, as the current context of interconnection rates questioned the economic sense of carrier pre-select.

In conclusion, Cohen said that more competition would bring more innovation, better service quality and customer choice, but again, asymmetric regulation was required, and the access framework for the sector needed to be resolved if this is to have any meaningful impact.