Licensing and regulation in the communications sector

By Amanda Armstrong, head of Communications Law Department, Werksmans Inc.

New communications legislation

South Africa currently has two key statutes governing broadcasting, and a separate statute for telecommunications. There is, however, a single regulator, the Independent Communications Authority of South Africa (ICASA), which governs both sectors.

In the first quarter of 2006 almost all of this legislation will be repealed by a convergence statute, the Electronic Communications Act (EC Act).[1]

Objectives of the Electronic Communications Act

The EC Act is an attempt by government –

to create a single statute for the electronic communications sector;
to provide for legislation that is technology neutral, and for the making of policy, licensing and regulation in an increasingly converged environment;
to provide for the greater liberalisation of the sector; and
to provide for less intrusive regulation by distinguishing between services requiring an individual licence and services requiring a class licence.

New licensing framework

The Bill introduces an entirely new licensing framework. A licence is required –

to provide an electronic communications network service
to provide an electronic communications service;
to provide a broadcasting service;
to use spectrum allocated to the communications sector.

As already indicated, the EC Act distinguishes between services requiring an individual licence and those requiring a class licence. Services that are to be individually licensed are those that would “have [a] significant impact on socioeconomic development”. Examples include the provision of a national fixedline service, a mobile cellular service or a national or provincial commercial broadcasting service. The statute envisages a formal licence application for, and the fairly extensive regulation of, these services. Additional licence conditions, over and above standard licence conditions, may be imposed on such services.

Services that merely require a class licence are those which “do not have [a] significant impact on socioeconomic development”. They would include, for example, the provision of local electronic communications network services and community broadcasting services. A relatively simple form of registration is envisaged, and these services will be subject to light touch regulation.

Other key aspects of the EC Act

Having dealt with licensing, the EC Act proceeds to deal with the regulation of electronic communications networks, the radio frequency spectrum, technical equipment and standards, interconnection, facilities leasing, universal service and access, and transitional arrangements.

Competition matters

Currently, the Competition Act “applies to all economic activity within, or having an effect within,” South Africa, and deals with prohibited practices and merger control. The application of the Competition Act is, however, qualified: Where a sector is subject to the jurisdiction of another regulatory authority, such as ICASA, and such authority has jurisdiction in respect of conduct regulated in terms of the prohibited practices chapter or the merger control chapter of the Competition Act, concurrent jurisdiction will be established in respect of that conduct.

The chapter of the EC Act that has attracted the most controversy is that dealing with competition matters: it will dramatically change the situation described above. It will give ICASA virtually full-blown jurisdiction in relation to prohibited practices, and will allow for ex ante and ex post facto intervention across the entire communications sector concerning not only transmission networks and services, but also broadcasting services. The handling of competition matters in the EC Act is unfortunate for a number of reasons:

This legislation deals with competition concepts in a manner that is sketchy and often inconsistent with the Competition Act;
The Competition Act creates an appropriate structure for the investigation and adjudication of competition matters, whereas the EC Act does not;
The competition authorities have the resources, expertise and experience in dealing with competition matters, whereas ICASA does not;
This situation of concurrent jurisdiction is likely to result in uncertainty and compliance difficulties within the communications sector.

Comments and criticisms of the EC Act

At the level of principle, the EC Act is similar to the approach adopted in the Framework Directive and associated Directives of 2002 in the European Union (EU). It attempts to address convergence and provides for a less intrusive form of regulation by introducing the notion of class licences.

However, a number of criticisms may be levelled at the EC Act:

As already indicated, the competition provisions are problematic, and deviate from the approach increasingly adopted in the EU and other jurisdictions – namely that general competition law ought to apply on an ex post facto basis. In these jurisdictions, it is only in limited circumstances, and particularly in relation to network and transmission services, that ex ante regulation may apply;
While the EC Act provides for the greater liberalisation of the communications sector, many critics argue that it has not gone far enough. For example, ICASA may only accept and consider applications for new individual electronic communications network service licences in terms of a policy direction to be issued by the Minister of Communications;
Extensive powers are given to ICASA: Detailed policy making, licensing and issuing of regulations are delegated to it. Whilst this, per se, is not problematic, the success of the EC Act will depend, to a large extent, on the manner in which ICASA exercises these powers.

Challenges

Despite the above criticisms, the EC Act is likely to open up the market in the communications sector. Furthermore, it will allow for a far more flexible and appropriate approach to the licensing and regulation of this sector.

Reference

1. The EC Bill is awaiting signature by the President, after which it will be gazetted. It will either come into operation at that point, or shortly thereafter.

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