Minister Intervenes to Break Icasa Deadlock, Clears Path for Starlink Launch

Key Takeaways

• The Minister of Communications and Digital Technologies has issued a policy direction to the Independent Communications Authority of South Africa (Icasa) to align its regulations with the national ICT Sector Code.
• This move is expected to pave the way for foreign investors, including Elon Musk’s SpaceX, to operate in South Africa without having to sell equity to historically disadvantaged groups.
• The policy direction is part of a coordinated effort by the executive cabinet to clear regulatory blockages and attract national and international investments.
• The move has been met with criticism, with some arguing that it undermines the Broad-Based Black Economic Empowerment Act (B-BBEE Act) and favors foreign investors over local interests.

Introduction to the Policy Direction
While the rest of South Africa was preparing for the festive season, the Minister of Communications and Digital Technologies took the opportunity to push a Starlink deal through by issuing a policy direction to Icasa. This move is seen as a coordinated effort by the executive cabinet to clear regulatory blockages and attract national and international investments. The policy direction instructs Icasa to "urgently consider alignment" of its regulations with the national ICT Sector Code, effectively allowing foreign investors to operate in South Africa without having to sell equity to historically disadvantaged groups.

The Rationale Behind the Policy Direction
The Minister of Communications and Digital Technologies, Solly Malatsi, argues that Icasa’s refusal to recognize the Equity Equivalent Investment Programmes (EEIPs) is "not permissible in law". He contends that the B-BBEE Act overrides Icasa’s sector-specific regulations, and that the regulator’s refusal to recognize EEIPs is blocking the "national and international investments" the country desperately needs. The EEIP policy allows multinationals to bypass the equity sale requirement by instead investing in local skills development, enterprise support, or infrastructure, provided the Department of Trade, Industry and Competition (DTIC) approves the deal.

The Implications of the Policy Direction
The policy direction has significant implications for Icasa and the regulation of the telecommunications industry in South Africa. By forcing Icasa to accept the DTIC’s codes, Malatsi is effectively handing his colleague, Minister Parks Tau, the keys to the gate. If Tau’s department signs off on Starlink’s investment plan, Icasa will be legally compelled to issue the license, regardless of their previous objections to equity structures. This move shifts the gatekeeping power from an independent regulator to the executive cabinet, raising concerns about the potential for political interference in the regulation of the industry.

The Criticism and Controversy
The policy direction has been met with criticism, with some arguing that it undermines the B-BBEE Act and favors foreign investors over local interests. Malatsi anticipates the criticism, arguing that the policy applies to all licensees equally. However, practically, there is only one major player currently sitting in the waiting room because they refuse to sell shares. The move has been seen as a coordinated executive shove to clear regulatory blockages, with some arguing that it is a battle for "digital sovereignty" and "bridging the digital divide". However, others see it as a threat to the principles of Broad-Based Black Economic Empowerment and the promotion of local ownership and control.

The Future of Telecommunications Regulation in South Africa
The policy direction has significant implications for the future of telecommunications regulation in South Africa. It sets a precedent for the regulation of the industry, with potential implications for other sectors. The move is expected to attract national and international investments, but it also raises concerns about the potential for political interference in the regulation of the industry. As the industry continues to evolve, it is likely that there will be ongoing debates about the role of regulation, the promotion of local ownership and control, and the balance between attracting foreign investment and promoting Broad-Based Black Economic Empowerment. The policy direction is a significant development in this debate, and its implications will be closely watched in the coming months and years.