ISPA said that it is especially pleased that ICASA has moved to adjust its proposed licence fees for the new electronic communications network service (ECNS) and electronic communications service (ECS) licences to more realistic levels. While ISPA is still researching the new structure, it says the proposed new licence fees of 1.5% of operating profit generated from licensed activities is certainly far more palatable than the initially proposed levy of 3% of annual gross revenue.
The ISPA welcomed the fact that ICASA recognised the deficiencies in the first draft of the regulations and set out to remedy them. Dominic Cull, one of ISPA's regulatory advisors, said: "The decision to reduce annual licence fees and to base them on gross profit, as opposed to gross revenue, is a major step forward for the industry, which will remove many of the difficulties that have bedevilled the calculation and levying of licence fees in the past under the Telecommunications Act."
The Department of Communications and ICASA had, perhaps, previously worked under the assumption that companies in the telecoms industry were making excessive profits when it drew up the first draft of the regulations, said Cull. However, it is only the incumbent operators with significant market power making excessive margins in the telecoms industry. The previously proposed 3% of gross revenue may have been realistic for incumbents who have enjoyed strict market protection in the past, but did not take the 500-plus newly licensed operators into account.
Many smaller operators and ISPs are struggling to remain competitive. The initially proposed licence fees in the first draft regulations would inevitably have resulted in higher costs to consumers.
Cull said that ISPA particularly appreciates ICASA's proposal to exempt small businesses from the obligation of paying licence fees, as this will facilitate the entry of more small and medium-sized enterprises into the telecom market.
"Apart from encouraging real competition right at the grassroots of the telecom industry, such a move would no doubt facilitate transformation and dovetail nicely with ISPA's initiatives to train entrepreneurs from disadvantaged backgrounds who wish to start an ISP, Internet café or hot-spot service," he added.
ISPA does have some reservations about the latest draft regulations, especially insofar as administrative fees are concerned. It believes that the proposed fee of R50,000 for changing a shareholder or company name for licensed service providers is extreme. It also maintains that the interest rates and penalties proposed for late payments seem harsh.
