Should Internet Service Providers (ISPs) Be Regulated?

Currently, there are no laws that directly govern Internet Service Providers (ISP) e.g. Frampol . You might have assumed that these are being regulated by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), but no.

However, it is the Internet Access Providers (IAP) which are regulated by POTRAZ . IAPs are the companies that provide ISPs or even individuals with access to the Internet. Therefore, IAPs can be Internet Service Providers themselves (since they are basically internet suppliers), but the major difference between ISPs and IAPs is that an IAP has the equipment and the telecommunication line access required to have POP on the Internet for the geographic area served.

Zimbabwe being a landlocked country, gets most of its broadband supply from South Africa through the IAP Liquid Telecom. It is on such IAPs that all regulations that include Quality of Service (QoS) are applied. In turn, these regulations where applicable are imposed on the ISPs through their IAPs.

In essence, it means that an ISP business has no direct laws that apply to it as an ISP in Zimbabwe (as would an IAP) , it just needs to be registered and then abide by the laws of its registration.

Therefore the next question would be: Are there any problems associated with this model of governance?

The answer there is yes and no.

Yes in that if no laws are set to govern a certain industry, abuse is inevitable. This often affects the customers. Businesses can potentially connive and/or overcharge their customers. It is also possible for the incentive to produce quality service to be compromised in such a situation. But then again, that’s assuming they do connive otherwise if not, market factors can take care of that.

Secondly, this model can affect the ISPs and IAPs themselves, mostly the ISPs because they are at a place of disadvantage when faced with competition from IAPs. As I mentioned earlier on, IAPs can basically provide internet even to individuals, this means that they share the market with ISPs.

IAPs can target the same internet end user as that of the ISP. Now because IAPs sell their internet at a wholesale price and do not need a mark up price that ISPs would need for their businesses to make sense, they can easily win over the customers.

Apart from that, IAPs can easily sabotage ISPs to keep them out of the game since they function as both their supplier and competition. This therefore begs the need for a revised regulatory framework that recognises ISPs so that they can be protected and by so doing ‘create a level playing field’ for these players.

Now the no comes into play when we consider license fees. For IAPs, initial class A licensing can go up to as much as 4 million United States dollars (US$4 mill) and there I haven’t even mentioned other annual obligations that need to be met. Of course, ISPs will potentially demand less but still. Licensing might suffocate players and as such, force them off the playing field – and we all know too well what happens when a few key players are left to be in the field.

Again, POTRAZ says that although it had intentionally avoided ‘over regulating’ the ICT industry with the hope of promoting competition, it now sees the cons of not regulating ISP outweighing the pros. In April last year, it seemed as though POTRAZ was now ready to go for it but until now nothing has come up. In fact, this move started as early as in 2010 when POTRAZ invited all IAPs and ISPs to a consultation meeting in order to map a way forward on that matter.

Nevertheless, one might argue that even without the hassle of a license, there still aren’t as many ISPs as the country needs, so what difference will licensing make? Valid point. Is the problem even with ISPs or it’s more with IAPs since ISPs heavily rely on IAPs? If IAPs, then we’re definitely looking at it the wrong way. Should more energy be channeled towards ‘fixing’ the IAP field instead?

What do you think?