The Independent Communications Authority of South Africa (ICASA) is at odds with internet service providers (ISPs) over the confusion relating to licensees entering into transactions which affect their ownership structure.
In a recent statement, the Internet Service Providers’ Association (ISPA), which represents the majority of local ISPs, says at the heart of this confusion is ICASA’s failure to take a clear position on which transactions will require the regulator’s prior approval, because they will have the effect of changing who controls a licence, and which transactions require only that ICASA be notified within seven days of the transaction being implemented.
According to the industry body, the difference between these two processes is massive.
It notes that an application for prior approval requires payment of a non-refundable application fee of R69 409 per licence and can take anything from eight to 15 months for ICASA to process.
A notification has no cost, and no further action is required from ICASA other than to update its records, it adds.
“We’ve had a decade of disarray because many licensees have used the wrong process and ICASA is now – notwithstanding its persistent silence on the matter – ordering that licensees reverse transactions entered into more than five years ago,” says Dominic Cull, ISPA’s regulatory advisor.
As a result, ISPA is requesting that ICASA implement an amnesty in respect of transactions where the required application was not made and take immediate steps to clarify its position on what constitutes a change of control over a licence.
“ISPA is seeking an amnesty allowing affected licensees to approach ICASA to regularise their position without any sanction being imposed. ICASA would still receive and evaluate applications for approvals of transfers,” Cull says.
In response, ICASA says the authority’s legislative and regulatory framework – which is in the public domain – is clear on transactions that require prior approval from the authority before their conclusion and those that the authority needs to be notified of.
It notes that section 13(1) of the Electronic Communications Act (ECA) provides that: “An individual licence may not be let, sub-let, assigned, ceded or in any way transferred, and the control of an individual licence may not be assigned, ceded or in any way transferred, to any other person without the prior written permission of the authority.”
Any transaction which falls within the above-mentioned parameters needs to be submitted for the authority’s approval prior to completion of the transaction, says the regulator.
It adds that Regulation 11 of the Licensing Processes and Procedures Regulations for Individual licences published in 2010 and amended in 2016 (through a public consultation process) prescribe the manner in which applications are to be made.
The regulation provides the following key criteria against which the applications are to be considered: promotion of competition in the ICT sector, interests of consumers, and equity ownership by historically disadvantaged persons.
The notification process provided for in the Standard Terms and Conditions Regulations for Individual Licences published in 2010 and amended in 2016 (through a public consultation process) only relates to changes in shareholding that do not result in a transfer of control or ownership of a licence, and requires the licensee to notify the authority within seven days of the conclusion of the transaction, says ICASA.
The authority says in 2021, it published the Regulations on Limitations of Control and Equity Ownership by Historically Disadvantaged Groups (HDGs) and the application of the ICT Sector Code, 2021.
“These regulations provide clarity and guidance in respect of information required by the authority in terms of HDG equity ownership when the transactions are being processed by the authority. The process to develop the HDG regulations began in 2017 and followed a detailed and transparent consultative process, which entailed receipt of both written and oral representations from interested stakeholders,” says the regulator.
Ownership transfer battle
In 2019, ICASA’s Compliance Division referred 10 licensees to the Complaints and Compliance Committee (CCC) for transferring ownership and/or control of their individual licences without prior written permission, as required in terms of section 13 (1) of the ECA.
According to ICASA, the CCC ruled that all 10 licensees were in contravention of Section 13 (1) of the ECA by failing to apply for prior approval from the authority before the conclusion of the transactions as required and ordered them to reverse the transactions and submit the relevant transfer applications.
It explains that Lesedi Africa Productions – which was one of the licensees against which the CCC ruled – applied to the courts to have the authority’s decision to reverse the transactions reviewed.
The court dismissed the application, stating the authority acted within its powers and that no basis was established for the court to review the authority’s decision in this regard.
On the bid for amnesty, ICASA responds: “Any amnesty in respect of transactions would have to be founded within the provisions of the empowering legislation and be carefully considered in line with the prevailing legislative and regulatory framework.
“The authority will consider such a request as and when it is submitted, informed by the prevailing legislative prescripts.”