Proposed amendments to the Electronic Communications Act

On 23 June 2023, South Africa's Department of Communications and Digital Technologies published the Electronic Communications Amendment Bill, 2022 (Bill) together with an accompanying memorandum on the objects of the Bill, for public comment.

The Bill seeks to amend South Africa's existing communications legislation, the Electronic Communications Act 36 of 2005 (ECA). The last time that the ECA was amended was in 2014. Since then, there have, of course, been many changes to consumer habits, technologies, and the business models of communications companies. A previous amendment bill was published for comment in 2018 but was subsequently withdrawn. Some of the changes proposed in that bill, including open access requirements, were very different from what the current Bill contains. As the draft White Paper on Audio and Audiovisual Content Services has not yet been finalised, the Bill also does not suggest any changes to the regulatory framework for broadcasters (currently dealt with in the ECA and Broadcasting Act, 1999) and other providers of content services, like on-demand and non-linear services (currently dealt with in the Films and Publications Act, 1996).

Aside from introducing a new licence category, the Bill does not propose any big changes to the underlying framework. Some commenters have suggested, for example, that, as in many other countries, licences should be done away with (other than where they relate to scarce resources like spectrum and numbers and preferential land access rights) and that anyone that wants to provide communications services should generally be able to enter the market (although they would not be immune from regulation). In addition, although the distinction between the individual and class licence categories has largely broken down (other than the fact that relatively recently introduced requirements regarding ownership by historically disadvantaged persons apply only to individual licensees), the Bill persists with the distinction between the licence categories.

Many of the proposed amendments in the Bill are underpinned by the Competition Commission's findings in the Data Services Market Inquiry report (DSMI report).

There are still a number of steps that will need to be taken before the Bill is ultimately finalised and before any amendments to the ECA will be made and enforced.

The key proposed amendments in the Bill are set out below.

 

Facility providers to be regulated

The Bill proposes to impose a licensing requirement on persons providing an „electronic communication facility service” (ECFS) by making available electronic communications facilities (such as wires, cables, antenna, masts, transponders, radio apparatus etc) for use in networks. The ECA currently does not require persons who simply provide or make available passive infrastructure and facilities, like tower companies, to hold any type of licence. By contrast, providers of lit network services (referred to as electronic communications network services (ECNS)) and electronic communications services (ECS) over networks are currently required to be licensed.

This means that tower companies and other infrastructure that have not previously been the subject of regulation will be required to obtain a communications licence. It is not clear whether existing ECNS licensees whose business models might include an „ECFS” will, in addition to the licences they already hold, need to obtain a separate ECFS licence. For example, there is currently no carve-out for ECNS licensees that share infrastructure with other licensees on a commercial basis. It also isn't clear what the position is for other types of infrastructure providers that lease or could lease their infrastructure on an incidental basis, such as building owners, and owners of electrical infrastructure. The DSMI report suggested that these types of infrastructure providers should be subject to some regulation and should possibly be included under the facilities leasing regime. By requiring such providers to be licensed, the Bill could inadvertently be giving these types of providers an „out” and a basis to refuse to give access given that if they don’t hold an ECFS licence, they can’t provide access.

The communications regulator, the Independent Communications Authority of South Africa (ICASA), will have to prescribe which ECFS will need to be licensed within 18 months of the amendment coming into effect. Individual ECFS licences will be required for ECFS of national or provincial scope and class ECFS licences will be required for ECFS of local or district municipal scope.

If this change is introduced it will mean that, as with ECS and ECNS licences, ECFS licensees will need to comply with a range of compliance obligations such as payment of licence fees, universal service access fund contribution in the case of an individual service licensee, local ownership requirements, submission of annual reports to the regulator etc. ICASA would also presumably be able to regulate the fees and rates charged by ECFS licensees in appropriate circumstances, as suggested.

