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Date : 19/05/2004
Source: Independent Communications Authority of South Africa
Title: M Langa: Media briefing on Under Serviced Area Licences recommendation


MEDIA BRIEFING BY MANDLA LANGA, CHAIRPERSON OF ICASA, ON THE RECOMMENDATION TO THE MINISTER ON THE APPLICATIONS FOR UNDER SERVICED AREA LICENCES (USALs), 19 May 2004

Good morning and welcome everyone.

This is a media briefing regarding the Authority's recommendation to the Minister of Communications on the applications received and adjudicated on for Under Serviced Area Licences.

The Minister of Communications in terms of section 34(2) of the Telecommunications Act issued an Invitation to Apply (ITA), which was published in Government Gazette No. 24204 dated 19 December 2002. The closing date and time for submission of applications was extended twice and finally fixed for 14h00 on 29 August 2003.

The Authority received 15 applications and published a notice advising the public of the number and names of applicants in Government Gazette No. 25498 of 23 September 2003. Save for the above number of applications the Authority decided, after lengthy deliberations, to disqualify the two applicants that failed to comply with some of the requirements of the ITA.

In accordance with Government Gazette No. 25591 of 14 October 2003, the Authority invited interested persons to inspect and submit written representation in respect of applications received. The closing date for written submission elapsed on 30 October 2003 and six written representations were received. The Authority published a Government Gazette No. 25868, inviting applicants to lodge written responses. The second closing date for written responses was set for 6 January 2004. However, despite the grace period, the Authority still did not receive any written responses. In the interest of time and to prevent unnecessary delays, the Authority decided that applicants must submit their written responses at the public hearings.

The applicants and all interested parties were advised of the schedule for these public hearings on 14 January 2004 through a notice in Government Gazette No. 25918. Public hearings were held in the home districts of the applicants. All applicants were afforded an opportunity to make a one-hour oral presentation. Thereafter, competing applicants, the public and Icasa USAL panel were afforded the opportunity of asking questions to the applicant.

Deliberation process

Deliberations took place in accordance with section 35 of the Telecommunications Act. The committee took into consideration all relevant information.

A three-phased approach was adopted, during which the committee first reviewed all applications in terms of Section 20 of the ITA and the Warrants and Representations, which were to have been provided under Section 12.4 of the ITA.

In the second phase, the committee reviewed whether there were any disqualifying factors regarding substantive violations of the Warrants and Representations or other requirements of the ITA.

In the third phase, the Council Committee (comprising of Councillors only) evaluated the remaining applications according to the criteria of section 21 of the ITA.

General findings

In deliberating on the applications the Authority made the following observations on six areas of significance and also made determinations regarding them.

Conflicting documents

Section 15.1.3 of the ITA prescribes that the applicant shall submit one original and twenty duplicate copies, as well as an electronic version on the CD-Rom. The ITA clearly indicated that such copies should be duplicates of the original. The Authority noted that some of the applicants did not comply with this provision such that written requests were made to those affected applicants to submit the required number of duplicate copies and/or the CD-Rom copy thereof.

Upon opening and examining the applications, the Authority noted that some application copies were materially different from both the original copy and in some instances from the CD-Rom copy. In these instances the Authority noted the provision in section 15.2 of the ITA, which states that in case of conflict the original copy shall prevail. The Authority has therefore decided that where conflicting information was found, the original copy of the application be considered as the document upon which it would base its decision.

In addition, regarding the submission of additional copies which contained additional information, the Authority noted the provisions of section 34(2)(b)(iii) read with section 34(3B) of the Act, that regulates the period and manner in which applications shall be lodged. The amendment or variation of applications after submission, in this case 29 August 2003, is prohibited by statute. The Authority therefore disregarded any information that was determined to have materially changed the application.

Shared consultants

The Authority decided to exercise its discretion in terms of section 12.8 of the ITA by not disqualifying any applicant on the basis of this provision. However, the Authority is of the view that, applicants are ultimately and solely responsible for the contents of their applications and compliance with the terms of the ITA.

Substantive invalidity

Where the Authority found applications to be substantially flawed, that is, in non-compliance with Clause 19 of the ITA, the Authority determined that such applications would be disqualified.

Binding effect

Section 13, of the ITA deals with the binding effect of applications. The Authority noted that some applicants had not considered the consequences of this clause in relation to their applications. In some instances applicants were, when required to clarify information at the hearing, unaware of some of the information contained in their applications. The information that such applicants were unaware of had far reaching corporate governance implications, as the applicants had bound themselves to contracts that were not sanctioned by the board of directors of the applicants. The Authority noted this to be tantamount to dereliction of fiduciary duties of such board members. This also brought into question the ultimate decision making capacities of such applicants despite the provisions in the founding legal documents protecting them under such circumstances.

Technical

Section 21.3.4 of the ITA sets no limitations on the type of technology that applicants may use in providing the service, but impresses on the importance of the quality and content of the Technical Plan. Most applicants proposed to utilise, amongst others, GSM, CDMA, Wireless Local Loop, corDect and LMDS technologies to provide their services.

The Authority, in evaluating applications, considered the overall cohesion of the ITA requirements and did not focus on the choice of technology individually. The Authority also noted the challenge facing most of the applicants in the technical area of their applications, as there seemed to be a general over reliance on the technology partners/vendors.

Civil servants

With regard to the ITA provision requirement that the applicants not have civil servants being part of this licensing process, the Authority noted that in some of the areas, many participants were civil servants. Most of these civil servants were however not directly involved but were second or third tier investors who in some instances may not have known that their entity was participating in the process and that there was a prohibition on their participation.

The Authority decided that this prohibition was in contrast to the very objectives of the licence and could materially affect participation by historically disadvantaged individuals who may also be civil servants. The Authority therefore decided to only apply this condition where civil servants had a direct conflict of interest or had the ability due to the level of their position in the civil service to influence the bid. In those applicants where it was found that senior management or those occupying positions of influence were civil servants, the Authority decided that affected applicants be informed to ensure that such persons relinquish their respective positions thereby addressing the compliance issue.

Recommendation

The Authority, after considering all relevant information hereby recommends the following:

Limpopo Province
(i) DC35-Capricorn District
Bokone Telecomms - Granted
Capricorn Telecomms - Refused
Limpopo Ya Rena - Disqualified

KwaZulu-Natal Province
(i) DC21-Ugu District Municipality
Thinta Thinta Telecoms - Granted
Ugu Wavetel - Disqualified
(ii) DC26-Zululand District
Kingdom Communications - Granted

Eastern Cape Province
(i) DC15-OR Tambo Municipality
Ilizwe Telecoms - Granted
(ii) DC12-Amatole District
Thethani Telecoms - Disqualified
Amatole Telecoms - Granted, pending the finalisation of the merger discussions with Uqalo Consortia members.

Free State Province
(i) DC20-Northern Free State District
Mamela Communications - Disqualified
(ii) DC18-Lejweleputswa
Bokamoso Communications - Granted, pending the removal of warehoused shares from the chairperson of the consortia to the community trust or any other legal instrument that will ensure broad based empowerment.

North West Province
(i) DC38-Central District
Ledimo Communications - Disqualified
Karabotel - Granted, pending submission of revised shareholding structure reflective of the community of the district
(ii) DC39-Bophirima District
Lonaka Communications - Refused
Karabotel - Refused

Issued by: Independent Communications Authority of South Africa (Icasa)
19 May 2004
Source: Independent Communications Authority of South Africa (http://www.icasa.org.za)

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