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Johannesburg - Telecommunications regulator Icasa's requirement that firms that apply for WiMax spectrum should have 51% black ownership is "counter-productive".
So says Werksmans director Kathleen Rice, whose comments follow Icasa's invitation to the public to comment on its decisions on the licensing of the remaining radio frequency spectrum in the 2.6 and 3.5 GHz bands - which is needed to be able to offer wideband wireless connectivity, or WiMax.
The decisions were published in the government gazette 31 350 on June 17 this year.
In order to qualify for spectrum, players must first have an electronic communications network dervice (ECNS) licence under the Electronic Communications Act.
While Icasa is busy converting old licensees with the right to build their own networks under the old legislation into ECNS license holders, the process of converting some value-added network service (Vans) licensees into ECNS licence holders has been put on hold by a court battle launched by Altech Autopage Cellular.
However, once this process has been completed, then Icasa would open applications for WiMax spectrum.
But few Vans licensees have 51% black ownership, nor does it seem they'd want to relinquish control for the privilege of getting hold of spectrum.
Deprived of foreign expertise
Rice said Icasa's decision on WiMax empowerment ownership would not encourage future foreign investment and new entities would be deprived of foreign expertise.
"Icasa appears to have overlooked the economics of empowerment. Empowerment works where BEE is seen as adding value to an entity and investment is relatively low risk as the investor has some control over its investment in a company," Rice said.
Being required to have 51% BEE ownership meant the investor that had financed the company would not have control over its investment, increasing the risk.
Rice said although the Electronic Communications Act made provision for Icasa to set ownership requirements for new entrants at 30% or above, there was no precedent elsewhere for a 51% - controlling stake - ownership requirement.
The WiMax ruling suggested that Icasa might wish to extend this BEE ownership requirement to other areas under its purview, Rice warned.
Written comments to Icasa regarding its decisions must be submitted by 4pm on August 11.
- Fin24.com