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South Africa: Regulators 'Should Stay at Home'
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Business Day (Johannesburg)
17 July 2008
Posted to the web 17 July 2008
Lesley Stones
Johannesburg
THE telecoms sector would fare better if the industry regulators stayed at home and relaxed rather than went to work each day, the outgoing CEO of Vodacom, Alan Knott-Craig, said yesterday.
At the very least, the regulator should be staffed with experienced and successful industry executives, so it would regulate with common sense and not with the mentality of government officials, he said.
The outspoken Knott-Craig will retire in September after heading Vodacom for 15 years, during which time he has seen the Independent Communications Authority of SA (Icasa) make some good decisions and many bad ones.
The only need for a regulator in the telecoms sector was to issue spectrum and allocate phone numbers sensibly, he told the French South African Chamber of Commerce and Industry.
Knott-Craig was particularly critical of Icasa's plan to issue numerous new licences for wireless spectrum, saying that would condemn 90% of the new entrants to fail as they would have insufficient spectrum to offer useful services.
Last month, Icasa announced plans to issue six new national licences for WiMax wireless technology, but industry players say each licence will come with too little spectrum to allow them to compete cost-effectively.
Icasa has also made contradictory statements about how many licences it would issue allowing voice and data carriers to build their own national networks, promoting concern that the licences would offer too little spectrum to be useful.
The intelligent allocation of scarce spectrum meant giving it to people who knew what to do with it and who would use it wisely, Knott-Craig said.
That ruled out the government-owned signal distributor Sentech, which was sitting with unused spectrum that should be clawed back and allocated to companies that would use it, he said.
Licensing an unlimited number of operators to promote competition was good in theory, but did not work in a sector with limited spectrum.
"When you license too many players, all you are doing is condemning 90% to bankruptcy. If you license too many people with too few resources you make them uncompetitive before you even start. It i s not an intelligent thing to do," Knott-Craig said.
If the regulator had to exist at all, it had to be staffed with people who understood economics. "You cannot be a government official if you want to regulate. Staying at home and relaxing will do more good for the industry than anything else you can do."
Cellphones have now reached about 92% of South Africans while i nternet access has touched only 10%.
There was no reason that should not reach 90% in 10 or even five years' time with a little innovation, Knott-Craig said. But to achieve that the industry had to be left alone "to play its game without miles of red tape around its throat and people trying to regulate how they run the business ".
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He also urged Icasa and the competition authorities not to punish large companies just for being large, if they had achieved their success in a competitive environment.
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