A proposal by Icasa (Independent Communications Authority of South Africa) to raise licensing fees by about 30-times has VANS (value-added network services) operators up in arms.
Althech Autopage recenlty won a landmark court victory allowing VANS operators to have their licences converted to allow them to self-provide but, if Icasa's proposal goes through it will place licences out of reach of many operators.
And, just when consumers could expect telecommunications prices to start dropping, 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 (ECA) which aims to increase competition and reduce costs in the telecoms industry," says John Holdsworth, CEO of ECN. "While Icasa will at last issue the new electronic communication network service and electronic communications service licenses, it is simultaneously putting up yet another barrier by proposing exorbitant license fees.
"We have only until 5 December to submit comment, as Icasa is of the view that it must finalise the fees before January 19 deadline for conversion of all Telecommunications Act licences, which would include the VANS licenses."
VANS currently pay approximately 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" says 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 license fees should only be calculated on revenue generated from licensed services."
ECN estimates that the proposed new licensing fees, based on last year's National Revenue Fund financial report, will enable Icasa to raise approximately R2,1-billion per annum from the telecoms industry alone.