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Important Notice to Value Added Network Service (VANS) licencees – USF Contributions

by dominic - Posted 12 July 2007

After lengthy efforts on the part of the Internet Service Providers Association (ISPA) clarity has been obtained from ICASA on how contributions to the Under Serviced Fund (USF) by VANS licencees are to be calculated.

Each licencee is required to “pay an annual contribution of 0.2% of the annual turnover derived from the provision of the telecommunication services which it is licensed to provide” to the USF. Until now it has not been possible to accurately calculate the contribution due to a lack of guidance  from  ICASA as to  which services  are to be regarded as VANS .

The following VANS services will be regarded as “contribution eligible” i.e. you will need to pay an amount calculated as 0.2% of annual turnover achieved through the provision of these contribution eligible services:

• internet access including leased lines and dial-up services
• managed data network services (includes VPNs)
• subletting of telecommunications facilities as per the Ministerial Determination of 7 September 2004 (“In terms of section 40(4) of the Act, 1 February 2005 shall be the date from when a person who provides a value added network service shall be entitled to cede or assign the right to use, or to sublet or part with control or otherwise dispose of the telecommunications facilities used for the provision of the value added network service;”) this will cover e.g. sale of bandwidth

The following services are either not VANS or are VANS which are not contribution eligible and annual turnover attributable to these activities should not be taken into account in calculating the USF contribution due:

• virtual internet service providers
• e-mail services
• internet café’s
• wireless hotspots
• educational networks if registered as a section 21 company or association not for gain (must still submit financials but will be zero-rated)
• web-hosting services
• domain name services
• security services
• VISP/ISP hybrids (although it must be noted that ICASA has requested more clarity from ISPA in this regard)

For further information please contact dominic(at)nicciferguson