broadcasting and telecommunications

Broadcasting and telecommunications are subject to relatively extensive regulation in South Africa, and services are required to be licensed. Bowman Gilfillan has advised several clients, including the regulatory authority, network operators and service providers, in relation to their regulatory obligations and in the context of transaction in the telecommunications and broadcasting sectors.

historical overview of the regulation of the communications sector: the independent broadcasting authority

Prior to the advent of constitutional democracy in South Africa in 1994, the broadcasting and telecommunication sectors were regulated primarily by the provisions of the Radio Act, 1952, and the Broadcasting Act, 1976. These statutes facilitated control by the government over telecommunications and broadcasting activities in South Africa during the apartheid era.

The government exercised exclusive control over the formulation of broadcasting and telecommunications policy, over the regulation of the broadcasting and telecommunications industries and over the provision of broadcasting and telecommunications services. The apartheid government abused its position of power in this regard in order to promote its political agenda.

During the multi-party negotiation process, which resulted in South Africa’s transition to democracy, it was decided to set up various bodies that would facilitate that transition.

These bodies included the Independent Media Commission, the Transitional Executive Council and, importantly, the Independent Broadcasting Authority (IBA).

The IBA was established by the Independent Broadcasting Authority Act, of 1993 (the IBA Act). The IBA Act made the IBA responsible for the formulation of broadcasting policy and for the regulation of broadcasting activities. The IBA was also mandated to supervise the expansion and diversification of the broadcasting industry by means of the privatisation of some of the sound broadcasting services, of the South African Broadcasting Corporation (SABC) and the licensing of new sound and television broadcasting services.

The Constitution came into effect on 4 February 1997. It provides, in section 192, that national legislation must establish an independent authority to regulate broadcasting in the public interest, and to ensure fairness and a diversity of views broadly representing South African society. By enacting this provision, the Constitutional Assembly gave constitutional recognition to the IBA. It also entrenched the principle of the independence of the IBA.

restructuring of the sabc and reform of the communications sector

The Broadcasting Act, of 1999 established a broad framework for the regulation of the broadcasting industry and supplemented the provisions of the IBA Act. A substantial part of the Broadcasting Act was devoted to the restructuring of the SABC and, in particular, its conversion from a statutory body into a public company of which the state is the sole shareholder.

The Broadcasting Act also provided that the Minister of Communications was ultimately responsible for the development of broadcasting policy. By conferring this power on the Minister, the power of the regulatory authority to determine broadcasting policy was diluted although the Minister was required to adhere to certain general principles in developing policy and issuing policy directives to the IBA.

Telecommunications was recognised as a key sector requiring reform and the government set out its policy in this regard in the White Paper on Telecommunications Policy that was published in 1994. The White Paper recognised the need for liberalisation of the market in line with international trends and to facilitate the roll out of networks and services in line with the government’s developmental goals.

The first phase of reform to the sector saw the partial privatisation of the state-owned fixed line network operator and its incorporation as Telkom SA Limited, as well as the licensing of two mobile operators, MTN and Vodacom. The Radio Act, 1952, in terms of which telecommunications had been regulated, was then repealed by the Telecommunications, Act of 1996, which came into effect on 1 July 1997.

the telecommunications act

The Telecommunications Act established a sector regulator known as the South African Telecommunications Regulatory Authority (SATRA), which was responsible for regulating a range of telecommunications matters. Although the Telecommunications Act stated that SATRA was an independent regulatory body, it empowered the Minister to issue policy directions to SATRA and for the Minister to promulgate the regulations that gave content to many of the provisions of the Act.

The Telecommunications Act deemed Telkom to be the holder of a licence to provide a public switched telecommunications service comprising local access, long-distance and international services. Telkom was granted exclusive rights in relation to the provision of these services for a period of five years.

Thereafter it was intended that a second national operator (SNO) would be licensed, which would have access to Telkom’s facilities and resell Telkom services for a period of two years, after which it would be permitted to operate its own network and provide certain facilities itself. In terms of the Telecommunications Act, the exclusive rights of Telkom and the SNO were to expire in 2005.

The Telecommunications Act introduced some competition in the value-added services sector (comprising such services as Internet service provision, e-mail and other data services) in relation to which Telkom did not have exclusive rights. However, providers of value-added network services (VANS) were required to obtain facilities from Telkom alone and were not permitted to carry voice until the Minister determined otherwise.

Telkom was also permitted to provide VANS and, as such, operated in the competitive downstream sector of the market while holding the monopoly in the upstream sector. The Minister prompted further liberalisation of the sector when she lifted the restrictions on VANS and mobile operators with effect from 1 February 2005, allowing them to obtain their facilities from any source, as opposed to from Telkom alone, and allowing them to carry voice. Following delays in the licensing process, the SNO, Neotel (Pty) Ltd, was ultimately licensed only in 2005 and commenced with the provision of wholesale services in 2006.

the independent communications authority of south africa (icasa)

The Independent Communications Authority of South Africa Act, of 2000 (ICASA Act) provided for the dissolution of the IBA and SATRA and for the creation, in their place, of a regulatory body known as the Independent Communications Authority of South Africa (ICASA). The ICASA Act recognised that technological and other developments in the fields of broadcasting and telecommunications had caused a rapid convergence of these fields and acknowledged a need to establish a single body to regulate broadcasting and telecommunications matters.

The Electronic Communications Act, 2005 (the ECA) repealed and replaced the IBA Act and the Telecommunications Act with effect from 19 July 2006. At the same time, the ICASA Act was amended to provide that, in addition to regulating electronic communications, ICASA would also assume responsibility for regulating the postal sector.

the current regulatory framework

Electronic communications and broadcasting are now governed by the ECA. ICASA administers the ECA and is primarily responsible for the regulation of the communications sector generally. The ICASA Act provides that the Minister of Communications is responsible for developing policy for the communications sector and may issue policy directives to ICASA in this regard.

ICASA is required by the ICASA Act to function without any political or commercial interference. ICASA is an 'organ of state', and its conduct in considering licence applications and performing other regulatory functions constitutes administrative action. This means that ICASA must act in a lawful, rational and procedurally fair manner in exercising its statutory powers. Should it fail to do so, its actions and decisions may be set aside on review by the High Court.

The ECA takes account of the convergence of telecommunications and broadcasting technology, which allows for a variety of different services to be provided over a single platform, and establishes a regulatory framework in line with new communications methods and technologies. The ECA provides that electronic communications services and broadcasting services are required to be licensed, unless exempted from these licensing requirements.

In addition, network operators which make available physical network capacity for the conveyance of communications or the transmission of a broadcast signal, require licences to do so.

The ECA provides that electronic communications, broadcasting services and broadcasting networks may be authorised in terms of either an individual or a class licence. The type of licence that is required depends on the scope of the service or network. Individual licences are generally required in respect of services that have a significant impact on socioeconomic development and will be granted pursuant to a relatively intensive adjudication process. Class licences, on the other hand, are required in respect of services that ICASA finds do not have a significant impact on socioeconomic development, necessitating less intensive regulation. Service providers and network operators requiring class licence authorisation are only required to register with ICASA in respect of such services. ICASA has very limited power to refuse such registration.

Under the previous regulatory regime, operators were licensed as vertically integrated bodies to operate networks and provide services over those networks. The ECA has replaced this system with a horizontal licensing framework that provides for the separate licensing of networks and services.

To facilitate convergence in the sector, the ECA provides for a single licensing framework in respect of all communications networks (regardless of the services provided across them) and communications services, although a distinction is retained between electronic communications services and broadcasting services. The ECA provides for a range of measures which ICASA may introduce to facilitate competition in the sector.