Icasa under fire over high fees
Telecommunication companies on Wednesday continued their strong criticism of the Independent Communications Authority of South Africa’s proposed licence fee increase 3% of gross annual turnover.
State-owned telecoms provider Telkom went as far as saying that the proposed fees were so high they would have a negative impact on South Africa’s economic growth.
Graham Keet, Telkom’s senior specialist for the regulatory environment, said: “[The] proposed licence fees are extremely high and largely unjustified. The licence fees will far exceed the cost for regulating the environment.
“We cannot afford to have regulations that discourage infrastructure development. Discouraging investment in infrastructure can cause lessening of growth in the country.”
Despite a successful bid by technology group Altech last year to allow more companies to receive licences that would allow them to self-provide infrastructure and services, Icasa’s proposed fees threaten to limit the entry of smaller players into the market and stifle the growth of established players.
Some companies are in line to receive two licences on Monday.
The new regulation could result in these companies having to pay as much as 6% of pre-deduction revenue.
This is a significant jump, considering that companies have — up until now — been only paying 0.1% of annual revenue to the regulator.
Gateway Communications, which was recently acquired by Vodacom, agreed that the fees were excessive.
Mike van den Bergh, Gateway’s chief operating officer, said: “A rise in fees from 0.1% of revenue to 3% equates to as much a 3000% jump.”
For some companies, especially small ones such as DBI — a broadband Internet service provider — this could be disastrous.
Julius Keraney, director of DBI, said the company was one of the 27 that would be receiving new licences next week.
Kearney said: “Icasa should say exactly why it is setting these fees; whether it genuinely is for regulation costs. Our preferred model of regulation should be that licences are set as a percentage of profits, rather than of revenue.
“Some start-ups may take years before they are even profitable, and if they are charged based on revenue, it’s doubtful that they would ever be profitable,” Kearney said.
“The purpose of the Electronic Communications Act is to present new opportunities for the public to benefit from new entrants,” he added.
Rudi Jansen, chief executive of MWeb, said though Icasa had proposed the increase as a cost-recovery method, the money would go straight to the National Treasury.
“We therefore feel that there is no reason to increase fees. We see it as a barrier to entry for new entrants into the market. Telecoms prices will remain high in a market that is already pricey,” Jansen said.
Though companies had slightly different concerns, such as Sentech’s request that it be exempt from paying fees as a state-owned entity, they all felt that fees should be kept below 1% of gross turnover
The hearings end today.
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