{"id":623185,"date":"2025-12-12T16:49:15","date_gmt":"2025-12-12T14:49:15","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=623185"},"modified":"2025-12-13T09:54:32","modified_gmt":"2025-12-13T07:54:32","slug":"big-changes-to-black-ownership-laws-for-internet-service-providers-in-south-africa","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/telecoms\/623185-big-changes-to-black-ownership-laws-for-internet-service-providers-in-south-africa.html","title":{"rendered":"Big changes to black ownership rules for Internet service providers in South Africa"},"content":{"rendered":"\n

Communications minister Solly Malatsi has issued a policy direction<\/a> instructing the ICT sector regulator, Icasa, to address legal problems with its equity ownership rules.<\/p>\n\n\n\n

In addition to confronting long-standing concerns about requiring all Internet service providers to be minimum 30% black-owned, it would also introduce Equity Equivalent Investment Programmes (EEIPs).<\/p>\n\n\n\n

EEIPs have been a controversial topic since Malatsi first proposed them, as they would offer an alternative path for Starlink to launch in South Africa.<\/p>\n\n\n\n

Critics have argued that EEIPs would enable Starlink and others to circumvent South Africa\u2019s black economic empowerment (BEE) laws.<\/p>\n\n\n\n

However, Malatsi\u2019s policy direction stated that there was little evidence to support this claim.<\/p>\n\n\n\n

\u201cAs the ICT Sector Code itself recognises EEIPs as contributing to BBBEE, this is not a legally sound argument,\u201d he said.<\/p>\n\n\n\n

\u201cThe sole purpose of the policy direction is to promote and support empowerment and transformation initiatives already in place in terms of the ICT Sector Code under the Broad-Based Black Economic Empowerment Act.\u201d<\/p>\n\n\n\n

Malatsi\u2019s policy direction singles out problematic regulations that the Independent Communications Authority of South Africa (Icasa) published over four years ago.<\/p>\n\n\n\n

On 31 March 2021, Icasa published the \u201cRegulations in respect of the Limitations of Control and Equity Ownership by Historically Disadvantaged Groups (HDG) and the Application of the ICT Sector Code\u201d.<\/p>\n\n\n\n

Under these regulations, all network operator, service provider, and radio frequency spectrum licensees would need to be 30% black owned.<\/p>\n\n\n\n

It superseded existing provisions in the Electronic Communications Act, which required licensees with national footprints to be 30% owned by historically disadvantaged groups (HDGs).<\/p>\n\n\n\n

HDGs include black people or citizens who are women, youth, or people with disabilities. \u201cBlack people\u201d generally means<\/a> South African citizens who are ethnically African, Coloured, or Indian.<\/p>\n\n\n\n

Icasa\u2019s black-only provision in its new regulations was extremely controversial, resulting in the Authority suspending its implementation until an indefinite future date.<\/p>\n\n\n\n

This plunged South Africa\u2019s entire telecommunications industry into a state of uncertainty, with smaller players disproportionately affected.<\/p>\n\n\n\n

Shortly after Icasa introduced these new regulations, Starlink amended its African rollout plans to deprioritise South Africa and focus on other territories instead.<\/p>\n\n\n\n

An accidental broadband revolution<\/h2>\n\n\n\n
\"Ivy
Former communications minister Ivy Matsepe-Casaburri<\/figcaption><\/figure>\n\n\n\n

Icasa had embarked on a project to reform its ownership equity regulations because compliance among licensees was low.<\/p>\n\n\n\n

However, to understand how that happened, it is necessary to go back twenty years \u2014 before the Electronic Communications Act of 2005 (ECA) came into effect.<\/p>\n\n\n\n

Under the previous Telecommunications Act of 1996, there were many licences for different types of networks.<\/p>\n\n\n\n

These included licences for public-switched telephone services, mobile networks, international services, and private networks. For everyone else, there was the Value Added Network Service (VANS) licence.<\/p>\n\n\n\n

The law also explicitly stated that only Telkom was allowed to operate a local access network until the Minister of Communications said otherwise.<\/p>\n\n\n\n

When the ECA replaced the Telecommunications Act on 19 July 2006, it dramatically simplified the licences and included a mechanism for converting old licences to the new regime.<\/p>\n\n\n\n

This was to facilitate the so-called \u201cmanaged liberalisation\u201d of South Africa\u2019s telecommunications sector, hopefully ending Telkom\u2019s decade-long monopoly.<\/p>\n\n\n\n

Instead of licences for different types of services \u2014 which wasn\u2019t very future-proof \u2014 the ECA essentially had two different licence types and two licence classifications.<\/p>\n\n\n\n

The two types were Electronic Communications Network Service (ECNS) and Electronic Communications Service (ECS).<\/p>\n\n\n\n

An ECNS licence allows licensees to build and operate physical networks, whereas an ECS licence lets them offer telecommunications services.<\/p>\n\n\n\n

These can be issued as either \u201cindividual\u201d or \u201cclass\u201d licences. An individual licensee can operate nationally, whereas class licences are regional (although this initially had a different meaning for ECS licences).<\/p>\n\n\n\n

Under the direction of the late former minister Ivy Matsepe-Casaburri, Icasa published a list of VANS licensees who would be converted to an I-ECNS licence.<\/p>\n\n\n\n

These licensees would be permitted to build their own physical network infrastructure, like Telkom, Neotel (now Liquid), Vodacom, MTN, and Cell C.<\/p>\n\n\n\n

Some of the VANS licensees that were left off the list launched a legal challenge against Icasa and the minister in what became known as the \u201cAltech case\u201d.<\/p>\n\n\n\n

