Telecoms regulation and licencing, what’s what?

There is a period when a new technology becomes known of, or is available. This period, for a lack of better term, is referred to as the “wild west”. This is when everything is expanding rapidly, first to those who can afford it or the government and then lastly and slowly to the public.

In this “wild west” phase, there is very little in the way of controls or checks. The system is a novelty, a symbol of status, or rank to then quickly becoming something of strategic, monetary, security value.

Standardised communication is no different, the invention of long distance information traffic started off as something that was only for those with the financial resources, and as we are all too well aware governments find a way to use it for their own purposes.

When governments get involved there are usually regulations that come with whatever a new form of technology has presented itself. Government involvement isn’t always a bad thing. Regulations create a contract between an entity and the public (and vice versa). The intended purpose of this is to have a structure in place to moderate the interactions between the public, a platform, and the operators (up to a point).

For example before the United States enacted The Radio Acts of 1912 and 1927. Point to point communication was liberal. This however caused a lot of interference with the US Navy especially. Amateur operators were sending false distress calls and communications cost them time, money and resources. The United States then took on the recommendations from 1906 International Radiotelegraph Convention, to licence operators and create specific official channels, and they imposed strict penalties to those who attempted to interfere with official lines of communications.

Regulation, however, isn’t only used for this purpose. Sometimes it is used to serve whatever purpose an administration sees as meeting its ends. This is unfortunate, but is the way most systems work.

Governments aren’t the only bogey man. Private entities as well, are a well-spring of regulation. This in most cases leads to those players seeking the most advantage over consumers as is possible. In cases like these the government can play the hero and step in. Although in some instances, it can also mean that the government isn’t getting a slice of the pie and decides to make a move in order to get in on the action.

The exponential growth of a single private entity especially in situations that have accompanying network effects means that a government’s regulatory body or agency has to create an environment for fair competition. If one single entity has too much control it will negatively impact consumers. Without another option or viable option, consumers are locked to the whim of a single company for a specific service.

One regulatory apparatus is licencing. Licencing is a way of making sure that whoever is entering a space is qualified and capable to offer that service. This, to some degree, ensures the service that will be offered to the public has been vetted.

So let’s take a dive into the meat of the matter.

What is a telecommunications licence?

A telecommunications licence authorizes an entity to provide telecommunications services or to operate telecommunications facilities. Licences define the parameters or terms and conditions of such an authorization. The licence also outlines the rights and obligations of a telecommunications operator.

The issuing of these licences is, according to the International Telecommunications Union, done by the following processes:

• Comparative evaluation processes, this means that a regulator or any other government agency decides who should get a licence to operate depending on the spectrum. There are criteria laid out for a prospective operator to meet in order to proceed with an application. These criteria include financial resources, technical capabilities and commercial feasibility of the relevant spectrum application.
• Lotteries, they provide a fast, transparent and inexpensive way for qualified applicants. The applicant has to follow a qualification process to be chosen as a lottery participant. Participants of a lottery may not want to operate in the telecoms business, as seen in the United States they may just want to sell on the licence for profit.
• Auctions, provide another avenue for pre-qualified applicants to lodge a bid for an operations licence. Auctions can be single round or simple auctions, or they can be simultaneous auctions. Single round auctions give bidders one chance to submit a bid. Bids are then evaluated and a winner is chosen.

In Zimbabwe prospective telecommunications companies undergo the Comparative Evaluation Process, where they have to meet the general requirements such as, a certificate of incorporation and the other registration documents. The applicant will then have to submit a project proposal that outlines what service under which spectrum they wish to enter in. The regulatory body from that point on then decides whether a company can operate or not.

What types of licences are there?

