SOUTH AFRICA: TELECOMMUNICATIONS UPDATE – DRAFT REGULATIONS REGARDING STANDARD TERMS AND CONDITIONS FOR INDIVIDUAL LICENCES

By Humayra Hajat,Livia Dyer Thursday, April 21, 2022
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On 16 March 2022, the Independent Communications Authority of South Africa (ICASA) published a notice indicating its intention to amend the current 2010 Regulations regarding Standard Terms and Conditions for Individual Licences under Chapter 3 of the Electronic Communications Act 36 of 2005 (ECA) (Standard Terms and Conditions).

ICASA’s draft amendment regulations (Draft Regulations) were published together with an explanatory memorandum outlining ICASA’s thinking behind the draft amendments. The Draft Regulations are accessible here.

The Standard Terms and Conditions set out the general requirements that all holders of individual licences must comply with. The obligations relate to matters such as how licensees must update ICASA about developments on their ownership structures, contact persons, addresses, among others; when licensees have to start operating after they obtain their licences; and the types of invoices that licensees must provide to their customers.

Who will be affected by the Draft Regulations? 

The Draft Regulations propose amendments to the standard terms and conditions for holders of:

  • individual licences to provide broadcasting services (i.e. public and commercial broadcasters);
  • electronic communications network services (ECNS) licences (i.e. licensees that operate physical networks); and
  • electronic communications services (ECS) licences (i.e. licensees that provide services over physical networks, such as internet service providers, and providers of switched voice services that use numbers from the national numbering plan).

There is an erroneous reference in the Draft Regulations to class ECNS and class ECS licences, but the regulations only apply to holders of individual licences.

Proposed amendments when notifying ICASA of changes to a licensee’s details and information

ICASA has proposed substituting regulation 2 of the Standard Terms and Conditions which set out the requirement for holders of individual licences to notify ICASA of any changes to the licensee’s details and information.

In particular, it is proposed that:

  • licensees will still be required to notify ICASA of any changes to their names or trading names; contact details and contact persons; principal places of business; and postal addresses;
  • licensees may not change their names and/or trading names if the new name may be confused with another licensee’s name or trading name;
  • licensees will have 14 days instead of seven days within which to notify ICASA; and
  • any notification received by ICASA outside of this window must be accompanied by a late fee to be determined by ICASA from time to time.

Proposed scrapping of requirement to notify ICASA of changes to shareholding information

A significant change is that ICASA has proposed repealing regulation 2(1)(c) of the Standard Terms and Conditions which is the requirement for individual licensees to notify ICASA of any changes to their shareholding. Although ICASA has proposed repealing this requirement, it has not yet included a proposed substitution and/or amendment of this requirement.

In its explanatory memorandum, ICASA notes that the notification requirement has been subject to abuse and has been incorrectly applied by some licensees. As a result of this, ICASA has not been able to adequately monitor and manage changes in shareholding in individual licensees, particularly in relation to changes of ownership and control over time.

This is because, in ICASA’s view, a change in a licensee’s ownership has the effect of changing the licensee’s shareholding structure, which may trigger the requirement in section 13(1) of the ECA to get ICASA’s prior approval to the extent that any change amounts to a transfer of control of an individual licence.

The explanatory memorandum suggests that all changes to a licensee’s shareholding structure will need to be approved or at least notified to ICASA before being implemented. If this is actually ICASA’s intention (which is not entirely clear), the changes will have significant implications for holders of individual licences. These include:

  • The potential for a delay in licensees being able to implement shareholding changes. ICASA’s current timelines to approve transfers of control are generally between six and 18 months. It is not clear whether ICASA has the capacity to evaluate all shareholding changes, even if not all shareholding changes will require approval.
  • The lack of clarify on whether changes to both direct and indirect shareholding must be approved before being implemented, or whether only changes to the direct ownership structure will need to be notified. If changes to the indirect ownership structure of licensees need to be notified, it is not clear how licensees with listed indirect shareholders are supposed to comply.
  • The introduction of requirements extending ICASA’s prior approval powers will not necessarily achieve the objective of ensuring that licensees submit the correct notifications to ICASA or apply for ICASA’s prior approval when they are supposed to. Licensees that flout the requirement are not likely to comply with the new requirements anyway. There may well be better means of incentivising licensees to comply and clarifying the circumstances in which ICASA thinks prior approval is needed.

Other proposed amendments

Some of the other amendments proposed in the Draft Regulations seem to be to enhance ICASA’s enforcement powers and clarify certain aspects of the Standard Terms and Conditions. In particular, the Draft Regulations propose the following amendments:

  • Regulation 1: the insertion of new definitions, such as ‘days’ and ‘effective date’ as ICASA has noted confusion from licensees in this regard.
  • Regulation 5(4): a licensee’s failure to commence operations within the timelines stipulated in regulation 5(1) or any extension period will constitute non-compliance and be referred to the Complaints and Compliance Committee (CCC) for a recommendation on whether to cancel the licence.
  • Regulation 8: ICASA may refer a matter to the CCC where a licensee fails or refuses to provide ICASA with required information after three attempts; and
  • Regulation 12: contravention of the regulations (not specified in regulation 12(1) and except for regulations 2 and 5) will result in liability to a fine not less than ZAR 10 000 but not more than ZAR 100 000.
  • Changes in order to simplify the licence templates. 

Opportunity to make written submissions to ICASA

Interested parties wishing to make submissions on the Draft Regulations may do so by no later than 16h00 on 5 May 2022 by post, hand delivery or e-mail in accordance with the details provided in the Draft Regulations.

* This article was co-authored by Azraa Moyideen