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. <\/p>\n
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.<\/p>\n
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.<\/p>\n
“We cannot afford to have regulations that discourage infrastructure development. Discouraging investment in infrastructure can cause lessening of growth in the country.”<\/p>\n
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.<\/p>\n
Some companies are in line to receive two licences on Monday. <\/p>\n
The new regulation could result in these companies having to pay as much as 6% of pre-deduction revenue.<\/p>\n
This is a significant jump, considering that companies have — up until now — been only paying 0.1% of annual revenue to the regulator. <\/p>\n
Gateway Communications, which was recently acquired by Vodacom, agreed that the fees were excessive.<\/p>\n
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.”<\/p>\n
For some companies, especially small ones such as DBI — a broadband Internet service provider — this could be disastrous.<\/p>\n
Julius Keraney, director of DBI, said the company was one of the 27 that would be receiving new licences next week.<\/p>\n
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. <\/p>\n
“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. <\/p>\n
“The purpose of the Electronic Communications Act is to present new opportunities for the public to benefit from new entrants,” he added.<\/p>\n
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.<\/p>\n
“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. <\/p>\n
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 <\/p>\n
The hearings end today.<\/p>\n