 

Changes to the facilities leasing regime

The ECA currently embeds an access regime for passive electronic communications facilities. A licensee can request access to another licensees facilities, and the request must be granted unless the request is not reasonable from a technical and economic perspective. The facilities leasing access requirements apply to all ECNS licensees and interconnection obligations apply to all ECS and ECNS licensees. Unlike the legislation in other countries that have similar requirements, the obligations do not apply only to operators with significant market power.

The Bill proposes to do away with the „reasonableness” element entirely and instead provides that an ECNS and ECFS (although it could be either an ECNS licensee or ECFS licensee in the case of a tower company for example) has to lease its facilities in line with the „principles of access” prescribed by the regulator.

The Bill proposes that the regulator must prescribe facilities leasing pricing principles, which will presumably constitute a large part of the „principles of access”.

The rationale for requiring all providers of passive facilities to provide access is not very clear. The entire model of some infrastructure businesses is to provide access. Tower companies, for example, are incentivised to provide access to as many mobile and wireless network operators as possible. The operators are their customers. Network operators, by contrast, are not incentivised to give access to their competitors, so it makes sense to mandate that they must provide access.

There are also businesses and organisations that lease space on their infrastructure (such as rooftop space on government and private buildings, electricity pylons, etc) on an incidental basis, where leasing space to telco operators is a limited part of what they do. The DSMI report said that all owners of passive electronic communications should be brought within the regulatory framework to facilitate access by telco operators at reasonable prices. The way that the Bill tries to do this is by requiring providers of ECFS to be licensed. But this may inadvertently mean that organisations that only provide access to telco operators on an incidental basis are actually able to escape having to provide access if they do not obtain a licence to do so.

The Bill also proposes changes to the essential facility regime. ICASA will have to publish a list of essential facilities that cannot practically be substituted or duplicated, without access to which competitors cannot efficiently provide goods and services to their customers. The explanatory memorandum published with the Bill said that when an electronic communications facility is included in the list, licensees will not be able to refuse to grant access on the basis that it is not technically or economically feasible to do so. By contrast, the Competition Act, 1998 says that a dominant firm cannot refuse to give access to an essential facility when it is economically feasible to do so. It is not clear exactly how this would work if, for example, a particular facility is fully occupied.

 

Rapid deployment of facilities

DLA Piper has previously written on the importance of rapid deployment of infrastructure in South Africa, particularly in smaller towns and less urban areas to bridge the digital divide in the context of the National Policy on Rapid Deployment of Electronic Communications Networks and Facilities. The Bill seems to aim to concretise what is echoed in the policy by requiring the Minister of Cooperative Governance and Traditional Affairs of South Africa (COGTA) to make standard draft-by laws in terms of the Municipal Systems Act, 2000 for the deployment of facilities.

The by-laws must provide for, amongst other things, a uniform wayleave process, cost-based wayleave application fees, a framework for sharing municipal property and communications infrastructure etc. This proposed amendment is aligned with the draft standard by-laws published on 16 September 2022 and which are currently still in the process of being finalised. The difficulty with standard by-laws published under the Municipal Systems Act is that they are only enforceable in municipalities that adopt them. This means that the publication of standard by-laws may well not lead to a consistent approach across municipalities, which is indicated to the be the reason for the requirement. Those municipalities that have already adopted by-laws on access to municipal infrastructure may well prefer their own by-laws.

 

Spectrum sharing v spectrum trading

The Bill seeks to directly regulate and flesh out „spectrum sharing” to ensure the optimal use of spectrum by licensees.

The Bill introduces definitions for spectrum sharing and spectrum trading:

• Spectrum sharing, where more than one licensee uses a specific frequency or spectrum band in a particular area. In order to share spectrum, both users have to have a licence to use the spectrum. Although spectrum sharing is not currently defined in the ECA, the proposed definition is similar to what is already provided for in the ICASA's Radio Frequency Regulations.

