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Legislation and Market Liberation

Legislation and Market Liberation


The primary Act of Parliament regulating the electronic communications industry in South Africa is the Electronic Communications Act 36 of 2005 (“the ECA”), which replaced the Telecommunications Act of 1996 (“the Telecommunications Act”) on the 19th July 2006. The ECA can be characterised as pro-competitive legislation in stark contrast to the Telecommunications Act, which was protectionist in that it sought to protect the incumbent fixed line provider, Telkom SA Ltd, from the effects of competition.


  • Licensing
  • Access
  • Infrastructure rights such as way-leaves
  • The management and assignment of frequency markets and competition, and
  • Universal service.

The ECA is convergence legislation which takes into account the blurring between broadcasting and telecommunications in particular.


The Telecommunications Act No. 103, passed in November 1996, completely overhauled the legislative and regulatory framework of the South African telecoms industry, replacing virtually all of the telecoms provisions covered by the 1958 Post Office Act. The most important provisions of the act concern:

  • creation of the South African Telecommunications Regulatory Authority (SATRA) as an independent regulator for the telecoms sector, which was replaced by ICASA in 2000;
  • definition of the processes and powers for licensing of telecoms services;
  • definition of telecoms operators’ right to interconnect their networks;
  • creation of the Universal Service Agency, which is charged with developing ways to ensure rapid progress towards achieving universal service and which also advises the government and manages the Universal Service Fund (the latter is financed by operators and is to be used to help those in need pay for telecoms services and help operators extend services to under-served areas); and,
  • establishment of the Human Resources Fund to pay for education, training and research activities in telecoms, partly through grants to individuals. All licensees are required to contribute to the fund.

In 2001, the 1996 Telecommunications Act was substantially revised to allow for, among other things, competition in the fixed-line telephony market. Three main changes were envisaged to liberalise the market:

  • the licensing of a second PSTN operator to compete with Telkom; the ‘second national operator’ (SNO), Neotel, eventually received its licence in Q405 and began offering its first services in August 2006;
  • the award of carrier and multimedia licences to Sentech, the state-owned signal distributor (these were issued in May 2002); and, the award of under-serviced area licences (USALs) for areas with teledensity rates of less than 5% (it was not until November 2004 that the first four of these were issued, out of a possible 27).

The 2001 revisions to the 1996 Act also provided for the introduction of carrier pre-selection (CPS) by the end of 2003 and number portability by 2005, as well as enabling Telkom to seek a partial stock market listing.

In February 2005, the South African government published a new Convergence Bill, 2005, to provide a licensing and regulatory framework for a converged telecoms, broadcasting and information technology industry. However, it was not until mid-April 2006 that the Electronic Communications Act (ECA) was actually signed into law, and not until July 2006 that the ECA came into effect. Key secondary legislation, such as that governing mobile number portability, was not activated until much later in 2006.

In January 2008, ICASA published a set of draft definitions of the retail and wholesale markets. The new definitions of market segmentation are used to ensure that each sector is open to adequate competition and to establish which operators have significant market power (SMP). While sectors such as the provision of wireless broadband services are already highly competitive, the fixed-line broadband market is still monopolised by the incumbent operator, Telkom.

In December, ICASA, called for written submissions for its carrier pre-selection draft regulations. Submissions had to be submitted by January 9 2009, with oral hearings expected to take place on January 21 and 22. The regulations proposed by ICASA follow the form of pre-selection that requires callers to dial a code to select the carrier before placing their call, as opposed to the alternative form that allows consumers to select a carrier during the call. Although similar regulations in other countries usually only govern the fixed-line operators, ICASA’s draft regulations stipulate that all individual electronic communications network (IECN) services licensees will have to adhere to these regulations: the mobile operators, the value-added network service providers and the two national operators, Telkom and Neotel.