Telecommunications Regulation. SOUTH AFRICA Bowman Gilfillan
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1 Telecommunications Regulation SOUTH AFRICA Bowman Gilfillan CONTACT INFORMATION Daniel Pretorius Bowman Gilfillan 165 West Street, Sandton P.O. Box Johannesburg, What is the name and nature of the regulatory body(ies) in your jurisdiction? To which bodies (if any) are decisions appealed? The regulatory authority in respect of the communications sector in South Africa is the Independent Communications Authority of South Africa (ICASA). ICASA is responsible for, amongst other things, licensing network operators and service providers, managing the radio frequency spectrum, making policy recommendations to the Minister of Communications (the Minister) and monitoring compliance by providers of communications services with the applicable regulatory requirements. Decisions of ICASA that amount to administrative action may be reviewed (but not appealed) by the High Court of South Africa in judicial review proceedings. 2. Has your jurisdiction adopted the WTO Basic Telecommunications Agreement? If yes, with what exceptions, if any? South Africa has adopted the WTO Basic Telecommunications Agreement with no exceptions. 3. Are operators in your jurisdiction privately or publicly/state owned?
2 There are both publicly and privately owned telecoms operators in South Africa. The Government of South Africa has a 40% shareholding in the incumbent public switched telecommunications network (PSTN) operator, Telkom SA Limited, (Telkom) and a further 15% stake through the Public Investment Corporation. Broadband Infraco (Proprietary) Limited, which was established in 2008 to provide wholesale network access to other operators, is wholly state-owned as is Sentech Limited which operates as a carrier-of-carriers and provides broadcasting signal distribution services. All other major operators in South Africa are privately owned although various government entities have a stake in certain major operators, including the mobile operators MTN Group Limited and Vodacom Limited. 4. What are the primary differences between the regulation of wire line, wireless, satellite, cable and VoIP providers? There are no significant differences between the manner in which wireline, wireless, satellite, cable and VoIP providers are regulated. All such providers are required to be licensed in terms of the Electronic Communications Act, 2005 (ECA), which has established a horizontal licensing framework. As such, networks and the electronic communications services (ECS) provided over such networks are licensed separately. Depending on the scope of the network or services to be provided and whether the services are to be provided on a commercial basis or not, a network operator or service provider will require an individual or class (general authorisation) licence. All individual network licensees, regardless of the technology used in the particular network (i.e. wireline, wireless, satellite or cable), are subject to the same regulatory obligations. Similarly, all class network licensees are subject to the same regulatory obligations. Holders of individual or class service licences will also be subject to the same standard terms and conditions of licence, regardless of the nature of the services, such as wireline, wireless or VoIP, which they make available to end-users. An operator of a relatively large-scale electronic communications network will, regardless of the technology employed, require an individual licence to provide electronic communications network services (ECNS). A provider of voice telephony services utilising numbers from the national numbering plan is required to be authorised in terms of an individual ECS licence, whether the services are ultimately provided to end-users using wireline, wireless or VoIP technology. As described under question 13, wireless and satellite providers also require radio frequency spectrum licences to provide services utilising spectrum and further regulatory obligations may be imposed on such providers in terms of those licences. 5. Are broadcasters regulated separately from telecoms? Broadcasters and providers of telecoms services are regulated in terms of the same statutory instrument, the ECA but are licensed separately and are subject to different regulatory obligations. All networks are regulated in the same way, regardless of whether they are used to distribute broadcasting services or transmit telecoms services, and such network operators are not regulated separately.
