Due to the growing desire for fast and reliable internet access in South Africa, the demand for fibre has boomed in the past decade. The Independent Communications Authority of South Africa ("ICASA") reports that fibre-to-the-home and fibre-to-the-building subscriptions have grown 4 231% between the years 2015-2021, compared to an increase of 61% for fixed line broadband subscriptions over the same period.
As a result, ICASA and various government departments have had to scramble to regulate at the pace at which fibre is being rolled out. In this blogpost we condense the some of the most impactful recent regulatory changes for fibre network operators ("FNO's").
Licensing framework in terms of the Electronic Communications Act
When is a license required?
Section 7 of the Electronic Communications Act No. 36 of 2005 ("ECA") provides that, save for certain exempted services, no person may provide any 'service' without a license.
In the context of the ECA, a 'service' includes:
- an electronic communications network service ("ECNS"), which is a service whereby a person makes an electronic communications network, such as a network of fibre optic cables, available by sale or lease for use either by that person, another person, or another licensee; and
- an electronic communications service ("ECS"), which is any service provided to the subscribers thereof which consists wholly or mainly of the conveyance by any means of electronic communications over a network.
In the context of fibre internet, an internet service provider ("ISP") delivers ECS whereas a FNO provides ECNS.
Types of licenses
Section 5(1) of the ECA empowers ICASA to grant individual and class licenses to providers of ECS and ECNS.
An individual license must be obtained:
- in the case of an ECNS provider, where the provider operates on a national or provincial scale; and
- in the case of an ECS provider, where the ECS consists of "voice telephony utilising numbers from the national numbering plan".
A class license must be obtained where a commercial ECNS or ECS provider operates within the scope of a district or local municipality. An ECNS/ECS provider can, however, obtain multiple class licenses in order to provide services in various municipalities across a province or the country. For instance, an FNO can have 10 C-ECNS licenses and may accordingly provide fibre network services across a range of locations.
2021 regulations prescribe B-BBEE requirements for licensees
Individual and class licensees must now have a minimum B-BBEE contributor status level of four, and licensees must furnish ICASA with proof of compliance on an annual basis.
However, existing class licensees will not be required to comply until the renewal, transfer, or amendment of their class licenses.
Draft by-laws in respect of electronic communications network deployment on municipal land
The Minister published the Standard Draft By-Laws for the Deployment of Electronic Communications Networks and Facilities ("By-Laws") on 24 February 2023.
These By-Laws are now available to municipalities for adoption as model by-laws, but they are of no force and effect until adopted and implemented at municipal level.
The objective of the By-Laws is to ensure uniformity across municipalities with regard to municipal planning for electronic communications infrastructure, to facilitate rapid deployment of electronic communications networks.
Application of the By-Laws
In terms of section 3(1), the By-Laws apply to "all persons seeking to deploy or operate electronic communications facilities on, under, or above Municipal Property", and cover a list of activities, including maintenance and operational activities related to already-deployed electronic communications facilities. "Municipal Property" is defined in the By-Laws as any property which the municipality either owns or has personal rights to, for example, the right to use, manage, occupy, or control the property.
Application for wayleave must be made
Section 4(1) provides that, save for the execution of maintenance on existing electronic communications networks that can be completed within 12 hours and does not involve damage to municipal property, no civil works for the deployment/maintenance of electronic communications facilities may take place on a road zoned by the municipality for road use ("Road Reserve") without a valid wayleave being issued therefor.
Section 4(2) provides that an ECNS provider must conclude a lease agreement with the municipality in order to deploy electronic communications facilities attaching to Municipal Property, including, for instance poles or similar structures owned by the municipality alongside a Road Reserve.
Bank guarantee to be provided by the ECNS provider
In terms of the by-laws, a municipality will require that a wayleave holder provide it an irrevocable performance or bank guarantee to provide the municipality with access to funds to remedy any non-compliance by the wayleave holder with the By-Laws and/or wayleave agreement, and to recuperate any loss caused to the municipality as a result.
