Regulatory rot

As communications technology becomes more complex and regulatory processes more dense, Icasa is in more of a mess than ever.

Walking into the Sandton offices of the Independent Communications Authority of South Africa (Icasa) tells you more than you need to know about the regulator. There are dead flowers at reception and the distinct smell of stale food infused with industrial cleaner at the stairwell.

Upstairs, litter lies on the lobby floor, below a notice board haphazardly plastered with government notices. Before reaching Paris Mashile’s office, we pass yet another dying bouquet.

Mashile looks weather-beaten. Lately he’s battled cellular operators about shoddy service levels, faced a fallout from the Vodacom debacle and had a scuffle with the media over being “quoted out of context”.

“Business is nothing but warfare,” says Mashile. “How do I defeat my enemy? How can I achieve my objectives? How am I going to win the war?”

If it’s been war, Icasa is licking its wounds. A sustained period of talent poaching has left the regulator weak, with industry pointing fingers at delays, missed time frames, a lack of capacity and exhausting regulatory processes.

“Look at all of the delays and incomplete processes. These reflect a lack of institutional capacity created by the regulator’s revolving door,” says Alison Gillwald, associate director of economic policy centre The Edge Institute. “The lateness of the turnaround on the Vodacom listing leaves a clear impression of an organisation without all of its ducks in a row.”

A strongly outspoken critic of Icasa’s performance, Gillwald points to a number of incomplete regulatory processes. These include the regulator’s public hearing processes, interconnection rates, essential facilities and licensing components that are incomplete because of delays.

“I don’t think the telecommunications operators deliberately poach talent to make it difficult for the regulator, but it would be crazy for them not to exploit any kind of strategic advantage to improve their bottom line. This has hurt the regulator and is certainly one of the contributing factors to the lack of institutional capacity and ability to regulate effectively.”

Delays, delays and more delays
Former Icasa councillor and executive head of regulatory affairs for Neotel, Dr Tracy Cohen, begs to differ: “It is a well-known global strategy to poach and delay. This yields certain benefits, but we have got to a point where the delay is only of benefit to certain larger companies. Most in industry would rather have matters finalised so that there is regulatory certainty.”

Cohen, who was poached from Icasa last August, talks about a “four d” strategy in the industry which goes: “Delay. Deny. Debate. Deliver.”

“If the environment does not benefit you, then part of your strategy would be to delay the environment. Only if it benefits you, would you seek resolution,” she says.

Icasa has suffered badly by being a training ground for industry. The regulator haemorrhaged talent in 2006 when a mass exodus of senior staff saw more than half of its top brass leave. The same year witnessed the suspension of CEO Jackie Manche, who was charged with transgressing the Public Finance Management Act. Charges were dropped after her resignation in 2007. Icasa head-hunted Karabo Motlana from Cell C with the specific mandate to clean up the mess.

“We stemmed the tide. We used to haemorrhage but the turnover has minimised,” says Mashile, who adds that staff turnover is less than 20%, which compares well with the industry average. “The salary structures have been reviewed and the environment is more conducive to people wanting to work for the organisation,” he says.

Icasa also invests more heavily in training now, with 3% of employee salaries earmarked for up-skilling. The problem is systemic.

“There was a problem that Icasa couldn’t retain staff because salaries were low, but my understanding is that the salaries have benchmarked equal to, or above, what industry is paying,” says Cohen. “It can’t be a salary issue but rather about an issue of creating a work environment or career path conducive to retaining talent. It may also have to do with job satisfaction.

“There are some incredibly skilled individuals at Icasa, so the question must be around work-flow design and systems. There are no frameworks for turnaround times or operating levels, which has always been a problem. This is a public-sector issue and quite frankly it is not good enough to say the organisation is based on “Batho Pele Principles“. Sometimes processes take so long they get bypassed in terms of relevance.”

Cohen adds that by simply targeting quick wins the regulator could make major strides:

“The regulator has to decide which processes must be prioritised. There are a number of processes which, if brought to resolution, would be major wins. If it just resolved the interconnection fees and access regime it would have a huge impact on the industry and on consumers. What is needed is a smarter, leaner operation. I don’t buy the lack of skills argument; it is about how the skills meet with the systems, or lack there of, at the regulator.”

Tough life
Life isn’t going to get easier for Icasa. The increasing complexity of communications technology has contributed directly to regulatory density at a time when Icasa has lurched into a reputation crisis. The Vodacom disaster saw industry allegations of government meddling with the regulator, while economists and analysts called for heads to roll.

“Regulation and policy is becoming increasingly complex,” says Dr Andrew Barendse, group executive of regulatory affairs at Telkom and an associate professor at the Wits University LINK Centre. “In South Africa you were very lucky five years ago if you got one draft regulation every six months. Now you are dealing with four regulations every month out of the Electronic Communications Act alone that you need to have written and oral submissions for. Often this requires technical analysis, legal analysis, financial analysis and consultation with a range of specialists, including engineers and specialist regulatory economists.”

“The environment is complex, changing and the demands are going to grow,” says Luci Abrahams, director of the LINK Centre. “Delays are unacceptable because they have a stifling effect on our economy in many, many ways. They have a crippling effect on the small enterprise sector.

“All sectors rely on ICT in the same way that they rely on electricity or roads, so when Icasa adopts a certain position it is not only the ICT sector that suffers, but the broader economy. There are knock-on effects all the way down to the banking, finance, automotive, commercial and retail sectors. Each is affected by the decisions the regulator makes. What is certain is that Icasa needs to be reinvented.”

Barendse says capacity problems at Icasa have directly affected investment in the ICT sector. “The regulator has two fundamental roles. To stimulate competition and enable sufficient investment in the sector and when the regulator does not have the resources it generally affects the second role. Because there is no clarity, no consistency and no certainty for operators we tend to invest less.”

Capacity is not just a problem at Icasa, says Barendse, who believes the chaos starts upstream. “This whole thing starts with portfolio committee in Parliament. Icasa can only implement what is pursuant to the ECA. If the members of Parliament that formulate the policy framework are not empowered and competent then you are going to have a problem.”

Back at Icasa, Mashile spends much of his interview time detailing new systems that have been put into place to enhance efficacy and capacity.

“Whatever we do will be done non-discriminately, objectively, transparently, effectively and speedily,” says Mashile. “And we will do so without fear of favour, either from commercial interests or even from the government.”

On delays and efficiency, he says: “We are certainly flooded and we are doing our level best in that kind of environment. There are challenges there. But you cannot just have a bloated organisation, so you have to put systems in place, automate, and streamline things … you know. You can look at technological means by which you can fast-track issues.”

He declines to comment on the Vodacom process, the most damaging reputational crisis Icasa has faced this year. “The post-mortem may flush out some of the challenges we have been having.”

Interview over, Mashile fiddles with his phone, saying he doesn’t know how to work the device, and leads the way out of his office, past the dead flowers.