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The South African Minister of Communications and Digital Technologies has introduced the Electronic Communications Amendment Bill (the "Bill") in the National Assembly. The Bill proposes significant amendments to the Electronic Communications Act, 2005 (Act No. 36 of 2005) (the "Act"), with the stated aim of promoting competition, reducing the cost to communicate and accelerating the deployment of electronic communications infrastructure across South Africa. The Bill follows recommendations made by the Competition Commission in its Data Services Market Inquiry report of 2 December 2019, which identified various issues in the market for data services, including high data prices resulting from a failure to promote competition.
This article highlights three of the most noteworthy proposals introduced by the Bill: the "use it or share it" principle for radio frequency spectrum, the regulation of roaming services, and the mandatory provision of mobile virtual network operator services.
The "Use It or Share It" Principle for Spectrum
The Bill introduces a "use it or share it" principle applicable to radio frequency spectrum. Under this principle, ICASA (the "Authority") will be empowered to require spectrum-sharing where assigned radio frequency spectrum remains unused in any area for a period of two years.
The mechanism works as follows. Where the Authority identifies whether through its own inquiries or upon information received from any interested person, that spectrum is unused, it may permit another service licensee or exempted person (a "secondary licensee") to share that unused spectrum. The Authority must invite interested persons to apply for a radio frequency spectrum licence as a secondary licensee, on such terms and conditions as it may determine, including matters relating to duration, withdrawal, interference and technical parameters. Before amending or withdrawing a spectrum licence, the Authority must provide the affected licensee with at least 30 days' written notice, affording the licensee an opportunity to demonstrate that it is utilising the spectrum in compliance with the Act or has network plans in place for its use within twelve months.
The Bill gives preference to community networks and SMMEs when assigning unused spectrum, provided the Authority monitors use to ensure operation without causing interference. Notably, secondary licensees will not be required to pay spectrum licence fees for the first twelve months from the date of assignment. The "use it or share it" principle does not apply to science services as defined by the ITU.
Importantly, if no secondary licensee is successfully licensed for the unused spectrum, the Authority may withdraw the spectrum from the primary licensee altogether, effectively reverting to a "use it or lose it" approach.
The "use it or share it" concept is not unique to South Africa. The Bill's Memorandum notes that the United Kingdom has adopted a similar approach through so-called "local access licences", which enable other users to access spectrum licensed to UK Mobile Network Operators in locations where an MNO is not using its spectrum. In addition, Germany, Albania, Canada, China, Singapore and Hong Kong are all reported to be reimagining the use rights and conditions applicable to high-demand spectrum. The approach is broadly aligned with ITU guidance that regulation-induced spectrum scarcity should be avoided.
Regulation of Roaming Services: A New Regulatory Framework
One of the most significant developments in the Bill is the introduction of a new Chapter 7A to the Act, which for the first time provides a regulatory framework for national roaming and international roaming services. This is an entirely new area of regulation under the Act.
Under the proposed section 42A, an "access provider", (defined as a licensee assigned IMT radio frequency spectrum with mobile network coverage of at least 90% of the population) must provide national roaming services upon request to any licensed person or person providing services pursuant to a licence exemption. Upon receipt of a request, the access provider must conclude a national roaming agreement within 60 days, extendable by a further 60 days. Where disputes arise regarding the terms and conditions of the agreement, the Authority must make a determination within 60 days. The Authority is required to prescribe regulations within 18 months of the Bill's commencement, addressing matters including a reference offer containing model terms and conditions, minimum quality and service levels, the mobile technology generations to which access must be granted, and wholesale rate rules and standards.
The Bill also introduces section 42C, empowering the Authority to prescribe international roaming regulations relevant to the SADC region and other specific countries or regions. These regulations are conditional on reciprocal terms being imposed by the relevant foreign country or its national regulatory authority. The regulations may include rate regulation for roaming services, including price controls on wholesale and retail rates.
The underlying rationale for these provisions is that wholesale roaming arrangements which are not competitively priced can raise rivals' costs, particularly for challenger networks, thereby reducing the competitive pressure such operators can exert in the market.
Mandatory Provision of MVNO Services: A New Concept
Another transformative proposal in the Bill is the obligation on access providers to provide mobile virtual network operator ("MVNO") services upon request. The Bill's Memorandum acknowledges that MVNOs are not well developed in South Africa, due largely to a lack of incentives by large networks to provide access.
Under the proposed section 42B, an access provider must provide MVNO services upon request to any licensed person or person providing services pursuant to a licence exemption. The same timelines apply as for national roaming: the access provider must conclude an agreement within 60 days (extendable by a further 60 days), and disputes must be resolved within 30 days, failing which the Authority must make a determination within a further 60 days. The Authority must prescribe regulations within 18 months of commencement, addressing definitions of MVNOs (taking into account different mobile virtual network business models), reference offers, minimum quality standards, the technologies to which access must be granted, and wholesale rate rules.
The Bill recognises that MVNOs can bring material benefits for consumers at the retail level, including greater choice, improved quality, and lower or more innovative pricing. By mandating access, the Bill seeks to address the structural barriers that have historically prevented the emergence of a competitive MVNO market in South Africa.
Wholesale Pricing Rules and Standards
Supporting the new roaming and MVNO obligations, the Bill amends section 47 of the Act to require, rather than merely permit, the Authority to prescribe wholesale pricing rules or standards applicable to different types of electronic communications facilities, including essential facilities, roaming and MVNO services. These rules must be fair and reasonable, non-discriminatory (unless pro-competitive justifications exist), cost-oriented, and, for essential facilities, reflective of cost plus a reasonable return. The Authority must prescribe these rules within 18 months of the Bill's commencement.
Concluding Remarks
The Bill signals a marked shift towards a more interventionist regulatory approach in the South African electronic communications sector. Operators holding high-demand spectrum will need to demonstrate active utilisation or risk losing access to that spectrum. Access providers with national coverage will, for the first time, be obliged to provide roaming and MVNO services on regulated terms.
Stakeholders in the electronic communications sector are encouraged to review the Bill carefully and to engage in the legislative process as it progresses through Parliament, for questions or concerns, please reach out to our TMT team.
To view the Notice that was published in Government Gazette, click here.
To view the bill, please click here.
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Read the original publication at ENS
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