The Independent Communications Authority of SA (ICASA) has proposed that licence fees for telecommunications operators be based on a graded royalty system and that upfront payments are done away with, says chairman Paris Mashile.
Speaking yesterday at the WiMax World 2008 conference, in Cape Town, Mashile said the regulator was awaiting approval on this proposal from the Department of Communications and National Treasury.
He expected this approval before the end of this month so that licences, in terms of the Electronic Communications Act, could be issued in August.
Mashile said the rationale for proposing a graded royalty licence system was that it would open the market to smaller companies and more competition. It would also eliminate the passing on of costs to consumers that usually happened with an upfront payment.
"We are thinking of a graded system based on a company's turnover. For instance, say a company has a turnover of R100 000, then we may ask for 2% of that. If a company has a turnover of R10 million, then we may ask for 5% of that."
Mashile said current licence fees contributed just over R2 billion annually to the fiscus, and National Treasury was anxious not to lose that income.
"If many more companies enter the market, then National Treasury will also benefit from the increased numbers of those organisations paying company tax."
Only certain licences
These licence fees relate only to individual-electronic communications network services (I-ECNS) and electronic communications services (ECSs), and do not include licence fees that will be levied for spectrum allocation that ICASA will deal with separately.
An I-ECNS licence is roughly comparable to a public switched telephone network licence in the defunct Telecommunications Act. An ECS licence approximates to a VANS licence in that law.
"As far as fees for spectrum licences are concerned, National Treasury is insistent that they reflect the true commercial value of those frequencies," he said.
Licences that will be issued next month will also relate only to those incumbent telecommunications operators, such as Telkom, Neotel and Vodacom, which will receive I-ECNS licences, and those value-added network services that are entitled to receive ECS licences.
Excluded from the August issuing of licences would be those VANS that want I-ECNS licences, as that process has been halted due to the court case brought by Altech Autopage last month.
By invitation only
Mashile said ICASA would issue an invitation for VANS to apply for I-ECNS licences. This would give effect to the ministerial determinations of September last year stating the regulator should consider if all VANS, or just some, are entitled to receive I-ECNS licences. However, he did not give a specific date.
Siyabonga Madyibi, director of regulatory affairs at Internet Solutions, says he is in favour of the proposed licence fee structure.
"If that structure is implemented, it will take a heavy upfront financial burden off the shoulders of companies."
Related stories:
Autopage takes ICASA, DOC to court
VANS asked to pay up
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