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Issue Date: June 2007

Orion telecom MD calls for action on telecommunication acts

14 June 2007

South Africans – corporations and consumers alike – continue to anticipate the rollout of two important telecommunications acts. Are they worth the wait? Jacques du Toit, MD of Orion Telecom, says yes.
The main purpose of the Electronic Communications and Transactions Act (ECT Act) is to drive deregulation. Thus far, the ECT Act has paved the way for value added networks (VANs) to interconnect – interconnection is the physical linking of a carrier's network with equipment or facilities belonging to another carrier, allowing traffic from one network segment to be transferred onto another network. “VANs route telecommunications traffic in the most cost effective manner because they are in a position to aggregate traffic across all network providers and then to decide on the best route for that traffic,” says Du Toit. “This has been a key development in the deregulation of the sector.”
In theory, deregulation will enable the market as a whole to drive prices down because it puts an end to Telkom’s monopoly and allows for competition. The benefits of a competitive market go beyond cost reduction, however, to include factors such as vastly improved customer service, better infrastructure and general quality of service.
In practice though, says Du Toit, the rules of engagement need to be defined more appropriately. “Delays in market deregulation provide ample proof of how distant the dream of deregulation remains. The processes around interconnect agreements, regulation of pricing, licence types and spectrum management are all matters that have yet to be decided on. In the meantime, the corporate world continues to carry the costs of those delays.”
Similarly, the closely related Independent Communications Authority of SA (Icasa) Amendment Act, signed into law by president Mbeki a year ago, has yet to come into effect. The law, which governs the telecommunications, broadcasting and postal regulator, ICASA, had to be changed in order to bring it into line with the ECT Act.
The effective date of the Icasa Amendment Act is eagerly awaited because it too will enable the reduction of telecommunication costs, which remain among the highest in the world.
On the question of cost reduction, however, Du Toit sounds a cautionary note: “Suppliers need to wary of prices falling below a certain point. You cannot drop costs to the point at which it becomes impossible to grow your network infrastructure. Should that happen, we will have a scenario in which low costs come at the expense of quality of service. The market will have to ensure that suppliers make a sufficient margin to enable infrastructure growth and maintenance.”
Are either acts adding value to the local telecommunications industry? Du Toit says they have played a vital role in setting the ball in motion. “We have the laws in place, so now we need to take action. We need implementation. Only then will we be able to measure the true impact of both on our beleaguered telecoms sector.”

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