Telkom handed bruising court defeat over lease of ducts

The high court in Pretoria has handed a significant and potentially ground-breaking legal defeat to Telkom, and victory to Vodacom, over the use of the partially state-owned telecommunications operator’s ducts used to carry broadband cables.

In a judgment handed down on 15 August 2020 in a case brought by Telkom against communications regulator Icasa and Vodacom, judge Neil Tuchten found no basis to the operator’s claim that the regulator erred in allowing Vodacom access to Telkom’s telecoms ducts in various housing estates in the Western Cape. It comes after the supreme court of appeal also found in favour of Vodacom, and against Telkom, in a related case heard last year.

If Telkom does not appeal the judgment, it could have far-reaching implications for the sector and could, in theory, prompt a flood of applications from companies seeking access to ducts owned by other telecoms providers. Telkom told TechCentral on Tuesday that it has not yet decided whether it will seek leave to appeal the judgment. “Telkom is currently reviewing the judgment and has yet to make a decision on the next course of actions,” a spokeswoman said via e-mail.

In its application to the high court, Telkom sought to review and set aside a decision made by Icasa in 2018 that under section 43 of the Electronic Communications Act, a request by Vodacom to lease access to Telkom ducts in 15 housing estates in the Western Cape was reasonable. Section 43 of the act deals with the leasing of facilities between licensed operators.

The dispute began in August 2015 when Vodacom wrote to Telkom asking it to lease to it space in the ducts in the 15 estates so it could run fibre cabling through them and connect residents to the Internet. Telkom refused.

Sufficient space

Vodacom then approached Icasa for clarity and to investigate the matter. In October 2017, in a preliminary report, the regulator concluded that there was sufficient space in most of the existing ducts for additional installations, while keeping 25% spare capacity for “cable kinks and crossovers”.

Icasa concluded that in 13 of the 15 estates in question, further roll-out of fibre services was technically feasible. It concluded that it was “generally technically feasible” for Telkom to lease space in the ducts.

The authority concluded in its preliminary report that it would be more cost-effective to require Telkom to lease space in its ducts rather than requiring Vodacom to lay its own ducts in the estates. It said infrastructure sharing, where feasible, was preferable to a situation where a new service provider had to incur the additional costs of laying down ducting.

Icasa published its final report in March 2018. Its conclusions substantially conformed to its preliminary preliminary report.

Although Telkom complained about the methodology used by Icasa, Telkom produced no evidence to show it produced an incorrect result, Tuchten said in his judgment. Telkom was aggrieved by Icasa’s decision and on 4 June 2019, an order suspending Icasa’s decision in favour of Vodacom was granted following an urgent application by the company to the high court.

But in his judgment, Tuchten said: “Section 43 of the Electronic Communications Act makes it mandatory for any licensee to lease electronic communications facilities to any other person who qualifies … and requests such a lease unless such request is unreasonable… Only where the request is unreasonable may the licensee (Telkom) … refuse to proceed to the negotiation phase” where a reasonable lease price must be hammered out.

The judgment said the act and the relevant regulations supporting it contemplate that a dispute of this kind should be decided in a matter of days. “To the great detriment of potential consumers, this dispute has, however, stretched into years.”

The court found that the submissions by Telkom’s legal team were largely undercut by the evidence of the company itself that it wants to do precisely what Vodacom asked a lease to achieve: to utilise the available space in the ducts to install further fibre-topic cables.

“To my mind, once Telkom asserts that it wants to lay cabling where Vodacom wants to lay cabling, it admits, by implication, that what Vodacom wants to do is both technically and economically feasible and would promote the efficient use of networks and services,” the judge said.

‘Review must fail’

“How can you argue that what your competitor wants to do is not technically and economically feasible and contributes to the efficient use of networks and services when you are planning to do the very same thing?

“I therefore find that Telkom has failed to establish that Icasa came to its conclusions on anything other than reasonable grounds. To this extent, the review must fail.”

The judge also shot down a claim by Telkom that it would have made more sense for Vodacom to share fibre cables with it, rather than sharing the ducts. “This would have required that Vodacom accept data from one of Telkom’s associated companies and sell it on the retail market. Entirely understandably, Vodacom did not want to become one of Telkom’s (associate’s) customers. That would have put Vodacom in the position of competing with its own supplier, which would then have enabled Telkom to set the price for, and exercise measures of control over, both quality and quantity of product.

“It was, in my view entirely, reasonable for Icasa to determine, in effect, that Vodacom should be empowered to enter the market upstream of Telkom’s wholesale supply arm. That route was more competition-enhancing, and thus more advantageous to consumers, than the alternative.”

In dismissing Telkom’s application, the court ordered the company to pay all costs.  — (c) 2020 NewsCentral Media