Johannesburg — WIDESPREAD criticism of "unworkable" demands made on bidders for new licences to offer high-speed internet access have forced the regulator to reconsider its stance.

Six new wireless licences have been earmarked for companies at least 51% black-owned, provoking an outcry with claims that the only companies black enough to win licences lack the cash, skills and the technical know-how to operate a national network.

The furore has prompted the Independent Communications Authority of SA (Icasa) to backtrack and ask the industry to comment on its licensing requirements.

Although spokesman Sekgoela Sekgoela said the conditions were final, Icasa wanted to know what the industry thought. "These are the final decisions, but people can comment on the decisions," he said.

"We want to gauge what the industry thinks about them."

Sekgoela would not say whether comments to be submitted by August 11 would influence a reworking of the heavy conditions.

Icasa called for 51% black equity to boost empowerment, but it has probably been surprised by the vehemence of protests. The rules not only prejudice the traditional white-owned major players, but also make it unnecessarily tough on potential black bidders.

The new rules stop licence winners merging with larger players for at least five years, so they could not use the licence to strike a deal to strengthen their business. That would force them to fund the network themselves, and financiers are unlikely to back a new entrant in a sector dominated by Telkom, MWeb, Internet Solutions and the cellular operators.

Icasa spectrum manager Mandla Mchunu has already admitted it will be difficult for firms that meet the criteria to succeed in building a national internet operation.

Icasa will face a deluge of written complaints, since major technology companies are keen to win the licences for WiMax, a technology that can cover large areas and carry high volumes of traffic relatively cheaply.

Companies are also concerned that the licences only grant 20MHz of spectrum, giving them too little bandwidth to operate effectively.

Internet Solutions's chief regulatory officer, Siyabonga Madyibi, said 51% black ownership was a blatant contradiction to Icasa's existing policy of issuing licences to companies that are 30% black, and he would lobby for that to be relaxed.

The high black equity demand would deter foreign investors and deprive licence winners of foreign expertise, said Kathleen Rice, a director at Werksmans Attorneys.

SA's telecoms industry had been boosted by foreign investments and the expertise that came with it. As companies that qualified for a WiMax licence were likely to be relatively new, investors would be loath to take a minority stake that gave them no control over the business, Rice said.

One of the few companies that believes it has the cash and the skills to succeed is 65% black-owned UniNet, chaired by the former Telkom CEO, Papi Molotsane.

UniNet runs urban networks and has sufficient resources from financiers to plan a R1,6 billion expansion. Spokesman Sehapa Moeletsi said UniNet did not know of any other black players who could do the job

UniNet founder David Jarvis said telecoms companies had not transformed to any significant degree. "The bigger players are a bit of a disgrace, to be honest, and that's a very real concern for Icasa," he said.

UniNet was far more concerned about the low level of spectrum offered with the licences as operators needed at least 30MHz to offer a wide range of voice, data and video services, Jarvis said.