The International Telecommunications Union lists the following classes:

• Individual licences (Operator Specific Licences). These are licences granted to PSTN (Public Switched Telephone Network), mobile and fixed wireless services.
• General Authorizations (Class Licences). They are awarded to data transmission services, resale services and private networks.
• Services which may be provided without a licence (fully liberalized services). These are usually given to Internet service providers and value added services

In Zimbabwe Telecommunications licences categories are as follows:

• Public Switched Telephone Network Licence (TelOne)
• Public Cellular Telecommunications Network Licences (Econet, NetOne and Telecel)
• Internet Access Provider (IAP) – Class A (e.g. TelOne, Liquid, Powertel, Telecontract, Africom, Aquiva, Aptics, Dandemutande) and Class B (e.g. NetOne)
• Public Data (Broadlands)
• Private Network licences (e.g. Banks, NGOs, Private Organizations)
• Private Mobile Radios (VHF, HF, Aircraft, Ship, Amateur)
• Approved Telecommunications Equipment Dealership Licence

The ones of concern here are the Telecommunications licences, which are Public Switch Telephone Network Licence, Public Cellular Telecommunications Network Licences, and Internet Access Provider (IAP).

Public Switch Telephone Network Licence

A public switch telephone network is an international network that follows closely to the guidelines of the ITU-T. This means that operators in this arena are part of an international switch, and have to switch seamlessly from country to country. This is in simple terms is your fixed telephone line.

Public Cellular Telecommunications Network Licences

The operator licensed here is authorised to offer Mobile Telephony by means of GSM communications.

Internet Access Provider (IAP)

This has two categories:

• IAP Class A, this is a licence for operators to offer internet infrastructure and connectivity and also allows the operator to carry voice (VoIP) over their network. The operator is restricted to Internet Protocol traffic.
• IAP Class B, has the same stipulations as IAP Class A, but the holder of this licence will not be able to execute VoIP transmissions.

So how much do operators in Zimbabwe pay for licences?

Operators according to POTRAZ pay:

Public Switch Telephone Network (PSTN)

• The initial licence fee is US$100 000 000
• An annual fee of 2% of the annual audited gross turnover
• A contribution to the universal service fund, which is 1.5% of the annual audited gross turnover.
• The licensee shall pay an annual number usage fee at the rate prescribed by the Authority from time to time. Such a fee shall be used in the development, administration and review of the numbering plan (Not specified).
• The licensee shall pay an annual frequency usage fee at the rate prescribed by the Authority from time to time for service that require the use of radio spectrum (Not Specified).

Public Cellular Telecommunications Network Licences

• The licence fees have increased from US$100 million for a 15-year tenure to US$137.5 million for 20 years.
• In addition, mobile operators will still pay an annual licence fee of 2% of their annual gross turnover.
• They will also pay towards the Universal Service Fund of 0.5% of the annual gross turnover.
• They also pay spectrum fees (not specified).
• The licence will cover “the range of services that are commonly referred to as 2G through to 3G” (With operators offering 4G this fee may cover that spectrum as well)
• Services beyond that will require formal licence adjustments. It doesn’t say if there will be any additional fees paid for this.

Internet Access Provider (IAP)

IAP Class A:

• The initial licensing fee is US$5 500 000
• Operators must also pay 2% from their audited annual turnover or US$100 000 (Whichever one is greater).
• A contribution to the universal service fund of 1.5% of the audited annual turnover
• The licensee shall pay, in advance, an annual number usage fee for services that require the use of a public numbering scheme like Voive over Internet Protocol (VoIP) Telephony. (Not Specified)
• The licensee shall pay, in advance, an annual frequency usage fee for services that require the use of the radio spectrum at the rate prescribed by the Authority. (Not Specified)

IAP Class B:

• The initial licensing fee is US$ 2 750 000
• Operators must also pay 2% from their audited annual turnover or US$ 60 000 (Whichever one is greater).
• A contribution to the universal service fund of 1.5% of the audited annual turnover
• The licensee shall pay, in advance, an annual frequency usage fee for services that require the use of the radio spectrum at the rate prescribed by the POTRAZ. (Not Specified)