When a telecommunications company wants to set up shop and operate in South Africa to provide internet and telephony services to consumers, they need to acquire specific licenses from the Independent Communications Authority of South Africa (Icasa), which handles all the regulation for the telecommunications and broadcasting sectors in the country.
This rule applies to voice over Internet protocol (VoIP) providers as well.
“The licenses for electronic communications are issued under the Electronic Communications Act (ECA) and the available service licenses can basically be divided into two categories: Electronic Communications Network Service (ECNS) licenses; and Electronic Communications Service (ECS),” explains Mitchell Barker, CEO of WhichVoIP.co.za, a directory site featuring a comprehensive list of Voice Over Internet Protocol (VoIP) providers in South Africa.
“An ECNS license allows a company to deploy and operate a physical network. It doesn’t matter whether the network infrastructure consists of fibre optic cables, copper-based lines, switches, or even radio equipment for running a wireless network. An ECS license is mostly for providers only, as it enables its holders to provide electronic communications services to customers over its own or via another company’s network.”
Using South Africa’s major fixed line operator Telkom as an example to highlight the differences between the two, Ellipsis – a niche consultancy providing specialist regulatory and compliance advice to the electronic communications industry – says that since Telkom has an extensive telephone and voice network which covers most of South Africa, the operator needs an ECNS to license that infrastructure.
In conjunction with that, it also needs an ECS license to provide voice and internet services to consumers. On the other hand, Internet service providers and even VoIP providers which might own some of their own hardware, but which mainly make use of and rely on other companies’ networks to provide their services, only require an ECS license.
Those licenses are then further divided into two subcategories each: the Individual ECNS (IECNS) which allows holders to roll out their own networks across a province or the entire country, and the Class ECNS (CECNS) for rolling out a network in a district or local municipality, allowing holders to provide services to consumers in that area.
ECS is also subcategorised to Individual ECS (IECS) for providing services to customers over an ECNS licensee’s network.
“This is the kind of license used by VoIP providers providing their customers with numbers taken from the National Numbering Plan,” Barker explains. “It can also be used by ISPs for providing services such as internet access, e-mail and virtual private networks (VPNs).”
The second subcategory is the Class ECS (CECS) license, which allows providers to offer all of the same services offered by IECS holders, except for voice services that require numbers from the National Numbering Plan. IECNS and IECS licenses are issued for twenty years, and Class ECNS and ECS licenses are issued for 10 years and are renewable by paying an annual renewal fee.
Icasa recently hiked up the fees for those licenses, a move which has many telecommunications providers up in arms, with some complaining that it will prevent them from being able to continue running their businesses and saying that it will have a adverse effect on broadband in South Africa.
“From the first of April this year, the regulator changed the methods by which annual license fee renewals are calculated. Before, service providers were allowed to determine and deduct costs based on a fixed percentage of the company’s revenue fee, but now the fee is based on a license holder’s overall revenue,” Barker says.
“Many of the companies assure consumers that the fee hike will not affect their retail prices and will therefore not be passed onto consumers.”
Barker warns that Icasa has been cracking down on companies that have defaulted on paying their license fees.
“In April, after accusing Gauteng-based telecommunications company Broadlink of owing them millions of rands in outstanding license fees, Icasa shut down the transmissions equipment at Wireless Business Solutions (WBS) Holdings, Broadlink’s parent company, resulting in 75% of Broadlink’s network being kicked offline.
“Apart from creating a major inconvenience, having you and your clients’ connections severed also creates major loss of revenue, so it is advisable that you pay up, renew your licenses annually and not fall into arrears.”