The failure of South Africa’s communications regulator to open up new telecoms licences in over a decade has forced state-owned network Broadband Infraco operator to seek a “second-hand” licence from a willing seller.
Infraco recently published a tender to buy an individual electronics communications service (I-ECS) licence from another licence holder.
“Broadband Infraco hereby requests any entities holding a valid, unencumbered I-ECS licence that is in good standing with Icasa, to contact it regarding the sale and transfer of such a licence,” the company stated.
The I-ECS licence allows entities like Internet service providers (ISPs) to offer Internet services over their own or another company’s network.
Broadband Infraco already secured an Individual Electronic Communications Network Service (I-ECNS) licence on 19 October 2009, which authorises it to roll out and operate its own physical network.
That licence was granted by the Independent Communications Authority of South Africa (Icasa) after it published invitations to apply (ITA) for I-ECS and I-ECNS licences in 2009 and 2010.
Broadband Infraco’s mandate is to expand the availability and affordability of access to electronic communications, including to underdeveloped and under-serviced areas.
The company’s network measures over 15,000km and is used for neutral backhaul connectivity, linking fibre networks over long distances.
It seems it also wants to leverage that infrastructure to sell services directly to consumers, but for that, it needs an I-ECS licence.
MyBroadband found it curious that a government entity could not secure an ECS licence directly from Icasa.
The regulator told MyBroadband that Broadband Infraco could only apply for a licence if it publishes a new ITA in the Government Gazette.
This is determined by Regulation 8 of the Licencing Processes and Procedures Regulations 2010, Icasa said.
“Currently, the authority would like to emphasise that there is no ITA that it has published inviting interested persons to apply for an I-ECS licence in South Africa,” Icasa said.
“Any person wanting to provide I-ECS but is unable to do so due to the Authority not having published an ITA, may approach any I-ECS licensee that is willing to transfer or part with its licence.
“The holder of the licence/transferor must apply to the Authority for permission to transfer the I-ECS in terms of section 13 of the ECA, read with regulations 11 and 12 of the Regulations.”
Broadband Infraco’s ambition to offer services directly to customers is not a new one.
It also applied for the I-ECS licence with Icasa’s last ITA in 2009 and 2010, but its application was rejected for not meeting the requirements set out in the relevant legislation.
No explanation for 13-year gap in ITAs
Despite several attempts by MyBroadband to get a direct answer from Icasa about the issue, the authority would not explain why another ITA had not been issued in 13 years.
The apparent inaction was previously criticised by the Internet Service Providers Association of South Africa (Ispa) on several occasions.
“There is no reason under the Electronic Communications Act 36 of 2005 (ECA) why any qualifying telecoms market entrant cannot apply to Icasa for an I-ECS licence or an I-ECNS licence,” Ispa said.
“The bulk issuing of more than 500 I-ECS and I-ECNS licence pairs in 2009 and 2010 removed any policy rationale for restricting the issuing of licences for the operation of electronic communications networks.”
Ispa regulatory advisor Dominic Cull said the current situation created artificial barriers to entry to an ICT market that was crucial for South Africa’s future growth and aspirations.
Ispa wrote to the Minister of Communications and Digital Technologies and Icasa, expressing the opinion that facilitating greater market entry would boost competition and transformation.
It specifically asked the minister to give due consideration to issuing a policy direction as contemplated under section 3(2) read with section 5(6) of the ECA directing Icasa to issue an ITA for I-ECNS licences.
It also called on Icasa to issue a standing ITA for issuing an I-ECS licence to qualifying applicants under the ECA.
In the association’s view, there was no legal impediment stopping ICASA from immediately drafting and finalising a standard ITA to allow applications for I-ECS licences.
Only the I-ECNS licences require a “simple” ministerial policy directive before a standing ITA can be finalised.
It is understood that Icasa is waiting for the Minister of Communications to issue a policy direction before issuing any ITAs to avoid stepping on political toes.
In 2016, the regulator had tried to issue ITAs for licensing high-demand radio frequency spectrum — wireless network capacity — and was taken to court by then-Telecommunications and Postal Services minister Siyabonga Cwele.
Ispa has not received substantive feedback from the minister or Icasa since sending the letters in October 2020, over three years ago.
In January 2023, the association explained the situation led to some licence holders viewing the licences as a ticket to get rich.
Instead of using the licences to provide telecoms services, they simply sit on them until a buyer — like Broadband Infraco — comes along.
Cull said that small businesses looking to grow their footprints had no option but to purchase a licence on a willing-seller, willing-buyer basis and apply to Icasa for a transfer.
“This costs a significant amount of money — generally more than R1 million — and the Icasa application process will take a minimum of five to eight months to be completed,” Cull said.
One black women-owned ISPA member previously said the concept was counterproductive as the sellers wanted exorbitant prices for the licences, making it difficult for SMMEs to obtain them cost-effectively.