Fixing BEE rules is not just about Starlink

Reviewing South Africa’s regulations that all national telecommunications providers be 30% black-owned is not a special dispensation for Elon Musk’s Starlink, says communications minister Solly Malatsi.

The minister is currently in discussions with the Independent Communications Authority of South Africa (Icasa) about introducing equity equivalents as an alternative to existing black ownership requirements.

The Department of Trade, Industry, and Competition introduced equity equivalents to enable multinationals to invest in areas like skills training, small business development, and research and development without having to sell equity.

Companies like Microsoft, HP, and IBM have invested billions in these equity equivalents to enter and expand in the South African market.

Malatsi wants to know whether equity equivalents apply to the ICT sector where “it should be applicable”.

“That is not a pursuit for advancing one company or another. I just want it to be clarified and that can be done through engagement with Icasa,” the Sunday Times quoted Malatsi as saying.

He is currently analysing the watchdog’s response to his proposal, after which he can issue a policy directive to amend the Electronic Communications Act.

The minister said he would also consider instruments other than a policy directive to address the issue if a policy directive isn’t appropriate.

Malatsi announced his equity equivalent plan in October 2024, with the minister saying he would issue a policy directive urging Icasa to implement such a programme.

He was careful not to mention SpaceX’s Starlink satellite broadband service, despite it dominating headlines about the topic.

South Africa was once in line to be one of the first countries in the world where Starlink would launch, and now looks set to be one of the last.

Unless the regulatory red tape is cleared, South Africans will be the only people in Southern Africa without legal access to Starlink in 2025.

“This is part of an initiative to significantly expand access to broadband connectivity to poor South Africans and people living in remote parts of the country,” Malatsi said of his equity equivalents plan.

Bad regulations holding South Africa back

Large numbers of businesses and households in underserviced areas in South Africa are already using Starlink despite it technically being illegal to operate in the country.

They do this using Starlink’s roaming service.

However, it is becoming increasingly difficult for these users to use the service as a permanent Internet connection, with SpaceX cracking down on roaming users by increasing prices and adding a surcharge to activate kits outside of their home country.

It also started enforcing its terms and conditions, one of which specifies that kits may only roam for 60 days continuously before they must return to their home country.

Local Starlink community groups have said the kits must return to their home country for several hours once every two months to reset them.

When Starlink first began accepting pre-orders launched in February 2021, it targeted a 2022 launch for South Africa.

However, Icasa issued new regulations in March 2021, changing equity laws for telecommunications companies.

The new regulations specified that it would no longer be sufficient for national network operators and service providers to be 30% owned by historically disadvantaged groups (HDG), including black people, youth, women, and people with disabilities.

Instead, the regulations stipulated that telecommunications providers with a national footprint must be 30% black-owned.

At the time, even the HDG ownership requirement had not been enforced.

Prior to finalising its new black ownership regulations, Icasa received feedback from concerned industry stakeholders that enforcing equity laws on Internet providers would damage the industry.

One area of concern is that there are many small and micro enterprises that are also national Internet service providers.

There are currently no small business exemptions for these companies. If they have a licence to operate a national network or service providers, they will have to be 30% black-owned.

Icasa ultimately decided not to put the 30% black ownership regulations into operation. However, they remain the officially published regulations, which it could choose to enact at any moment.

This uncertainty of regulations that could change at any moment has hung over the industry for years and is another obstacle to foreign investment in South Africa’s telecommunications sector.