3 6. How are satellite earth stations and submarine cable landings regulated? The operator of a satellite earth station or submarine cable landing is required to hold an individual ECNS licence in terms of the ECA to provide network services. Satellite earth stations and cable landing stations are required to be included on the list of essential facilities which ICASA must publish, which must be leased by the operator, on request, to other licensed network operators. 7. How is the radio spectrum generally regulated? The Minister of Communications (the Minister) is responsible for settting policy in relation to the use of the radio frequency spectrum, including representing the Republic of South Africa in international fora such as the International Telecommunications Union (ITU). ICASA is responsible for preparing a radio frequency plan designating the services for which particular bands may be utilised. This plan is required to take into account the ITU's allocations of radio spectrum. The utilisation of radio spectrum is required to be licensed in terms of a radio frequency spectrum licence issued by ICASA. Radio frequency spectrum licences may be granted on a competitive basis, in respect of spectrum, such as WiMax spectrum, for which there is a high demand and not enough spectrum to accomodate the demand. In respect of spectrum for which there is less demand, application may be made to ICASA for the requisite radio frequency spectrum licence. Certain uses of radio spectrum are exempted from the licensing requirements. Spectrum which is awarded on a competitive basis may be subject to an auction process, which will determine the price paid for the spectrum and the annual administrative charges to be levied. Spectrum licences are generally required to be renewed on an annual basis, upon the payment of annual spectrum fees to ICASA. 8. Are any operators granted exclusivity? No operators in South Africa are granted any exclusive rights. 9. Are anti-competitive practices subject to regulation or general competition (e.g., antitrust) laws? Anti-competitive practices are subject both to ex ante regulation by ICASA in terms of the sector-specific communications legislation, the ECA, as well as to general competition laws, which are implemented by the competition authorities, the Competition Commission of South Africa and the Competition Tribunal. In terms of the ECA, ICASA may impose specific pro-competitive conditions on telecoms licensees who act in a manner preventing or lessening competition in a particular market through undue preference or discrimination in relation to any other operator. ICASA may also, in terms of regulations to be published under the ECA, designate a particular operator as having significant market power (SMP) in a certain market. Pro-competitve conditions may also be imposed on such operators.
4 10. What services have been liberalized or designated as competitive services? All services have now been liberalized. The only restriction on entry into the market is the requirement to hold a licence to provide telecoms services or operate a network. Where an individual licence is required to provide telecoms services or operate a network, as the case may be, an applicant for such a licence has to wait for ICASA to publish an invitation to apply (ITA) for the particular type of licence that is required. In terms of the Government's policy of managed liberalisation, ICASA may only publish an ITA for individual licences to operate a network, once the Minister has issued a policy direction to ICASA directing it to do so. As such, a degree of political control has been retained over competition at a network level. As such, the ability of prospective providers of telecoms services and networks to enter the market is subject to some restrictions in light of the applicable licensing requirements. 11. Are there regulated tariffs or price lists? If so, for what types of services? In terms of the standard terms and conditions of licence which are applicable to all operators, tariffs for all licensable telecoms services (being services which consist of the transmission of electronic communications) and network services are required to be filed with ICASA seven days before coming into effect. ICASA may impose price controls on an operator who is designated as having SMP in a market in which there is ineffective competition in relation to the retail and wholesale tariffs charged by that operator. At present, price controls are applicable only to the tariffs charged by the incumbent PSTN operator, Telkom. ICASA has indicated that regulations in relation to competition matters will be published in Are there restrictions on foreign investment in any types of communications companies? If so, what are the restrictions? There are no direct restrictions on foreign investment in telecommunications companies. Foreign ownership in a broadcasting service is restricted to twenty per cent. ICASA may impose requirements in relation to required levels of shareholding by historically disadvantaged persons (HDPs) who were subject to systemic disadvantage during the previous political regime in South Africa, prior to 1994, and who were classifed as either African, Indian or Coloured in terms of the racial classifications employed during apartheid. The category of persons who are regarded as HDPs also includes women, the youth and disabled persons. Where a new individual licence to provide telecommunications services or a network is granted by ICASA,the licensee will be required to demonstrate at least thirty per cent ownership by HDPs, or such higher percentage as ICASA may prescribe. These requirements necessarily limit the extent of foreign investment which is permitted in communications companies. 13. What are the approval processes for mergers and acquisitions? Do these vary by type of operator?
5 Mergers and acqusitions in the telecommunications sector are subject to regulatory approval requirements and competition (anti-trust) requirements. An operator is required to file an application with ICASA for prior approval of a transaction for the direct or indirect transfer of a control interest (being twenty-five per cent of the shares in the licensed entity or the ability otherwise to direct the affairs of the operator). At present, these requirements are only applicable to relatively large operators, but may be extended to all operators in future, if proposed amendments to the standard terms and conditions of licence which are applicable to operators, are adopted. Operators are also required to file a merger notification with the competition authorities for the approval of a merger or aquisition. These requirements do not vary in relation to the type of operator but different requirements and procedures are applicable to small, intermediate and large mergers. 14. Is interconnection between carriers mandatory? All network operators and service providers have the right to interconnect with any other licensed entity, provided that the request for interconnection is reasonable. Disputes with regard to the refusal to interconnect may be referred to ICASA, which may impose terms and conditions for interconnection. ICASA may, by way of regulation, exempt certain licensees from the obligation to interconnect where ICASA has not designated the licensees as having SMP. 15. Are interconnection fees/rates regulated? ICASA may regulate interconnection fees but has not yet published regulations in this regard. It is anticipated that regulations regulating the interconnection rates charged by operators who are desginated as having SMP will be published during the course of Must carriers make available network components to competitors? If so, what are fees/prices based on cost, or market rates? Network operators are required to lease network facilities to other network operators, on request, provided that the request is reasonable. Disputes with regard to requests for facilities leasing may be referred to ICASA for resolution and ICASA may impose terms and conditions on the operators in relation to the leasing arrangement. ICASA is required to prescribe, by regulation, a list of essential facilities which are required to be leased by network operators to other operators, including local loops, submarine cables and satellite earth stations. In addition, ICASA is required to publish regulations dealing with wholesale facilities leasing rates and the manner in which these must be determined. ICASA may also impose price controls in relation to network access services on operators who are designated as having SMP. It is anticipated that ICASA will publish the regulations referrred to, during the course of 2010.
