ICASA sends a warning to fibre networks and Internet service providers in South Africa
The Independent Communications Authority of South Africa (Icasa) has published a notice warning hundreds of telecommunications operators that they must renew their licences soon.
However, the notice also contains an unspoken warning: network operators and service providers must ensure they have 30% historically disadvantaged ownership before their licences expire.
Ostensibly, Icasa warned that renewal applications must be lodged no earlier than 12 months and no later than 6 months prior to the licence’s expiry.
“Licensees must refer to the effective date stated on their licence to determine the renewal period,” Icasa stated.
“For example, a licence issued on 15 January 2009 expires on 14 January 2029, and the renewal application must be submitted between 15 January 2028 and 14 July 2028.”
Icasa’s reminder is for Individual Electronic Communications Network Service (I-ECNS) and Individual Electronic Communications Service (I-ECS) licence holders.
I-ECNS licences allow holders to build and operate physical communications network infrastructure anywhere in South Africa.
To offer communication services over that physical infrastructure, an electronic communications services (ECS) licence is required.
Among the major companies the notice lists as having to renew soon are Axxess, Cell C, Cybersmart, E-tv, M-Net, EOH, Gijima, Hero Telecoms (Herotel), Liquid, Metrofibre, MTN, and Mweb.
Other network operators and ISPs on the list include Rain, Seacom, SA Digital Villages (owned by Vumatel), Smart Village (MTN’s Supersonic), Vodacom, Vox, Webafrica, and WIOCC.
Harmony Gold, Neology (now Rain), Neotel (now Liquid), NTT Data, Orbicom (owned by MultiChoice), Reunert, and Saab Grintek are also listed.
Interesting mentions on the list include Sahara Systems and The New Age, which belonged to the Gupta family, and Super 5 Media, Telkom’s aborted attempt to launch a pay-TV service.
Government entities on the list include Broadband Infraco, Sentech, the State Information Technology Agency, the SABC, and the SA Post Office. Telkom, which is majority state-owned, is also on the list.
No extensions, and 30% ownership requirements
Icasa’s notice is a critical reminder to licence holders, as the regulator has made it clear that there will be no leeway when it comes to renewals.
It ordered MultiChoice’s only satellite pay-TV competitor in South Africa, StarSat, to cease operations on 18 September 2024 after it submitted its renewal late.
StarSat’s licence expired on 8 July 2023, and it submitted its application in November that same year, explaining that efforts to secure investors were delayed by the Covid-19 pandemic.
When StarSat refused to shut down its South African broadcast, Icasa and officers from the South African Police Service raided its headquarters to remove its equipment.
Not explicitly stated in the notice is that Icasa will likely be enforcing the ownership requirements stipulated in the Electronic Communications Act (ECA) on licensees who renew.
MyBroadband contacted Icasa for clarity on this, but it did not respond by publication. However, if a licensee is non-compliant with the terms and conditions of their licence, that is grounds for non-renewal.
Many individuals and small ISPs will not be compliant with the ECA’s stipulation that licensees must be 30% owned by historically disadvantaged groups (HDGs).
In this context, HDGs include South African citizens who are women, youth, a person with a disability, or Black, which includes Indians and Coloureds.
Simply put, ISPs that are majority-owned by white men could lose their licences.
The Altech Case
The reason some licensees do not meet the ownership requirements is that many licences were issued during a massive upheaval in South Africa’s telecommunications landscape.
In 2008, the telecommunications industry scored a massive victory against the government when the High Court ruled that Value-Added Network Service (VANS) licensees could build their own network infrastructure.
Until then, Telkom had enjoyed a state-sanctioned monopoly on most fixed-line telecommunications infrastructure, and government wanted to control who could compete with it.
VANS licences were a structure of the old Telecommunications Act of 1996, which was replaced by the Electronic Communications Act’s ECS and ECNS licences.
Several of these VANS licensees were small businesses, ranging from sole proprietorships to companies with fewer than a dozen employees.
This means many did not meet the 30% HDG ownership requirement, but thanks to the government’s bungling, they got I-ECNS licences anyway.
As a result, the South African government inadvertently sparked a boom in the country’s telecommunications industry. A vibrant and fiercely competitive sector emerged.
However, rather than working to liberate the sector further, Icasa and the South African government have sought to increase restrictions on licences.
No new I-ECS and I-ECNS licences have been issued since 2010, which has made it costly for entrepreneurs to enter the industry, as licences are often sold for upwards of R1 million each.
This is something communications minister Solly Malatsi has only recently begun to address, seeking public comment on a plan to direct Icasa to issue more licences.
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