Black economic empowerment laws will be catastrophic for ISP and telecoms industry

21 April 2021

The Independent Communications Authority of South Africa’s (ICASA) recent regulations on ownership of telecoms licensees that will force 30% black ownership and Level 4 broad-based black economic empowerment (BBBEE) status on South African internet service providers (ISPs) will be catastrophic to the ISP and telecoms industry in South Africa.

The regulations will punish non-compliant ISPs with severe penalties of R5 million or 10% of their annual turnover. In an effort to escape this, ISPs might turn to fronting in an effort to abide by the irrational and discriminatory regulations. At the end of the day, South African consumers will bear the ultimate brunt of stunted innovation and increased prices.

ICASA is already jeopardising foreign investment. It is being reported that Elon Musk’s rollout of SpaceX’s Starlink Internet service in South Africa might be at risk due to the enforcement of the new regulations.

This effort from ICASA seems to build on government’s Employment Equity Amendment Bill which seeks to empower the Minister of Employment and Labour to identify national economic sectors and to set quotas for these sectors. The DA unequivocally opposes this and any other legislations that provides for race-based classifications.

True economic empowerment will only come through innovation and job creation, something BBBEE provides for on paper, but in practice kills for all but the politically connected few.

Issued by Zakhele Mbhele, DA Shadow Minister of Communications & Digital Technologies, 21 April 2021