6 17. Is there an obligation to serve all customers? If yes, is there a fund to subsidize eligible carriers? Which carriers contribute to the fund? Which carriers are eligible to receive these funds? Are broadband services subsidized or otherwise promoted through tax or other incentives? All licensed operators and service providers are required to contribute to the Universal Service and Access Fund (USAF), which is administered by the Universal Service and Access Agency (USAA). The USAF is used to subsidise the roll-out of services to under-serviced areas and persons and educational institutions by operators and service providers and to subsidise needy persons so as to enable them to obtain communications services. Application is required to be made to the USAA for funding. The USAA may also award project grants to network operators and service providers for the roll-out of services to under-serviced areas, which are awarded on the basis of a competitive tender. Broadband services are not specifically subsidised or promoted. Additional universal service obligations, including a requirement to roll-out services to particular areas and under-serviced areas are imposed as conditions of the licences held by certain operators. 18. Are there mandatory requirements to customer agreements (subscriptions, etc.)? Customer agreements are required to use plain and understandable language, and clearly indicate the nature of the contract, the minimum duration of the contract, any payment for early termination and the notice period and manner in which notice must be given for termination of the agreement. A copy of the written terms and conditions of a customer agreement must be made available to the customer within seven days of conclusion of the agreement. 19. Are there any general or telecommunication specific requirements as to data retention? New legislation with regard to the retention of personal data is to be adopted during the course of In relation to the telecommunications sector, in particular, fixedline and mobile operators are required to retain certain communications-related information, including traffic data, for the purpose of fulfilling lawful interception requirements. 20. Is number portability mandatory? If so, for which types of carriers (e.g., wireline, wireless, voice over internet protocol)? Number portability is mandatory for fixed-line (wireline) and wireless (mobile) operators. Number portability for fixed-line operators has been introduced in two phases: the first phase in which number portability must be offered to subscribers who have been assigned more than ten different numbers within the same block of 1000 or contiguous numbers and the second phase in which number portability must be offered to all subscribers in respect of individual geographic numbers. The first phase of number portability for fixed-line providers is targeted at
7 corporate customers while the second phase is targeted at residential customers. The first phase was implemented in May The second phase is due to commence in March 2010 although this implementation date may be delayed. 21. Is equal access dialing selection mandatory? If yes, for which types of carriers? No. 22. Is access or other contributions ( ADCs ) required of new entrants? No. 23. Is VoIP regulated? If yes, to what extent? VoIP is not specifically regulated and is subject to the same requirements that are applicable to other ECS. 24. Are any major changes to telecommunications laws expected in the near future? The ECA is intended to facilitate convergence and replaced previous legislation which regulated the telecommunications and broadcasting sectors separately and specifically. ICASA is engaged in preparing and finalising the various regulations and other statutory instruments which are required to be adopted for the full implementation of the ECA. These may introduce significant regulatory obligations. For example, ICASA is presently finalising regulations dealing with competition issues in terms of which a market definition process will take place, operators and service providers may be designated as having SMP and regulatory obligations such as price controls in relation to access may be imposed. 25. Is resale of telecom services permitted? If yes, is this activity regulated? What is the process to become a reseller? Are foreign companies permitted to be resellers? The resale of telecoms services is permitted. A reseller of ECS is exempted from the requirement to obtain a licence and is required only to submit a notification to ICASA. A reseller of network services requires an ECNS licence to resell network components or capacity. At present, there is no restriction of foreign companies operating as resellers although it is anticipated that foreign operators may, in future, be restricted from acting as resellers.
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