ECA Chapter 3

The registration and granting of electronic communications licences in South Africa is performed by ICASA under the Electronic Communications Act of 2005.

Why are there licensing requirements?

Governments impose licensing requirements so as to ensure that:

• Scarce resources such as frequency and numbers can be efficiently allocated and coordinated
• Services are provided in under-serviced and rural areas
• They have authority over licensees for the purposes of regulating markets and competition, and
• Consumers are protected in their dealings with service providers.

When is a licence required?

As a general rule a licence or licence exemption is required whenever communications are carried from one point to another.

Service licensing framework in South Africa

There are two main categories of service licence available under the ECA:

• Electronic Communications Network Service (ECNS) licenses: these licenses authorise the holder to roll-out and operate a physical network. This network can be made up of any technology you choose: radio equipment (for a wireless network), copper cabling, fibre optic cabling etc. ECNS licensees can also enter into commercial arrangements with other licensees to allow them to use the electronic communications network owned and operated by the ECNS licensee.
• Electronic Communications Service (ECS) licenses: these licenses allow you to provide services to customers over your own or somebody else’s network. This will typically be the licence held by an ISP which does not operate its own network or network facilities.

Examples:

• Telkom has a telephone or voice network which covers most of South Africa. The network consists of phone lines, switches and other hardware and in order to operate this network Telkom requires an ECNS licence. Telkom then provides voice services to its customers over this network – in order to provide these voice services it will require an ECS licence.
• Vodacom has a GSM network which also covers most of South Africa and consists of their masts and towers which have radio equipment located on them. They will require an ECNS licence in order to own and operate this network and an ECS licence in order to provide their services – voice, data, SMS, MMS etc – over this network.
• An ISP wishes to provide internet connectivity to customers. It does not have its own network (although it may own some hardware) but relies on the services of a network owner and operator such as Telkom (i.e. an ECNS licensee) to carry its services to its customers. In this example the ISP itself does not require an ECNS licence (it does not own and operate the network) but only requires an ECS licence so that it can provide its services to its customers over Telkom’s network.

The ECA breaks down the licence categories into the two subcategories set out in Table 1 below.

The licensing framework is technology-neutral. Thus, for example, while Telkom was restricted to the provision of fixed lines services in terms of the Public Switched Telecommunications Network (PSTN) licence issued to it under the Telecommunications Act, it is under no such restriction in terms of the IECNS and IECS licences which it now holds. Indeed Telkom is already providing mobile services while the mobile network operators are self-providing fixed lines to service their backhaul requirements.

Individual ECNS and ECS licences are issued for twenty years.  Class ECNS and ECS licences are issued for ten years. All of these licence types can be renewed upon payment of a renewal fee.

Annual licence fees are set at 1.5% of Gross Profit (total revenue derived from licensed services less total costs directly incurred in the provision of such services). The calculation of the amount due must be based on audited financial statements (or sworn statements where audited statements are not required by law), which must be submitted along with the payment.

Fees can be paid quarterly or annually: late payments will be subject to stiff interest penalties and fines for non-compliance.

Licences may be assigned, ceded or transferred after the approval of an application to ICASA. A transfer application fee is payable.

Service licensing is distinct from two other forms of licensing: type approval and frequency licensing. Where these latter forms of licensing are required they must be obtained separately. An ECNS licence is required before a licensee will be entitled to apply for radio frequency spectrum licensing.

Licence exemptions

Certain services are regarded as being of limited socio-economic importance and can be provided on a licence exempt basis, subsequent to application for a licence exemption to ICASA having been granted.

Download the ellipsis Guide to Service Licence Exemptions under the ECA

Table 1: Licensing under the Electronic Communications Act 36 of 2005