Interesting year ahead in South Africa’s ICT market
An interesting year lies ahead in the South African ICT market, considering the ever-changing legislative landscape.
This is according to Ahmore Burger-Smidt, director at Werksmans Advisory Services and a specialist on media, communications, and technology.
Burger-Smidt told MyBroadband there are currently several pieces of legislation that presents challenges to the IT and telecommunications sectors.
The most important pieces of legislation which will impact the local market are below, as explained by Burger-Smidt.
Electronic Communications Amendment Bill
The Electronic Communications Amendment Bill that was approved by Cabinet towards the end of 2017 has been criticised in various quarters since it publication.
The Bill seeks to implement and give effect to the policy points set out in the ICT White Paper, published in October 2016.
It is deemed that there are risks associated with this Bill that are extensive and significant. It has also been said that this Bill will discourage investment in the sector.
A slowdown in capital investment in our mobile networks will degrade the service and quality of the networks.
This will have serious and unintended consequences, including the hindering of economic growth with a negative impact on job creation.
Also, the Bill does not address the single biggest issue facing the local telecommunications industry, which is the serious “spectrum crunch”.
The withholding of spectrum will result in mobile operators needing to scale back plans for continued growth into rural areas.
Operators will have no option but to re-farm the spectrum and to further densify the network at increased cost, to cope with the ever-growing urban demand for data.
As a consequence of this, data costs will not be driven down with the impact being worst felt by South Africa’s most economically marginalised communities.
The ongoing demand for spectrum is an important consideration for 2018.
While some progress has been made in facilitating access to high-frequency spectrum, there is a very pressing need to speed up the allocation of spectrum, particularly the 2,600MHz frequency.
The release of spectrum will create much-needed capacity that will be operated using existing infrastructure.
Importantly, the release of additional spectrum will further drive down data pricing, helping to further democratise access to the Internet.
It is well known that mobile connectivity continues to be a powerful driver for social change.
Together, government, policy makers and the industry must find a way to bridge the digital divide, helping to deliver economic stability and inclusion for all.
Public comments have been invited and will be taken into consideration prior to finalising the process.
The Competition Amendment Bill
There is no doubt that the Competition Amendment Bill will impact the IT and telecommunications sectors significantly.
The amendments seek to strengthen the hand of the competition authorities to address economic concentration and transformation.
While some of the proposed amendments are relatively benign and do not introduce any real change to current legislation application, certain other proposed amendments speak to potentially far-reaching implications for IT and telecommunications firms doing business in South Africa.
The Bill constitutes a significant policy shift by government, to introduce economic concentration as a specific consideration in all competition matters.
In short, dominant firms may be at greater risk of being found guilty of excessive pricing, exclusionary conduct and price discrimination.
This clearly indicates that IT and telecommunications firms will have to further scrutinise the way they do business to mitigate their legal risk in terms of the competition act going forward.
The majority of South Africans have little or no access to fixed connectivity.
By contrast, mobile connectivity gives millions of South Africans access to information, by providing extensive geographic and population coverage, and affordable costs to connect.
Mobile connectivity is the pathway by which most people conduct business, and receive education, banking and financial services, government services and healthcare.
Mobile connectivity is a vital contributor to economic growth, employment and the alleviation of poverty and inequality.
Fierce competition amongst mobile network operators has driven continuous and significant investments that have resulted in nearly universal coverage.
The delivery of data volumes has grown exponentially, network quality has constantly improved, and pricing has fallen dramatically year after year.
Even though the average South African consumer regularly bemoans the cost of data, it is often forgotten that operators have invested hundreds of millions in capital expenditure over more than 20 years.
Operators have long achieved over 98% coverage of the population with 2G technology, 3G coverage has grown to over 95%, and 4G or LTE services have expanded to over 60% of the population.
Data speeds have improved by more than seven times over the past decade.
The volume of mobile data handled has grown 18 times in the past five years, while data prices have fallen by approximately 80-85% over this same period, and 4G LTE handset prices have fallen by 86% over the past three years.
Within this context, and mindful of the ongoing debate regarding the cost of data, the country awaits the outcome of the Competition Commission market inquiry.
POPI
We expect that the Information Regulator will finally promulgate the POPIA regulations and announce the POPIA commencement date during the first half of 2018.
The need for compliance with POPIA is real and companies need to be prepared. In addition, in a fast-changing world of cybersecurity, specific areas affecting data security of any business must be assessed.
Amongst others, companies have to plan for and empower a security team in order to secure information, prevent leaks and data breaches.
In this regard, one has to understand the impact of the Cybercrimes and Cybersecurity Bill on business.
Indeed, it is expected that this Bill also be will be enacted during 2018.
Not only South African specific legislation requires attention. The European General Data Protection Regulation seeks compliance by 25 May 2018.
The question IT and telecommunications firms has to ask themselves is whether they have considered the obligations in terms of these regulations and if applicable, have implemented the necessary controls.
“The year 2018 will definitely present the IT and telecommunications sector with significant and real compliance challenges,” said Burger-Smidt.
“The legislative landscape certainly looks like a potential minefield.”
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