While this would open a door for Elon Musk’s SpaceX to launch its satellite broadband service, Starlink, in South Africa, it has broader industry implications too.<\/p>\n\n\n\n
Malatsi’s plan comes more than three years after the Independent Communications Authority of South Africa (Icasa) issued regulations requiring all national network operators and service providers to be 30% black-owned.<\/p>\n\n\n\n
It should be noted that Malatsi was only appointed as minister this year. He and his colleagues had previously railed against these changes from the opposition benches in Parliament.<\/p>\n\n\n\n
Icasa suspended the implementation of its new black ownership provision until an undetermined future date following industry backlash. However, it can enact these pending regulations at any moment.<\/p>\n\n\n\n
In the meantime, the existing local ownership requirements of the Electronic Communications Act (ECA) remain in effect.<\/p>\n\n\n\n
It stipulates that national telecommunications providers must be 30% owned by historically disadvantaged groups.<\/p>\n\n\n\n
As defined in the ECA, historically disadvantaged groups (HDGs) include black people and citizens who are women, youth, and people with disabilities.<\/p>\n\n\n\n
However, even though the ECA has included black economic empowerment provisions since coming into effect in mid-2006, they have not been strictly enforced.<\/p>\n\n\n\n
This is thanks to a legal misstep by the late former Minister of Communications, Ivy Matsepe-Casaburri, which resulted in her and Icasa being dragged to court in what became known as the “Altech Case”.<\/p>\n\n\n\n
At the heart of the issue was Telkom’s monopoly over fixed-line broadband infrastructure and how Value Added Network Service (VANS) licences under the old Telecommunications Act would be converted to the ECA.<\/p>\n\n\n\n
Essentially, Altech and its allies argued that all existing VANS licensees should be automatically converted to a new licence that would allow them to build their own network infrastructure.<\/p>\n\n\n\n
Although the case dragged on until August 2008, the Pretoria High Court ultimately ruled in favour of Altech<\/a>.<\/p>\n\n\n\n Matsepe-Casaburri chose not to appeal<\/a>, finalising Altech’s by November of that year.<\/p>\n\n\n\n The minister’s capitulation meant Altech and about 300 other voice and data carriers could all build their own network infrastructure \u2014 many of which did not meet the 30% HDG ownership requirement.<\/p>\n\n\n\n Several of these licensees were small businesses, ranging from sole proprietorships to companies with fewer than a dozen employees that would never have been able to qualify.<\/p>\n\n\n\n As a result, the South African government accidentally sparked a boom in South Africa’s telecommunications industry.<\/p>\n\n\n\n Although the impact wasn’t immediate, a vibrant and fiercely competitive broadband infrastructure sector emerged over the next decade<\/a>.<\/p>\n\n\n\n For many, it might be difficult to imagine a world before South Africa was awash with fibre operators like Vumatel, Frogfoot, Metrofibre, Octotel, and Herotel.<\/p>\n\n\n\n However, not too long ago, if you wanted uncapped broadband, there was essentially one option \u2014 Telkom DSL.<\/p>\n\n\n\n That all changed in 2014 when Vumatel broke ground in Parkhurst<\/a>, igniting a land grab among the country’s fibre network operators.<\/p>\n\n\n\n It also forced Telkom’s hand.<\/p>\n\n\n\n After spinning out its wholesale and networks division into a subsidiary called Openserve in 2015 and intensifying its own fibre rollouts, it was forced to cut prices to keep pace with Vumatel and the rest.<\/p>\n\n\n\n At the same time this industry boom was taking off in 2014, Icasa instituted an inquiry into the industry’s low levels of ownership by historically disadvantaged groups.<\/p>\n\n\n\n This also dragged on, with Icasa only moving ahead with draft regulations in 2020.<\/p>\n\n\n\n It published the final regulations in March 2021 that included its black ownership provisions despite several warnings and pleas from the industry to adopt a more nuanced approach.<\/p>\n\n\n\n One of the most prominent examples of the chilling effect of Icasa’s regulations was Starlink’s hesitation to launch in South Africa<\/a>.<\/p>\n\n\n\n Although SpaceX never confirmed that this was why it halted its South African plans, well-placed industry sources have said Icasa’s regulatory changes were absolutely to blame.<\/p>\n\n\n\n Malatsi also didn’t say as much in announcing his plans, but implementing an equity equivalent scheme was clearly a way to help SpaceX obtain the necessary licences in South Africa without selling a 30% stake in its local entity.<\/p>\n\n\n\n Equity equivalent programmes allow companies to fulfil the requirements of BEE ownership through alternate means.<\/p>\n\n\n\n However, while Malatsi’s plan offers a workaround, it doesn’t address the fact that Icasa’s regulations are poorly formed.<\/p>\n\n\n\n At the very least, they should recognise the importance of small and medium-sized businesses and allow them to qualify for national network and service licences.<\/p>\n\n\n\n![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2022\/07\/Frogfoot-e1664290020756.jpg\")
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