• Spectrum trading, „…the transfer, by a licensee, of ownership or control of the rights, in full or in part, held under a radio frequency spectrum licence by way of a sale, lease or sub-letting to a third party…”. This includes granting commercial rights to use spectrum that is licensed to someone else. The ECA does not currently include a definition of spectrum trading, although „spectrum leasing” is defined in the Radio Frequency Spectrum Regulations as giving access to a third party to one's licensed spectrum.

What the Bill provides for is the same as what the Radio Frequency Spectrum Regulations say currently: spectrum sharing (despite what the accompanying memorandum says) and the transfer of ownership or control of a spectrum licence are permitted subject to following the necessary regulatory processes, while spectrum leasing is prohibited. The Bill does not change this. This suggests that there has been no policy shift around allowing spectrum leasing. By contrast, the withdrawn 2018 bill had proposed that spectrum trading be allowed subject to regulatory approval.

Although spectrum sharing is already regulated in the ECA in its current form and in terms of the Radio Frequency Spectrum Regulations, the differences between what is currently provided for in the ECA and Regulations and what the Bill is proposing are that in terms of the Bill:

• The regulator must import a „use it or share it” principle to guard against spectrum hoarding and inefficient use of spectrum generally given that spectrum is a scarce and extremely valuable resource. This is a policy shift away from the „use it or lose it” principle initially proposed in the Next Generation Radio Frequency Spectrum for Economic Development policy paper (Next Generation Policy).

• The regulator must prioritise the assignment of spectrum to „community networks” which were mentioned in the Next Generation Policy but which weren't defined at the time. The Bill now defines these networks as non-profit organisations and non-profit companies, established under the relevant laws, and who would be exempt from the requirement to obtain a licence to provide ECS and ECNS by the regulator.

• A person would simply need to notify the regulator where it wants to share spectrum that is not „high-demand”, whereas currently a person requires the regulator's approval to share in any spectrum in terms of the RFS spectrum. Sharing in high-demand spectrum will trigger an approval requirement. (The Bill introduces a formal definition for „high-demand spectrum”, although it is implied in the RFS Regulations in its current form, to mean spectrum where demand exceeds supply, or spectrum that is fully assigned.) The Bill proposes that one of the bases on which the regulator may refuse a high-demand spectrum sharing application is where the sharing would amount to „spectrum trading” (as defined above), which includes transferring the ownership or control of a licence.

• The regulator must make regulations dedicated specifically to spectrum sharing.

 

Roaming and MVNO services

One of the objects of the ECA is to „…promote an environment of open, fair and non-discriminatory access” to communications services. The Bill introduces a requirement for ECNS licensees that are also holders of International Mobile Telecommunications (IMT) spectrum, and who have a national coverage of 90% of the population, to provide roaming and mobile virtual network operator (MVNO) (ie reseller) services to other licensees or licence-exempt persons. The language of the Bill clearly implies that this would be for the benefit of smaller market players and who may be seeking geographic coverage.

The Bill proposes that the regulator must make roaming and MVNO access / service regulations requiring, for example, reference offers containing model terms and conditions amongst other things. 

 

Underserviced areas

In the context of underserviced areas specifically, and when read holistically, the Bill seems to suggest that, in order to use state resources cost-effectively and optimally, licensees must either (i) share spectrum (although small businesses can be exempt from the requirement to use it or share it presumably because it would be unfair to expect them to use spectrum where they may not even have the capital to deploy a network in the first instance); or (ii) in the case of smaller market players, rely on other means to provide services by requesting access to roaming or MVNO services.

 

Conclusion

Whether or not these amendments are on par with the rest of the world, and whether or not the law is able to keep up with the rapid changes in technology and consumer habits, is debatable. There are a number of changes to the current framework that have been proposed for years that have not been included. The Bill also doesn’t include a number of provisions that were previously dealt with in the withdrawn 2018 bill. Instead, the Bill does not reflect any significant shifts in policy and in many instances mirrors what has already been provided for by ICASA in regulations or licence conditions.