Priority Markets Inquiry

The Independent Communications Authority of South Africa (ICASA) embarked on a Priority Markets Inquiry to identify segments within the electronic communications sector susceptible to ex ante regulation. Initiated under Section 67(4) of the Electronic Communications Act, 2005, the inquiry aimed to foster competition, address market failures, and ultimately reduce the high cost of communication for consumers. Following a comprehensive process, ICASA identified wholesale fixed access, upstream infrastructure, and mobile services as priority markets for potential future market reviews and pro-competitive interventions. This development underscores ICASA's commitment to proactive regulation, though recent legal challenges highlight the critical importance of robust methodology and procedural fairness in its regulatory determinations.

The South African electronic communications sector, a vital enabler of economic growth and social development, has long been characterised by a dynamic yet often concentrated competitive landscape. In an effort to address persistent concerns regarding market inefficiencies and the high cost of communication, the Independent Communications Authority of South Africa (ICASA) initiated a comprehensive Priority Markets Inquiry. This proactive regulatory intervention, rooted in its mandate to promote competition, represents a significant step towards identifying and remedying structural impediments to a truly competitive market.

Launched in 2017, the inquiry sought to define and assess markets within the electronic communications sector that are prone to market failures and thus require ex ante regulatory intervention. The findings, published in August 2018, designated specific wholesale and retail markets as priorities for further review. This article delves into the legal framework underpinning ICASA's inquiry, analyses its key findings, and considers the implications for industry stakeholders and the broader regulatory environment, especially in light of recent judicial scrutiny of ICASA's regulatory processes.

ICASA's authority to conduct market inquiries and impose pro-competitive remedies is primarily derived from Section 67(4) of the Electronic Communications Act (ECA) No. 36 of 2005. The ECA, which came into force in 2006, serves to promote convergence in the broadcasting, broadcasting signal distribution, and telecommunications sectors, establishing a legal framework for their regulation. A key objective of the ECA is to promote competition within the ICT sector and ensure the efficient use of the radio frequency spectrum.

Section 67(4) specifically empowers ICASA to define relevant markets and market segments, investigate whether there is ineffective competition within those markets, determine if a licensee exercises significant market power (SMP), and, where necessary, impose appropriate pro-competitive licence conditions on licensees with SMP to remedy market failures. This framework allows ICASA to intervene proactively to prevent anti-competitive practices before they occur, rather than merely reacting to them post-facto. The Priority Markets Inquiry was therefore a foundational step in ICASA's broader strategy to exercise these powers effectively, aiming to provide certainty to stakeholders regarding the markets slated for in-depth analysis through subsequent market review processes.

The Priority Markets Inquiry followed a structured four-phase process: a market study, publication of a discussion document, public hearings, and finally, the publication of a findings document. After receiving submissions from various stakeholders and conducting public hearings in 2018, ICASA concluded the inquiry and identified three broad markets as priorities for potential future market reviews. These included: wholesale fixed access, encompassing the wholesale supply of asymmetric broadband origination, fixed access services, and related facilities; upstream infrastructure markets, incorporating national transmission services and metropolitan connectivity; and mobile services, covering both the retail market for mobile services and the wholesale supply of mobile network services.

The identification of these markets reflects ICASA's assessment of areas where competition is either weak or where dominant players may exert undue influence, leading to higher costs and limited choices for consumers. For instance, the focus on wholesale fixed access, particularly the 'last mile' or local loop, has been a long-standing issue in South Africa, with Telkom historically being the sole operator with extensive DSL (copper) connectivity and no local loop unbundling. Similarly, the mobile connectivity market remains dominated by a few major players, namely Vodacom, MTN, Cell C, and Telkom, despite the presence of other smaller providers and MVNOs.

However, ICASA's regulatory efforts have not been without challenges. A significant development occurred in December 2025 when the High Court of South Africa set aside critical provisions of ICASA's Mobile Broadband Services Regulations, 2021, in a case brought by MTN. These regulations, which aimed to address competition concerns in the mobile sector, were challenged on grounds that ICASA relied on outdated data, misapplied economic tests, and failed to follow proper administrative procedures. The court found that ICASA's market definitions were not supported by a proper application of the SSNIP test or its own guidelines, highlighting flaws such as unjustified regional market segmentation and irrational exclusion of relevant infrastructure. This ruling underscores the necessity for ICASA to ensure its market inquiries and subsequent regulatory interventions are based on robust, current data and adhere strictly to procedural fairness and administrative law principles.

While the MTN judgment pertained to specific regulations stemming from a market review, it provides crucial guidance for ICASA's future conduct of market inquiries, including those flowing from the Priority Markets Inquiry. The dynamic nature of the electronic communications sector, characterised by rapid technological advancements like 5G and evolving market structures, further complicates regulatory efforts. ICASA's ongoing work, such as the gazetting of regulations on dynamic and opportunistic spectrum access, demonstrates its continued commitment to modernising spectrum management and promoting innovation, but also highlights the need for adaptability and precision in its regulatory approach.

The ICASA Priority Markets Inquiry represents a foundational step in South Africa's journey towards a more competitive and accessible electronic communications sector. By identifying key markets susceptible to ex ante regulation, ICASA has signalled its intent to proactively address market failures and reduce the cost of communication for consumers. However, the recent judicial review of the Mobile Broadband Services Regulations serves as a potent reminder of the stringent legal and economic standards required for such interventions to withstand scrutiny.

For legal practitioners and industry stakeholders, this means a continued need for vigilance and engagement with ICASA's processes. Future market reviews stemming from the identified priority markets will demand meticulous attention to detail, robust economic analysis, and strict adherence to administrative justice principles. Companies operating in the wholesale fixed access, upstream infrastructure, and mobile services sectors should anticipate further regulatory developments and be prepared to participate actively in consultation processes, ensuring their submissions are well-substantiated and address ICASA's concerns regarding market power and competition. The balance between fostering competition and ensuring regulatory certainty will remain a critical area of focus for the South African telecommunications landscape.