The case dragged on until August 2008, when the Pretoria High Court ruled in favour of Altech<\/a> and all other VANS.<\/p>\n\n\n\n

Matsepe-Casaburri ultimately chose not to appeal<\/a>. By November of that year, Altech\u2019s win was final. Icasa had to convert all VANS licensees to I-ECNS licences.<\/p>\n\n\n\n

The minister\u2019s capitulation meant Altech and about 300 other voice and data carriers could all build their own network infrastructure.<\/p>\n\n\n\n

Several of these VANS licensees were small businesses, ranging from sole proprietorships to companies with fewer than a dozen employees.<\/p>\n\n\n\n

This means many did not meet the 30% HDG ownership requirement, but thanks to the government\u2019s bungling of the ECA transition, they got I-ECNS licences anyway.<\/p>\n\n\n\n

As a result, the South African government accidentally sparked a boom in South Africa\u2019s telecommunications industry. A vibrant and fiercely competitive sector emerged.<\/p>\n\n\n\n

The Vumatel breakthrough<\/h2>\n\n\n\n
\"\"
Vumatel ground breaking in Parkhurst, 2014<\/figcaption><\/figure>\n\n\n\n

Although it took several years for true competitors to Telkom to rise, players like Dark Fibre Africa (DFA) began laying the foundation soon after the Altech case.<\/p>\n\n\n\n

When DFA’s backhaul and wholesale network service reached a critical mass, it helped enable Vumatel and the Parkhurst Residents and Business Owners Association to open the floodgates<\/a> in 2014.<\/p>\n\n\n\n

Vumatel and Parkhurst showed that the models being used to determine the financial feasibility of suburban fibre rollouts were flawed.<\/p>\n\n\n\n

Parkhurst proved there was consumer demand<\/a> by running a survey among community members, and showed there were many operators willing to build them a network by accepting bids through a tender.<\/p>\n\n\n\n

It ignited a craze among South Africa\u2019s leafy suburbs. Several had soon published their own tenders. These tenders soon became unnecessary as a fibre land grab ensued.<\/p>\n\n\n\n

By March 2019, just under five years after Parkhurst, Vumatel had overtaken Telkom\u2019s Openserve<\/a> as the largest fibre-to-the-home provider in South Africa in terms of homes passed.<\/p>\n\n\n\n

At the same time this industry boom was taking off, Icasa instituted an inquiry in 2014 regarding the industry\u2019s low levels of ownership by historically disadvantaged groups.<\/p>\n\n\n\n

Unfortunately, Icasa\u2019s inquiry did not seem to recognise that its own failure to issue new I-ECS and I-ECNS licences<\/a> since 2010 was a key culprit.<\/p>\n\n\n\n

It also didn\u2019t seem to recognise that making it easier for young entrepreneurs to launch telecommunications companies would boost participation from black people.<\/p>\n\n\n\n

Instead of considering ways to further liberate a sector where small businesses had flourished, Icasa began drafting updated regulations in 2020 to crack down on it.<\/p>\n\n\n\n

Fortunately, Icasa\u2019s new regulations don\u2019t impact new industry titans like Vumatel, which are already B-BBEE compliant.<\/p>\n\n\n\n

However, it disproportionately hurts the small businesses and one-man Internet service providers that have quietly been contributing to South Africa\u2019s broadband revolution for over 20 years.<\/p>\n\n\n\n

Malatsi issues final policy directive<\/h2>\n\n\n\n
\"\"
In-flight Wi-Fi on Qatar Airways powered by Starlink<\/figcaption><\/figure>\n\n\n\n

Malatsi\u2019s policy direction instructs Icasa to revise its controversial 2021 regulations to align with the Amended Broad-Based Black Economic Empowerment (B-BBEE) ICT Sector Code.<\/p>\n\n\n\n

He said that the direction has regard for \u201cthe need to promote numerous policy goals for the sector in relation to the availability, accessibility and affordability of communications services\u201d.<\/p>\n\n\n\n

It also takes into account the contribution to investment and competition that can be made by international entities, and considers the overriding provisions of the BBBEE Act.<\/p>\n\n\n\n

In addition to aligning its regulations with the ICT Sector Code, Icasa is directed to take account of government\u2019s national economic inclusion policy goals.<\/p>\n\n\n\n

Within the scope of its own powers and duties under the ECA and the Icasa Act, the regulator must give effect to these policy goals.<\/p>\n\n\n\n

Malatsi said that, as far as possible, Icasa must ensure parity among licensees and promote the rollout of broadband to bridge the digital divide.<\/p>\n\n\n\n

Icasa must also ensure the preservation of South Africa\u2019s digital sovereignty by encouraging adherence to South Africa\u2019s data protection and data security policies.<\/p>\n","protected":false},"excerpt":{"rendered":"

Communications minister Solly Malatsi has directed Icasa to address legal problems with its equity ownership rules, which will also clear a path for Starlink to launch in South Africa.<\/p>\n","protected":false},"author":15,"featured_media":555766,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[1295,42416,100989,100040,18090,76862,11375,48987,25299],"class_list":["post-623185","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-telecoms","tag-altech","tag-b-bbee-ict-sector-code","tag-broad-based-economic-empowerment-b-bbee","tag-equity-equivalent-investment-programmes-eeips","tag-independent-communications-authority-of-south-africa-icasa","tag-solly-malatsi","tag-spacex","tag-starlink","tag-vumatel"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/623185"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=623185"}],"version-history":[{"count":11,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/623185\/revisions"}],"predecessor-version":[{"id":623223,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/623185\/revisions\/623223"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/555766"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=623185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=623185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=623185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}