Daddy, are we there yet?
WHILE SOUTH AFRICA’S telecommunications industry celebrated regulator Icasa’s announcement it would convert all value added network service provider (Vans) licences into fully fledged operator licences by mid-January, there was some frustration because they had to wait almost another two months.
The wait is understandable from the perspective that Icasa must convert all 300 or so Vans while also solving the issue of licence fees. From mid-December, SA grinds to a virtual halt until mid-January, so there are only a few more really productive weeks left this year.
However, for a player such as Altech – which took the fight for its right to hold an electronic communications network services (ECNS) licence (as well as an electronic communications services licence, or ECS) to the courts and won the same right for every other Vans operator – the wait must be frustrating.
In August, the High Court ruled Vans operators had the right to provide their own networks since a 2005 ministerial determination and hence should receive both licences. But Icasa had put the licensing of Vans on hold pending the outcome of an attempt by Communications Minister Ivy Matsepe-Casaburri to appeal the judgment. Her attempt was unsuccessful.
John Holdsworth, CEO of ECN, a voice over Internet protocol (VoIP) operator and Vans licensee under the old Telecommunications Act, says there’s no point in trying to hurry up the procedure through the courts at this time of year. Operators will just have to provide the information Icasa has asked for and wait for their licences to be delivered.
Icasa issued a notice on 14 November in the Government Gazette confirming Vans licences would be converted to ECS and ECNS licences. It requires written submissions before 5 December from existing Vans operators on how it should proceed with converting their licences into ECNS licences. As part of that, it wants information on whether each Vans wants a class (localised area) or individual (large area, such as a national network) licence. Vans must also indicate which geographic area they will cover and undertake to start network rollouts within 12 months of the licences being issued.
Icasa said their written representations should also include a comprehensive technical plan, plus "voluntary obligations" on what they intended to contribute to SA’s socio-economic development.
Holdsworth describes the delay and the process the regulator has put in place for licence conversions as "posturing" and an attempt to appease all sides.
He says although the courts had ruled all Vans licensees were entitled to ECNS licences – period – there was an implicit threat in that Icasa was asking for a network plan it could use as a basis for reviewing each licensee a year down the line. This is a concern, Holdsworth says.
Another concern is the possibility the Communications Minister could still appeal to the Supreme Court or Chief Justice that she should have the right to appeal.
The remaining concern – and the most significant of the three – is the issue of licence fees. Icasa published draft licence fee regulations on 24 October and wants comments by 5 December.
Icasa proposed licence fees of 3%/year of gross revenue for both individual ECNS and ECS licences and 1,5% of gross revenue for class ECNS and ECS licences, plus certain additional upfront fees.
The regulator said the framework for the determination of licence fees was that individual licensees should pay more than class licensees, the duration of the licence should be a key determinant of cost and there should be a threshold of perhaps R1m, under which smaller companies only paid a marginal annual fee. And while the cost of licences should cover the cost of regulating the market, licence fees shouldn’t be a barrier to entry.
Holdsworth says in an industry with margins ranging between 7,5% and 15%, annual fees of 3% of revenue could be a bit hefty. But that would be an issue for licence application hearings. The important thing for now is that, in principle, Icasa will convert all licences by 19 January – a key victory for the industry.
Proposed annual licence fees
AS A PERCENTAGE of gross revenue (less certain allowable deductions):
* Individual ECNS: 3%
* Individual ECS: 3%
* Individual commercial broadcasting services: 2,5%
* Class ECNS: 1,5%
* Class ECS: 1,5%
* Source: Icasa’s draft general licence fees regulations
Telecoms regulatory discussion
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