A Closing Window of Opportunity: Under-Serviced Area Licensing in South Africa

Alison Gillwald
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Alison Gillwald: LINK Centre, Graduate School of Public and Development Management Witwatersrand University Box 601, Wits, 2050 South Africa

Information Technologies and International Development, 2005, vol. 2, issue 4, 1-19

Abstract: Technological innovation and the decreasing costs of wireless and other technologies, combined with progressive policy and regulatory environments, have resulted in the provision of telecommunication services in remote areas thought unserviceable by incumbent telcos in Latin America, Central Europe, and Asia. In line with the increasing number of success stories in other parts of the world, the South African government, as part of the policy of "managed liberalization" of the telecommunications sector, lifted the monopoly provision of telephone services in under-serviced areas by permitting smaller-scale entrants into the telecommunications market.Emerging from the second round of telecommunications policy reform in 2001, following the initial reforms to the sector in 1996, it was anticipated that these special operators would be licensed in 2002. Although licenses were finally granted following several licensing delays in June 2004 to seven applicants (three conditionally) from the ten areas demarcated in the first round, further delays in the final issuing of these licenses meant these licensees were only able to become operational in 2005.With the Ministry of Communications' latest policy directives on further liberalization of the market, which allows for some of the services previously reserved for Under-Serviced Area Licensees (USALs) to be more widely available from February 2005, just prior to the underserviced area licensees coming on stream, the window of opportunity for these small-scale new entrants may have closed.This paper assesses the degree to which policy and regulatory conditions promote the viability of these operators and facilitate their evolution as business and developmental models. Drawing on international experience, the policy and regulatory framework for these licenses is assessed.-super-2 The paper focuses specifically on other jurisdictions where similar regimes have been introduced as part of a national policy rather than on the wide range of pilot projects deploying innovative technologies that may provide low-cost solutionsbut which are not scaled up or formally implemented.-super-3 The key success factors in these jurisdictions are weighed in relation to the sustainability of the underserviced area operators (often referred to as regional or rural operators in other jurisdictions) under the conditions that exist in South Africa. Finally, it provides some lessons for other developing countries wishing to consider the South African experience. Copyright (c) 2005 Massachusetts Institute of Technology.

Date: 2005
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