Communications minister Solly Malatsi has moved to reduce the barriers to entry for the issuing of Individual Electronic Communications Network Services (I-ECNS) licences in South Africa.
This, after Malatsi proposed the long-awaited policy direction on the review of the licensing of I-ECNS licences in South Africa.
An I-ECNS licence authorises a company to build, operate and maintain its own electronic communications network infrastructure to provide services either to the public or to other licensees.
The proposed policy direction is set to pave the way for new entrants in the country’s telecommunications market.
At the heart of this policy move is a broader national goal of achieving affordable, high-quality internet access for all South Africans.
In a Government Gazette, Malatsi directs telecoms regulator the Independent Communications Authority of South Africa (ICASA) to undertake an inquiry into the country’s I-ECNS licence market.
He says the inquiry should consider the demand for and need to invite, accept and consider applications for new individual electronic communications network services licences.
The minister adds that the inquiry should consider whether new individual electronic communications network service licences will promote the objectives of the Electronic Communications Act and specifically improve competition in the market for individual electronic communications network services.
It must also determine whether or not and how new individual electronic communications network service licences will contribute to universal provision of electronic communications networks, and whether the benefits of new individual electronic communications network service licences outweigh the costs, including the cost to ICASA of monitoring and enforcing compliance with any such licences, and the burden on the environment.
“The authority is directed to submit a report to the minister in respect of such matters within a period of no longer than six months to enable the minister to consider whether or not to issue a further policy direction in terms of section three read with section 5(6) of the Act,” reads the Government Gazette.
The minister explains that in December 2019, the Competition Commission issued a Data Services Market Inquiry report, adding that among other issues, the report observed that “high prices [to communicate] may also be caused by hindrances to effective competition”.
The report highlights that “where competition is inadequate or non-existent, firms have more market power and a greater ability to increase prices above the competitive level”.
It also states that high levels of profitability and mark-ups are indicators of market power and a lack of effective competitive constraints on pricing levels.
The report concludes that “it is the lack of competition in the market that appears to be of the greatest impediment to lower prices for consumers”.
According to the minister, the report also observed a lack of competition in the market, but the hindrances to effective competition did not include an insufficient number of individual electronic communications network services licensees.
“Since a high number of individual electronic communications network services licences have already been granted and may be transferred subject to the authority’s approval, the authority should determine whether new individual electronic communications network services licences will promote the objects of the Act, including without limitation, improved competition and the universal provision of electronic communications networks and electronic communications services.”
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