Worries over ICASA’s timing of B-BBEE requirements

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Some internet service providers (ISPs) are concerned about the timing of the Independent Communications Authority of South Africa’s (ICASA’s) interim transformation requirements.

They suggest the April 2022 deadline does not give them enough time to establish effective agreements.

This is according to industry body, the Wireless Access Providers Association (WAPA), a non-profit organisation whose objective is to promote the growth of the wireless industry by facilitating self-regulation, promoting best practices, and educating members and the market about new wireless technologies and business models.

WAPA is positioned to be an interface between the regulator, network operators, service providers and consumers.

In a statement, WAPA says ISPs are required to have 30% broad-based black economic empowerment (B-BBEE) equity held by historically disadvantaged groups (HDG), including any black South African, women, people with disabilities and youth.

“This isn’t new; it was introduced in 2008 when the VANS [value-added network service] licences were converted to ECS [electronic communications service] and ECNS [electronic communications network service] licences,” says Paul Colmer, exco member of WAPA.

“However, other organisations have raised what we feel are valid concerns, not with the ultimate targets, but rather with the timing around interim targets.”

All being equal

According to WAPA, ICASA has been approached on the issue. Nonetheless, the regulator had not responded to ITWeb’s questions by the time of publishing.

In a Government Gazette in March, ICASA says the purpose of these regulations is to promote equity ownership by HDGs and promote B-BBEE.

In achieving this, these regulations will facilitate diversity and transformation in the ICT sector by promoting B-BBEE, with particular attention to the needs of women, opportunities for youth and challenges for persons with disabilities.

It notes that the regulations also prescribe the application of the HDG Equity Requirement, and provide the manner in which compliance with the HDG Equity Requirement, Black Equity Requirement and B-BBEE Contributor Status Level requirements will be verified, monitored and enforced, says ICASA.

It adds that a person that submits false, misleading or inaccurate information to the authority is guilty of an offence and is subject, on conviction, to a fine of no less than R50 000 but not exceeding R5 million.

“Companies that currently have no certification, for example, could struggle to reach level seven by April 2022,” says Colmer. “It’s also important to note that this is a separate issue from the newfound desire to support 30% ownership by HDG, which does not apply to class licence-holders, only to individual licence-holders.”

WAPA explains that individual licence-holders are generally larger companies that operate across an entire province or nationally.

It notes there are two types of ECS and ECNS licences. “ECNS is essentially the physical network and ECS the services that are provided over the network. Individual ECNS licences permit operation of a network nationally or provincially. Individual ECNS is the same for a district or local municipality,” says the NPO.

It adds that ECS is slightly different in that individual ECS licence-holders may assign numbers from the National Numbering Plan. Class ECS licence-holders may not, it notes.

WAPA points out that the National Numbering Plan is essentially a set of regulations around how telephone numbers are assigned, such as the 011 landlines and 08x numbers commonly used by mobile operators.

“What government has said, in essence, is that the transformation and equity ownership regulations that have been in place since 2008 will be enforced for the larger operators, the individual ECS and ECNS licence-holders, from April 2022,” says Colmer.

“HDG does not apply to class licence-holders. They are required to be level four, which only applies on renewal, amendment or transfer, and is automatically granted to licence-holders with annual turnover less than R10 million.”

He says individual licence-holder WAPA members have expressed concerns around the timing and he is keenly following an application made by the Internet Service Providers Association (ISPA) to ICASA.

Paul Colmer, exco member of WAPA.
Paul Colmer, exco member of WAPA.

Take a step back

ISPA recently called on ICASA to reconsider the extent to which it micromanages the affairs of licensees and the industry.

The industry body said it acknowledges that ICASA has an important role to play in transforming the ICT sector through its regulations mandating transformation through equity ownership and the application of the ICT Sector Code.

“However, when it comes to commonplace business transactions within the industry, we believe the regulator is over-regulating by inserting itself into and delaying commercial deals involving the transfer of a licence or transfer of control over a licence,” said Dominic Cull, ISPA regulatory advisor.

Cull explained that transfers of ownership of, or control over, licences take ICASA up to 180 working days to process and cost an applicant in the region of R70 000 per licence.

ISPA has received feedback from its members that includes examples of delays of more than a year to get ICASA’s approval for changes to internal shareholder arrangements, says the industry body.

“In practice, parties may reach a commercial agreement but must then wait for up to 180 working days to get approval from a regulator. This is clearly at odds with reasonable commercial practice and acts as an impediment to growth and transformation of the sector by disincentivising investment and entry into the sector.”

According to ISPA, this kind of micromanagement may have been appropriate when the number of licensees was limited, but it is no longer necessary now that there are more than 500 individual licensees authorised to deploy networks and provide services across South Africa.

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