Wimax Rules Wishful [column]

THE new licences to allocate scarce wireless spectrum to the internet industry seem an example of how over-emphasising black empowerment can harm, not help, social and economic development.

The Independent Communications Authority of SA (Icasa) believes it can uplift black businesses by reserving WiMax licences for companies that are at least 51% black owned. But building a WiMax network from scratch will cost hundreds of millions of rands, and no black-owned players in this industry spring to mind as potential licence buyers.

Raising cash from loans will be difficult, since not many financiers are likely to fund a new entrant trying to challenge well-entrenched players such as Internet Solutions, MWEB and MTN.

Black entrepreneurs could win a licence and try to negotiate a joint venture with existing players who see WiMax as a way to expand their coverage relatively quickly and cheaply.

Many telecoms companies have black equity of about 30%. Perhaps Icasa hopes they will strike deals boosting that to 51%. But is WiMax worth the time and money these deals absorb? Icasa should relent.

Related terms: communications, equity, internet, joint venture, money, strike, wireless