After a few weeks of controversy over consolidation in the communications industry, criticism that the board of ICASA is down to three members and grumblings over yet more digital TV delays, the CEO of telecoms regulator ICASA, Pakamile Pongwana, has released this long statement to the media. We wouldn’t normally publish in full but there some interesting stuff here that’s worth reading and it’s so unusual for the CEO of an institution like ICASA to write something like this, that this time we’re making an exception.
The electronic communications sector has undergone extensive changes over the years. More importantly, the sector has made headway in increasing overall accessibility to electronic communications and postal services by the South African public; particularly as regards access to voice, data and broadcasting services. These changes have placed the role and responsibilities of the industry regulator, the Independent Communications Authority of South Africa (ICASA) under scrutiny. ICASA’s mandate is spelled out in terms of the Electronic Communications Act, 2005 (ECA) for the licensing and regulation of electronic communications and broadcasting services, and in terms of the Postal Services Act, 1998 for the regulation of the postal sector.
In light of recent developments and media reports about the decisions of the Authority, I feel compelled to explain the role of the Authority and the legal framework within which the institution operates. Whilst I do not seek to opine on the matters that are currently before the courts, I wish to clarify the Authority’s overall mandate in relation to certain matters which have been commented on by a variety of stakeholders in the past few weeks.
First and foremost I think it is critical for everyone to recognise that as a creature of statute, the Authority is constrained to act in accordance with and within the context of its empowering legislation. In executing its mandate the Authority continually strives to ensure that its processes and decisions are administratively just and fair. However, the reality of our sector is that the decisions of the Authority will invariably affect vested interests. It is therefore to be expected that those decisions will be challenged and or reviewed in the courts. This is the benefit of our constitutional democracy. As a constitutional entity, the Authority is not above the law and its decisions are subject to legal review. In instances where our processes and decisions are found by the courts to have fallen short of the legal requirements, we will take the learnings (as we have done in the past) and improve our processes and procedures for the sake of all the stakeholders we serve. Having said that, there are a few issues on which I would like to outline the Authority’s position in response to a variety of opinions and queries over the past few weeks.
ICASA’s governance framework Much debate has been made of the fact that the ICASA Council currently comprises of three (3) members as opposed to a maximum of nine (9) as provided for in terms of the ICASA Act, 2000. In my view the legislation is quite clear. The quorum for any meeting of Council is a majority of the councillors presently serving as councillors. I am comfortable that the current team of councillors are capable of providing the requisite strategic direction for the institution in fulfilment of its constitutional and legislative mandate. It is also important to note that the process for filling the vacancies at Council has already been initiated by Parliament. Whilst we await completion of the process, it is important that the institution continues to function i.e. licences need to continue to be issued, compliance by the sector with applicable rules are enforced and the necessary regulatory instruments are implemented for protecting consumers.
ICASA must promote BBBEE in executing its licensing mandate The ECA contemplates that every individual licence granted from the effective date of the ECA shall have a minimum shareholding by historically disadvantaged groups or individuals (“HDIs”) of no less than 30%. This rule also applies to every individual licence that is transferred post the effective date of the ECA. The intention of the legislature in this regard is quite clear that one should not be permitted to – after failing to acquire an individual licence through a competitive process which requires a minimum HDI shareholding of 30% in terms of section 9 – to go through the back door and acquire the same licence through a transfer in terms of section 13. Hence ICASA is required in terms of section 13(6) to ensure that the HDI ownership requirement is not bypassed through licence transfer processes. In this regard the legislation makes it mandatory that the transferee of the individual licence (or and the individual licence subject to the transfer) also have a minimum shareholding of 30% by HDIs.
Spectrum management ICASA’s primary mandate in relation to spectrum is to ensure efficient use of radio frequency spectrum. Critical to this mandate is the need to ensure that spectrum is assigned to licensees (broadcasting and electronic communications services licensees) to enable and facilitate provision of services and that no ‘available and usable’ spectrum lies fallow. To this end, the Authority is eager to re-initiate the licensing process for the assignment of the high-demand spectrum (suitable for deployment of broadband services) which was abandoned a few years ago. In effect, part of the reason why the sector has seen a wave of consolidations is mainly because the key players in the sector (Vodacom and MTN in particular) have been spectrum constrained whilst new entrants have not been able to launch services in the market as they have not been assigned the requisite spectrum.
In this regard, it is important to note that the ICT sector in South Africa is regressing because of indecision by both the regulator and the policy maker on critical issues, particularly as they relate to management and assignment of radio frequency spectrum. It is clear that we are lagging seriously behind in digital migration. By the time the Set-Top Boxes become available, they may be irrelevant because of the already available digital television sets in the market. The state institution responsible for digital network roll-out (Sentech) will have to maintain both outdated analogue transmitters whilst on the other hand it may not be able to recover the costs of deploying and maintaining the digital transmitter network it has rolled-out for a number of years now. Meanwhile broadcasters will be able to transmit digital signal to end users who may not be able to receive them due to non-availability of Set-Top Boxes.
In the mobile space there is continued shortage of spectrum for deployment of Long Term Evolution (“LTE”) services. Spectrum is tied up in analogue transmission and that which is available has not and / or is not being assigned or issued to operators. The implication of the consolidation is that a giant infrastructure based player (or two) will be created in a first tier level of the market. A huge number of entities may not have reasonable and easy access to that infrastructure under the current regulatory framework. That is why concepts like wholesale open access, infrastructure sharing and Mobile Virtual Network Operators become relevant for the South African context. Any future licensing process needs to take account of the need for the creation of a wholesale open access framework to enable access by a myriad of service based players to ensure rapid deployment of broadband services.
The Authority hopes to work with policy makers and other key stakeholders to bring to an end the delays that have plagued the high-demand spectrum licensing process.
Promotion of competition in the ICT sector the Authority is mindful of the effects of the consolidation trends on the competitive landscape in the market. It is also fully aware of its mandate over competition matters in the ICT sector. The ECA, read with the ICASA Act, is very clear about the process which the Authority must follow in order to impose pro-competitive measures in any market. Such a process must include a process to define relevant markets, identify licensees with significant market power (“SMP”) in such markets and imposing procompetitive and proportional measures on identified SMPs. The Authority recognises that it cannot regulate the spectrum effects of market consolidation on competition in the various markets without undertaking an in-depth enquiry in terms of the legislation. The Authority intends to prioritise the identification of markets that are susceptible to anti-competitive effects.
The Authority is committed to radically transform the ICT sector to facilitate growth and employment in line with government’s national policy objectives.
Mr Pakamile Pongwana
[Main image – CC BY Alexkerhead]