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South Africa: The Electronic Communications Draft Amendment Bill and the changes it proposes to introduce

5 July 2023
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Overview

  • On 23 June 2023, the South African Department of Communications and Digital Technologies published the Draft Electronic Communications Amendment Bill, 2023 (Draft Amendment Bill), which is intended to amend certain aspects of the Electronic Communications Act 36 of 2005.
  • The Draft Amendment Bill seeks to: introduce a new licence category for electronic communications facilities services; enable spectrum sharing subject to the oversight of the Independent Communications Authority of South Africa; introduce a new regulatory framework for roaming and mobile virtual network services; improve the facilities leasing framework and its pricing principles; empower the Minister responsible for local government to make a national standard by-law on rapid deployment; and provide for improved competition regulation.

On 23 June 2023, the Department of Communications and Digital Technologies published the Draft Electronic Communications Amendment Bill, 2023 (Draft Amendment Bill), which is intended to amend certain aspects of the Electronic Communications Act 36 of 2005 (ECA).

Objectives of the Draft Amendment Bill

The objectives of the Draft Amendment Bill are to:

  • provide for a new licence category for electronic communications facilities services;
  • enable spectrum sharing subject to the oversight of the Independent Communications Authority of South Africa (ICASA);
  • introduce a new regulatory framework for roaming and mobile virtual network services;
  • improve the facilities leasing framework and its pricing principles;
  • empower the Minister responsible for local government to make a national standard by-law on rapid deployment; and
  • provide for improved competition regulation.

Proposed changes under The Draft Amendment Bill

New licence category for electronic communications facilities services

One of the most significant changes that the Draft Amendment Bill seeks to bring about is the proposed introduction of a new licence category for electronic communications facilities services which will, to a certain extent, bring electronic communications facility service providers (currently exempt from licensing requirements) within the existing licensing framework of the ECA.

The Draft Amendment Bill seeks to amend section 1 of the ECA by including a definition of ‘electronic communication facility service’ and ‘electronic communications facility service licence’ in the ECA. Section 5 of the ECA is also set to be amended by including electronic communication facility services in the licensing framework by granting ICASA permission to issue individual and class licences for electronic communication facility services. This licensing process would have to take place within 18 months of the coming into operation of the Electronic Communications Amendment Act, 2022 (if enacted in its present form).

This therefore means that providers of (as yet) unspecified categories of electronic communication facility services, to be prescribed in due course by regulations, will require individual electronic communication facility services licences to provide services of a provincial or national scope.  Providers of (as yet) unspecified categories of electronic communication facility services, to be prescribed in due course by regulations, will require class electronic communication facility services licences to provide services of district municipality or local municipal scope.

Implications specific to individual licensees

Licence holders under the proposed new licence category will have to comply with the licence obligations currently applicable to licence holders under the ECA. In accordance with these obligations, ICASA’s prior permission is required for some transactions concerning transfers of licences, or changes of control of individual licensees. The Regulations on Limitations of Control and Equity Ownership by Historically Disadvantaged Groups (HDGs) and the Application of the ICT Sector Code, 2021, require that licensees reach a 30% ownership by HDGs by 31March 2024 or 31 March 2025, depending on the size of the licensed entity. This ownership is determined on a flow-through basis and includes indirect equity ownership through other structures, such as trusts. Additionally, licensees are required to attain level 4 BBBEE status (measured according to the ICT Sector Code) by 2025.

Implications for individual and class licensees

Licensees need to submit annual reports to ICASA that include fee calculations based on revenue derived from licenced service provision. They must submit these reports and pay the fees within six months after their financial year-end. Licensees also have various filing obligations, such as submitting annual financial statements to ICASA, filing reports on ownership and shareholding, submitting interconnection and facilities leasing agreements, reporting tariff changes, notifying ICASA about changes to their details, and ensuring compliance with the ICASA Compliance Procedure Manual Regulations, 2011, and the End-User and Subscriber Service Charter Regulations, 2016.  Both individual licensees and class licensees must maintain a minimum BBBEE level 4 status.

Individual and class licensees must provide ICASA with proof of compliance on an annual basis in the same manner as with the HDP and/or the Black equity requirement.  An individual licensee will not, however, be required to provide proof of compliance in this regard where it has already done so for purposes of the HDG equity requirement.

Spectrum sharing

The Draft Amendment Bill proposes to introduce new definitions in the ECA such as ‘high demand spectrum’, ‘radio frequency spectrum sharing’, and ‘radio frequency spectrum trading’. The Draft Amendment Bill also seeks to amend sections 30 and 31 of the ECA and insert section 31A, which will regulate spectrum sharing. These changes, if enacted into law, will see spectrum sharing being made permissible. The sharing of high demand spectrum will be subject to approval by ICASA, and the sharing of non-high demand spectrum will be possible on notification to ICASA.

Facilities leasing

The Draft Amendment Bill proposes to amend section 47 of the ECA, which deals with facilities leasing pricing principles, to ensure that ICASA prescribes wholesale pricing rules or standards applicable to several types of electronic communications facilities, including for essential facilities, roaming and mobile virtual network operators (MVNOs). The objective of the amendments is to provide that pricing principles for facilities leasing and wholesale rates for roaming and MVNOs are developed by ICASA. This is in contrast to the current position, where such regulations may rather than must be developed. This is in line with the recommendations of the Data Services Market Inquiry that such regulation takes place, but it does recognise that different pricing principles may apply to different facilities and wholesale arrangements.

Competition

Section 67 of the ECA, which deals with competition, will be amended to mirror the Competition Act 89 of 1998 (Competition Act) and give ICASA similar powers to those conferred on the Competition Commission in the context of a market inquiry in terms of sections 43A-G of the Competition Act. The impact of the proposed amendment of section 67 of the ECA is that it would give the Authority similarly wide-ranging powers to address pricing, contractual terms or business practices which it thinks are a ‘feature of a market’ which ‘impedes, restrict or distorts competition’ to those which the Competition Commission now has in terms of the Competition Act when it conducts market inquiries.

Next Steps

Interested parties have been invited to submit written comments on the Draft Amendment Bill within 30 working days of the date of publication (23 June 2023) to:

The Acting Director-General, Department of Communications and Digital Technologies
For attention: Mr A Wiltz, Chief Director, Telecommunications and IT Policy
First Floor, Block A3, iParioli Office Park, 11666 Parkfield Street, Hatfield, Pretoria
Private Bag X860, Pretoria, 0001
[email protected] , cell: 0837140126 (Mr L Motlatla)

The Draft Amendment Bill can be accessed here.