Telecommunications operator Neotel is in discussions with the Independent Communications Authority of SA (Icasa) to have the once-off R100m licence fee it is liable for scrapped.

“We are working amicably with the regulator to try and clarify the regulations,” says Tracy Cohen, Neotel’s executive head of regulatory affairs.

Like all incumbent operators, Neotel was awarded its licence on the condition that it paid the large, once-off fee. Neotel was due to settle the licence fee over a period of years.

The company was licensed in 2005 as SA’s second fixed-line network operator in a regulatory environment in which it expected to enjoy a duopoly for several years.

However, the high court judgment in favour of technology group Altech in 2008 and against former communications minister Ivy Matsepe-Casaburri threw open the market to competition. The judgment had the effect of handing more than 300 companies the same basic licence as Neotel and competitors MTN, Vodacom, Cell C and Telkom.

The court determined that once-off licence fees were no longer applicable and fees should be based on the income and expenses of a company.

Icasa then promulgated new licence fee regulations, charging licensees an annual amount of 1,5% of gross profit.

There is still a clause in the regulations governing the once-off fee. However, the clause is not clear about whether any outstanding amount on Neotel’s R100m licence fee should be written off or whether it should be paid in full.

Neotel and Icasa have different interpretations of the clause and have not yet come to a mutual decision. However, the two parties will meet next week to try to clarify the situation.

If Icasa and Neotel still can’t agree, they have decided to go to court to have the matter judicially settled.

“The court will be requested to provide both parties with its interpretation to assist the parties moving forward,” says Icasa spokesman Paseka Maleka.

Communications technology lawyer Kerron Edmunson says having Neotel’s once-off licence fee scrapped makes sense as none of the more than 300 converted licensees were asked to pay it.

“The network licence had far more value when Neotel was the only direct competitor to Telkom,” she says.

Edmunson agrees the regulations are ambiguous and it would be good to get some clarity on what they mean.

Denis Smit, MD of consulting firm BMI-TechKnowledge, says even though Icasa and Neotel seem to be working together on the issue, it is unlikely a resolution will be found without the courts.

He says both Icasa and Neotel are in a tough situation. “If Neotel is expected to be held to this licence fee, then it should be applicable to all the others,” he says.

Cohen says she is confident the parties will come to an agreement soon. — Candice Jones, TechCentral