SERVICE LICENSING FRAMEWORK IN SOUTH AFRICA
The registration and granting of electronic communications licenses in South Africa is performed by ICASA under the Electronic Communications Act of 2005 (“the ECA”).
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.
- 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.
It is helpful to consider the following fundamental distinctions between these licence types:
- Wholesale vs Retail: An ECNS licensee wholesales network capacity to ECS licensees or other ECNS licensees for resale – it does not deal with the public. An ECS licensee on the other hand offers retail services to the public (and may also provide wholesale services for resale to third parties).
- Physical vs Virtual Networks: An ECNS licensee operates physical networks made of facilities such as fibre or base stations. An ECS licensee operates virtual networks such as VPNs and MPLS networks.
The ECA breaks down the license categories into the two subcategories set out 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.
There are 4 types of License categories:
This allows you to roll out your own network nationwide or across a province.
A class ECNS allows you to roll out your own network in a district or local municipality. In other words you will choose to operate in a municipal area and provide access services to consumers in that area. This is the form of licence you would require if you wanted to set up your own network focusing on a smaller area. South Africa has 48 district municipalities and 231 local municipalities as well as 7 metropolitan municipalities.
This licence allows you to provide services to your customers over the network of an ECNS licensee, including voice or VoIP services which use numbers taken from the National Numbering Plan. Examples of other services that can be provided include:
- Internet access
- Protocol conversion
- Virtual Private Networks (VPN)
- Multi Protocol Labelling Systems (MPLS)
The National Numbering Plan is a document drawn up by ICASA setting out all the different kinds of numbers used in South Africa. A distinction is drawn between geographic – where the number is linked to a specific location, e.g. 011 566 3000 – and non-geographic – where the number is mobile, e.g. 083 000 0000. The number range usually associated with VoIP services is the 087 range.
This licence allows you to provide the same services as the Individual ECS licence except for voice services requiring numbers from the national numbering plan. If you have one of these licenses you will need to enter into commercial arrangements with one or more ECNS licensees who have the networks to carry your services to your customer.
LICENSE FEES AND CHARGES
Annual license fees are set at a percentage of total revenue derived from 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.
Licensee Revenue Percentage applied
R0 – R50-mil 0.15%
R50-mil – R100-mil 0.20%
R100-mil – R500-mil 0.25%
R500-mil – R1-bil 0.30%
over R1-bil 0.35%
Licensees are further required to pay a contribution to the Universal Service and Access Fund (USAF) - an entity set up by Government to fund development of services in rural areas - amounting to 0.2% of annual turnover derived from licensed services.
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 license is required before a licensee will be entitled to apply for radio frequency spectrum licensing.
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. See http://www.ellipsis.co.za/guide-to-service-licence-exemptions-under-the-... for further information.
CONTROL AND OWNERSHIP OF LICENSES
ICASA released a Discussion Paper on ownership and control of telecommunications and broadcasting service licences in November 2009. Until such time as this process is completed the regulations promulgated under the Telecommunications Act – although completely unsuited to the new licensing framework – continue to apply.
Licences may be assigned, ceded or transferred after the approval of an application to ICASA. A transfer application fee is payable.
ICASA is responsible for the management of the national numbering plan and the issuing of allocations of numbers to licensees. The numbering plan is currently under review and numbering regulations finalised under the Telecommunications Act are currently in use. Only the holders of IECS licences are entitled to allocations of numbers. Such entitlement includes geographic (fixed) and non-geographic (mobile, VoIP) numbers.