I HAVE figured out why I don't need to watch soap operas. That's because, as a journalist on the telecommunications beat, I have ringside seats to my very own soapie.
It plays itself out on a day-to-day basis, providing me with endless material for stories.
And, as in "real-life" soapies, the characters never seem to die, proponents shack up and part and the plots are recycled regularly.
The next chapter in the drama is going to be what regulator Icasa finally settles on charging licensees for their new licences.
This comes after these licensees - with the help of Altech, the hero of the hour - recently won the right to become fully-fledged telcos which can build their own networks, be allocated numbers on the national numbering range and participate in number portability, among other things.
Licence fee controversy
The most controversial part of the proposed new licence fees will undoubtedly be what the old value-added network service providers (Vans) paid in the past, compared to what they will pay as fully-fledged telco operators with electronic communications network service (ECNS) and electronic communications services (ECS) licenses.
For these licences - with the provider offering services on a national scale, rather than a localised area like a municipal district - Icasa wants to peg licence fees at 3% of gross annual revenue, less Vat and certain allowable deductions, as well as facilities leasing charges and leased-line costs.
For an alternate telco like Vox Telecom - I use the example because it is listed and hence its financials are transparent- this could set it back by as much as R48m a year (this only assumes the deduction of Vat, not other allowable deductions).
This is more than the entire profit it made in the 2008 financial year, although this wouldn't have been the case were it not for the R61m in exceptional costs relating to the Dealstream debacle.
Although the figure may be a little inflated by not taking deductions and costs into account, it's safe to say it will lob a substantial portion of operator's margins off from the word go.
Unlisted alternate telco ECN says the operators will have no choice but to pass these costs on to consumers, negating the supposed benefits that the Electronic Communications Act should bring. It says the proposed new fees constitute a thirty-fold increase for the Vans operators, discourage investment and delay the normalisation of the industry.
The quantum of the proposed increase aside, the principle of rights and obligations for telco operators is one worth touching on in this regard.
This principle is that licensees with many rights should pay for those rights. This payment can be financial, in the form of licence fees which go towards regulating the industry, and in the form of more tangible obligations, like rolling out services to under-serviced areas.
Those with fewer rights should also have to pay - but a far lower amount commensurate with what they are allowed to get up to.
How much is too much?
Vans, under the old act, were the poorer second cousins to just about every other licence category. As a result, they paid very low fees (which is why hundreds of service providers have them; the barriers to entry were so low).
And now that they are being upgraded to licences that are equal in scope to the large incumbent operators, it should follow that they pay more for that privilege.
The question is how much more?
Charging too much could mean the licence becoming a liability rather than an asset, for both emerging players and consumers. But charging them too little could almost make a mockery of the massive fees incumbents like Neotel had to pay for the priviledge of its full-service license not so long ago.
There must be a balance struck that won't leave either incumbents or new entrants feeling like they're being robbed. What a difficult balance to achieve!
Another sticking point, says ECN's head of regulatory Jeremy Macdonald, is that Icasa proposes defining gross revenue too widely to include revenue from handset sales and installations, instead of only revenue generated from licensed services.
Icasa wants comments back from the industry by next Friday December 5. It would then set a date for hearings, but these would supposedly be soon, given that it wants to finalise the fees at the same time as issuing the licences in mid-January.
If ECN's response is anything to go by, that'll be one fascinating round of hearings - just another eventful episode in the never-ending SA telco soapie.
- Fin24.com