Economic Regulation of the Telecommunications Sector in South Africa: 2009-2014

Abstract

South Africa's electronic communications sector regulator, the Independent Communications Authority of South Africa (ICASA), has a mixed track record in carrying out its mandate. ICASA is part of a regulatory system for the telecommunications sector, that may be characterised as dysfunctional for the following reason: ICASA is not sufficiently independent from government. While regulated entities are generally partially state owned, this does create a conflict of interest for government. Nonetheless, ICASA has had some successes, where the interests of state-owned enterprises coincide with those of consumers. Its interventions in markets for voice services during the course of Telkom Mobile’s entry into the market, for example, have resulted in retail voice price reductions of more than 30%. Now that problems relating to voice services markets have largely been resolved through the call termination rate intervention, ICASA needs to shift its focus to markets for broadband services in order to ensure that South Africa becomes more competitive relative to its peers through unbundling the local loop and assigning spectrum for broadband. In order to achieve this, Telkom needs to be fully privatised in order to reduce government pressure to delay local loop unbundling (LLU) and Telkom’s wholesale and retail fixed-line operations should be functionally separated. ICASA needs to be further insulated from political interference and be properly resourced through industry levies and fees. Furthermore, a single appellate body for economic regulators ought to be established in order to improve accountability of the regulators and improve outcomes in the sector.