ICASA gives VANS a break

Johannesburg, 04 Jun 2001

The Independent Communications Authority of SA (ICASA) on Friday released a set of regulations which it says will "complete the regulatory and licensing framework on value-added network services (VANS) and private telecommunications networks (PTNs)".

The regulations come almost eight months after the body published a set of draft guidelines intended to clarify the regulatory framework.

Included in the released regulations are proposed licences for VANS and PTNs, which are open to comment for a 30-day period, as well as legislative points it hopes will be taken up in a forthcoming Telecommunications Act amendment Bill.

Among the major implications of the regulations is a full legalisation of virtual private networks (VPNs), the exclusion of a black empowerment component for all VANS licensees and the continued requirement that all Internet service providers (ISPs) be licensed as VANS.

The regulations also effectively give VANS licence holders the right to resell bandwidth and consolidate the needs of its customers in a price-effective way, an issue that has long been a bone of contention between VANS and Telkom.

Defining a VPN

In a complex decision, ICASA found that VPNs are completely legal, as long as the VANS operator providing the VPN sticks to its licence conditions. These conditions require that the VANS provider adds value through its services and does not carry any kind of voice traffic.

ICASA defines a VPN as created "by the application of software-based technological intervention in the operation of the VANS" in order to achieve goals such as privacy and reliability. "A VPN is another tier on top of the VANS, which by itself is a second tier on top of the telecommunication facilities obtained from Telkom, used in the construction of a value-added network," the body said in its opinion.

It left no doubt that such "technological intervention" is allowed to VANS providers, saying licensees are "entitled to apply any technical resources (redundant capacity and technological intervention) and managerial skills (management of the redundant capacity and technological intervention) to signal processing, packetising and encryption in order to meet customer requirements in respect of availability, reliability and security".

In simpler terms, a VPN may be used to create a virtual PTN, as long as the network does not breach the injunction against carrying voice signals. By combining the data networking needs of a group of clients, VANS providers believe they can offer competitive pricing from Telkom on very large bandwidth pipes.

Mike van den Bergh, chairman of the SA VANS Association (SAVA), says resale is an "ugly" word to use. "Just taking a [data] line and slicing it up is not adding value, or so I would argue," he cautions.

Required black ownership, fees, ISPs

A requirement in the draft regulations last year that all VANS should have a minimum 15% empowerment shareholding by previously disadvantaged individuals or groups was abandoned, following the lead of communications minister Ivy Matsepe-Casaburri on the matter.

"We were overtaken by the minister`s draft policy directions," says ICASA councillor William Currie. The minister published proposed policy guidelines in March which require an empowerment shareholding only of major, new licences, and ICASA says VANS do not fall into that category.

Application fees for both VANS and PTNs have been set at R5 000, after complaints that the proposed R10 000 was excessive. It is still proposed that a VANS provider pay an annual fee of R15 000 for its licence, while PTNs pay R10 000 per annum. However, ICASA abandoned the proposal that all licensees pay 0.25% of its annual turnover to the Universal Service Fund, as the ministerial directions will force ICASA to require such payments, not exceeding 0.5% of turnover.

That still leaves PTNs with a potential problem identified by the industry. The letter of the policy means that a major business such as a bank or retailer making use of a private network may be required to pay half a percent of the turnover of its entire business to the Universal Service Fund, even though it is using the network only internally.

Also abandoned is a plan to remove the requirement for ISPs to hold VANS licences, in order to open the market up to micro-providers. "Due to a lack of industry consensus on the basis for differentiation between Internet access providers (IAPs) and ISPs the proposed regulations also exclude [the previously proposed regulation]," ICASA says.

Minister/Telkom to act?

Implementation of the regulations depends on the approval of minister Matsepe-Casaburri, who has a history of rejecting the regulator`s proposals. ICASA hopes that the amendments to the Telecommunications Act required will be included in an update of the Act due to allow for the introduction of the second national operator next year. The minister must also give approval to regulations that require no changes to legislation.

But Currie says even an outright rejection of all the proposals will not make it meaningless.

"Obviously there is a possibility that these will not become part of legislation," he said. "At best then this is an expression of the viewpoint of the authority."

SAVA`s Van den Bergh holds little hope for the immediate implementation of the VPN decision, which he says would require Telkom to provide some VANS with bandwidth it has been withholding during the dispute. He expects the operator to wait until it is legally required to connect the services.

"We still need ICASA to instruct Telkom to provide the bandwidth," he says. "I would be pleasantly surprised if they acted on this. They won`t. History shows that they won`t."

Telkom started denying VANS new data access lines last year, saying it was protecting itself from the illegal resale of services.

Telkom says it is still studying the regulations and will probably be in a position to comment constructively later this week.

The ICASA Web site was unavailable due to a technical problem over the weekend, but the full regulations are expected to be available at http://www.icasa.org.za this week.