National policy on deployment of electronic communications networks
On 31 March 2023, the Minister of Communications and Digital Technologies issued the National Policy on the Rapid Deployment of Electronic Network Communications Networks and Facilities ("National Policy") in terms of the ECA, coupled with a policy direction directing ICASA to prescribe regulations implementing aspects of the National Policy. The National Policy is subject to local government and other legislation, to the extent applicable.
Conditions for deployment of electronic communications networks
The National Policy confirms that ECNS licensees have the right to select, access, and use public and private land to deploy communications networks and facilities, but subject to certain conditions, for instance:
- Written notice. The licensee must give the property owner 30 calendar days’ written notice of its intention to access the property, which notice must include a list of prescribed information;
- Consultation. The licensee must consult with the property owner on the proposed access and activities;
- Wayleave. The licensee must obtain a wayleave certificate from the municipality, where applicable (where the network is to be deployed on public land);
- Restoration. The licensee must exercise due care and diligence to avoid damage to the property and must restore the property to its former state; and
- Submission of geographical information. The licensee must submit geographical system information about the type and location of the infrastructure to be deployed to ICASA which will use the information to update its geographic information system database.
Fees and compensation
Furthermore, the position with regards to the payment of fees and compensation is as follows:
- Fees for access to public land. The National Policy does not apply to fees charged by local government, but it should be noted that in terms of the National Integrated ICT Policy White Paper, 2016, any wayleave administration fee or tariff levied by a municipality for a wayleave application may not exceed the administrative cost of processing the application.
- Fees for access to private land. Fees and compensation payable is a function of intrusiveness. No access fees may be charged for non-intrusive deployments, and buried or overhead cabling that does not constitute a cost to the property or deprive the owner of its own use is provided as an example of non-intrusive deployment. Where the deployment is intrusive, compensation in proportion to the disadvantage suffered by the property owner may be charged by the property owner, but the property owner may not be enriched thereby, and the licensee must not be exploited. An example of an intrusive deployment would be, for instance, where masts are erected on the property.
Electronic Communications Amendment Bill
On 23 June 2023 the Minister of Communications and Digital Technologies published the proposed Electronic Communications Amendment Bill, 2022, for public comment ("Bill").
The proposed amendments are aimed at lowering the cost of data in South Africa to prevent the exclusion of poorer South Africans as we move into a digital economy.
The following amendments to the ECA, to the extent that they are relevant for FNO's and ISP's, are proposed in the Bill:
- Facility licenses introduced. A new license category is introduced for an 'electronic communication facility license', which must be obtained where a person makes an electronic communications facility available for use in electronic communications networks. The purpose is to bring service providers such as tower companies within the ECA's licensing framework.
- Community networks. The provision of certain electronic communications and network services in 'under-serviced' areas will be license exempted. The Bill envisages these services to be provided primarily by registered non-profit organisations or companies.
- Competition regulation. Section 67 of the ECA will be amended to give ICASA heightened powers similar to that of the Competition Commission to address pricing, contractual terms and/or business practices which impede, restrict, or distort, market competition. Furthermore, ICASA will be empowered to prescribe regulations imposing pro-competitive license conditions on licensees where necessary to remedy ineffective competition in certain market segments.
- Obligation to lease ECNS facilities. Section 43 of the ECA currently provides that an ECNS licensee must, on request, lease its facilities to another licensee unless such request is unreasonable. A request will be reasonable if ICASA determines that such leasing is technically and economically feasible and will promote the efficient use of the network. The Bill proposes that the current criterion of reasonableness be disposed and that ICASA must prescribe principles of access to replace the reasonableness criterion. In addition, ICASA must prescribe a list of essential facilities to which access may not be denied, i.e. access is compulsory once a facility is listed as essential.
- Facilities leasing pricing principles. Section 47 is to be amended to provide that ICASA must prescribe regulations for the implementation of wholesale rates applicable to specified types of electronic communications facilities.
Please note that our blog posts are informal commentaries on developments in the law as at the time of publication and not legal advice. You should place no reliance on our blog posts; we look forward to discussing your particular matter with you.