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ICASA writes off R75m

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 23 Oct 2014
The ripple effect of ICASA fighting WBS over its six disputed licences would be that the business of WBS would be impacted and so would its end-users.
The ripple effect of ICASA fighting WBS over its six disputed licences would be that the business of WBS would be impacted and so would its end-users.

SA's historically under-resourced telecoms regulator has written off about R75 million in licence fees from iBurst and Broadlink parent Wireless Business Solutions (WBS) on the advice of senior counsel.

This comes after a protracted court battle between the Independent Communications Authority of SA (ICASA) and WBS. The court case was recently quietly put to bed after the two entities reached an out-of-court settlement that saw the broadband provider pay the last instalment off its licence fee debt last month - an amount of R20 million.

According to ICASA CEO Pakamile Pongwana's submission to the regulator's council - outlining WBS' proposed payment plan submitted on 29 May - the regulator was faced with the decision of whether to accept WBS' payment proposal - or oppose the company's application for leave to appeal a High Court judgment against it, made six months ago.

In the latter case, the submission indicates, ICASA would end up walking away from the whole skirmish without having recovered a cent from WBS. Accepting the proposal - which does not include three years of arrears (despite WBS continuing to use the six disputed frequencies) - would mean ICASA would recover R76.5 million of the R151.4 million its engineering division calculated WBS owed it.

Pongwana indicated there would be little merit in seizing the six disputed licences in WBS' possession. "The only advantage for ICASA would be that the spectrum becomes available again for other potential applicants. The ripple effect would be that the business of WBS would be impacted and so would its end-users."

Legal loophole

WBS' proposed payment plan does not include unpaid licence fee amounts for the periods 2010/2011, 2011/2012 and 2012/2013. Pongwana says this is where ICASA sought legal opinion, in October last year, from senior counsel.

"The senior counsel opinion indicated that, if the licence automatically expired due to non-payment of licence fees, then the obligation to make payment of the said fees falls away with the expiry of the licence." The senior counsel also advised ICASA it could not recover a fee for a licence that ceased to exist and was not renewed. The only remedy for the authority would be in penalties, it was told.

However, Pongwana notes taking the penalty route would also prove fruitless. ICASA could have initiated an "unjust enrichment" case against WBS, he says, but the criteria for a successful plea in this regard are prohibitively strict.

To successfully claim unjust enrichment to recover arrears, ICASA would have had to prove WBS was enriched and ICASA was impoverished; that WBS' enrichment was at the expense of the regulator and that the enrichment was unjustified. This, added to the possibility of the court criticising ICASA for not acting in a timely manner, meant the regulator's chances of succeeding with such a claim were "not good".

WBS' recently-appointed CEO Clinton Holroyd has confirmed the company's licences have been paid up, "and all spectrum frequencies are being utilised".

Missing minutes

Meanwhile, Democratic Alliance shadow minister of telecoms and postal services Marian Shinn in August kicked up a fuss around the fact that ICASA had not made public the minutes of its council meetings, in particular the meeting at which the WBS settlement was discussed.

According to the ICASA Amendment Act, minutes of meetings of council need to be made public within 30 working days from the date of the meeting at which the minutes of the previous meeting were confirmed by council as being correct, unless information is determined to be confidential. Also, any decision made by council relating to a licensing or regulatory matter must be made available on its Web site and placed in the ICASA library.

Dominic Cull, owner of Ellipsis Regulatory Solutions, says the WBS settlement sets a precedent for future disputes and is therefore relevant to the public. "I don't see any reason for this issue to be considered confidential."

ICASA had not responded to request for comment by the time of publication.

WBS is currently being eyed for acquisition by ICT company Multisource, shareholders of which include former financial bosses Michael Jordaan (ex First National Bank CEO) and Paul Harris (founder of First Rand Group).

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