BEE shareholding a major issue: ISPA

Johannesburg, 20 Jan 2005

The Internet Service Providers` Association (ISPA) is adamant the regulator needs to provide clarity on the scope of value-added network services (VANS) and make changes to the black economic empowerment (BEE) shareholding requirements, before any licensing issues can be properly resolved.

This was the thrust of ISPA`s presentation during the first day of the Independent Communications Authority of SA`s (ICASA`s) public hearings into the proposed VANS regulatory framework.

According to Ant Brooks, chairman of ISPA`s regulatory committee, the lack of clarity on what exactly constitutes a VANS provider means no one seems to know who the proposed regulations apply to.

"Many questions remain unanswered, such as does a virtual ISP require a licence? Does a Web site operator need one if it has an authenticated login section? Or even would a school require one if it provides e-mail access to students?

"We would also like to know what the justification is for a five-fold increase in the cost of a licence, since ICASA has always claimed the fee is based on the cost to the regulator for processing a licence application," he says.

He says the vast majority of ISPA members and many South African ISPs in general fall within the ambit of the small, medium or micro enterprise (SMME), and the proposed R30 000 licence fee is way beyond their means, since many cannot even afford the R3 000 membership fee to belong to ISPA.

Contentious issue

Perhaps the most contentious issue raised by ISPA was the requirement that every VANS licensee needs 30% of its shareholding to belong to historically disadvantaged individuals (HDIs).

"According to government definition, HDIs are considered to be anyone who was prevented from voting prior to 1994, women and the disabled. We feel this is too vague, since we don`t know if it includes white women, or precludes young black individuals.

"After all, theoretically, a group of black entrepreneurs born after 1975 wishing to operate as a VANS provider would be prevented from gaining a licence, since they have always been allowed to vote and hence are not classified as HDIs under the current definition," says Brooks.

ISPA says ICASA is being overly aggressive in terms of the 30% HDI shareholding, firstly because it doesn`t tally with the national ICT charter, and secondly because instead of moving empowerment in the right direction, it will more likely lead to companies either shutting down, leading to job losses, or to the equally despicable trend of BEE 'fronting`.

"ISPA believes it would be better if ICASA were to amend the HDI requirements to place a greater emphasis on training and staff - something many SMMEs have a better record with than large corporates - rather than on pure shareholding," says Brooks.

"Many SMMEs are working towards bringing their HDI staff members on board as shareholders too, but it is not an overnight process, and to expect them to have a 30% HDI shareholding inside nine months is totally unrealistic."

Other suggestions from ISPA included a flat licence fee, based on an organisation`s size, co-ordinating the licence payment with the end of the VANS provider`s financial year, and a change in wording on the consumer protection conditions, to allow licensees to disclose client information where required by law, such as in the case of someone publishing child pornography.

"It is critical that VANS providers be allowed to disclose information of this sort, so please amend this section to include the phrase 'where required by law`, otherwise you will make our lives extremely complicated," says Brooks.

"ISPA understands that a lot of the current confusion is not ICASA`s fault, rather it has been created by the people who drafted the Act, and we are happy with the progress being made on the VANS issue and hope we have been able to help the regulator in what is obviously a tough procedure."