Outrage over planned telecom licence-fee hike

Value Added Network Services (VANS) operators are reeling in the face of yet another potential major setback in their ongoing battle to compete equitably within the South African telecoms industry, said John Holdworth, CEO of converged voice and data solutions firm ECN.

“Having recently won the right, after prolonged legal wrangling, to build their own networks, they now face a thirtyfold increase in licence fees should Icasa’s [Independent Communications Authority of South Africa] new draft regulations be passed,” said Holdworth.

In August a landmark high court ruling found that VANS were entitled to individual electronic communications network service (I-ECNS) licences, enabling them to develop and operate their own networks, as do Cell C, MTN, Telkom and Vodacom.

The court case was brought by Altech Autopage against Icasa, essentially to force the authority to issue a new category of telecoms licences to anyone who applied, rather than hand-picking a select few it deemed worthy.

Holdworth added that “the increase will impact the entire industry by raising costs for consumers, discouraging investment and delaying industry normalisation”.

“The proposal flies in the face of the Electronic Communications Act which aims to increase competition and reduce costs in the telecoms industry,” he said.

“While Icasa will at last issue the new electronic communication network service and electronic communications service licences, it is simultaneously putting up yet another barrier by proposing exorbitant licence fees,” he said.

VANS operators such ECN have until December 5 to submit comment on the draft regulations.

Icasa wants to finalise the fees before a January 19 deadline for conversion of all Telecommunications Act licences, which would include the VANS licences.

VANS currently pay about 0,1% of turnover derived from the licensed telecommunications service as annual variable licence fees and 0,2% of turnover derived from the licensed telecommunications service as a contribution to the Universal Service and Access Fund.


“Icasa now proposes that the annual variable licence fee be increased 30 times to 3% of gross revenue, less certain permitted deductions,” said ECN head of regulatory affairs Jeremy Macdonald.

“In addition, the definition of gross revenue is too wide and includes revenue from non-licensed services, such as that from handset sales and installations. This is ridiculous and inconsistent.

“In our view licence fees should only be calculated on revenue generated from licensed service,” he said.

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