Media release: ECA Bill is anti-competitive, unconstitutional and will raise data prices

15 January 2018
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Media release
15 January 2018

The proposed Electronic Communications Amendment (ECA) Bill, 2017 is part of the legislation required to implement the Department of Telecommunications and Postal Services’ (DTPS) contentious Information and Communication Technologies (ICT) Policy White Paper. Released in October 2016, the Paper stunned the industry by ignoring much of the previous public comment and by the introduction of a WOAN: wireless open access network. It also contained several other controversial measures that will damage one of SA’s most successful industries. Subsequently, the DTPS engaged in ‘behind closed doors’ industry negotiations with the main players in an effort to reach consensus. This has failed as the ECA Bill fails to deliver on the terms agreed. The Free Market Foundation (FMF) believes that the Bill is anti-competitive, unconstitutional and will increase consumer data prices. It has called for the Bill to be returned for urgent revision.

Bowing to pressure from the FMF and others, government extended the deadline for public submissions on the Bill to 31 January 2018 instead of 17 December 2017. Click on the link for the FMF’s full submission FMF’s full submission

Like the White Paper, the ECA Bill is seriously flawed. It is based on a false premise that originates from an incorrect reading of the Constitution. The language of the Bill is ambiguous and imprecise and that alone fails to meet the Rule of Law requirements in section 1(c). In addition, the discretionary powers assigned to government lack clarity and specific criteria, again a constitutional obligation.

The Bill falls foul of sections 25(1) and (2) in the lack of respect given to citizens’ property rights by allowing network service providers to enter private property to install network infrastructure and facilities without owner consent. It then severely limits the owner’s recourse for compensation.

The WOAN will see the introduction of an experimental model that, contrary to Minister Cwele’s assertions, has been a resounding failure in the only country in which it has been tried, Rwanda. Mexico is attempting to implement something similar but is experiencing serious problems and set backs. In contrast, global ICT best practice is implementing models that empower private service providers. In effect, the SA government will be implementing a network monopoly with little detail on how it will work.

The ECA Bill will see essential spectrum and infrastructure being hoarded into this quasi-state monopoly. SA’s major mobile network operators (MNOs) have been very vocal in their calls for the release of more high demand spectrum, the lack of which is driving down network quality and consumer prices up while exacerbating user experience (dropped calls etc.).

The Bill’s proposal to ban trade in high-demand spectrum is problematic as it will prevent the free market from determining the best allocation of spectrum and it highly regulates trade in other non-high demand spectrum. The lack of free trade in spectrum is a major cause of relatively high data costs in South Africa. These measures will increase costs – in direct contrast to government’s stated intention.

The banning and regulation of trade is anti-competitive and concentrates the most useful spectrum resource in the hands of only a few market players. The optimum course would be an open and free trade of spectrum and the delay in government’s spectrum auction, still in legal stalemate, is making matters much worse for consumers.

FMF executive director Leon Louw said, “ICT is one of the greatest levellers of material prosperity the world has known. Few things have succeeded more in reducing inequality. Virtually everyone can now afford benefits that did not exist a few years earlier and then available only to the rich. The world is headed to the Internet of things (IOT) where nearly everything will be data driven and connected to some extent. It is crucial for South Africa to get it right and not be left behind. Implementing the Electronic Communications Amendment Bill in its current form will deliver the opposite”.

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