State’s heavy-handed approach invalidates consumer choice

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The Independent Communications Authority of SA (Icasa), the regulator of wireless communications, has ordered an innovative business that sought to sell Starlink equipment to South Africans despite there being no official launch in the country, to stop.

This is but the latest example of the overbearing nature of the SA state. 
Starlink is a satellite constellation for internet provision owned by SpaceX. Its aim, according to its website, is to enable fast internet access across the globe. Given the digital nature of the modern world, internet provision — fast internet provision especially — grows in necessity. 
Yet some South Africans have now been denied this opportunity to access the web at high speeds due to a macro policy environment that is hell-bent on socially engineering societal outcomes, right down to the demographic/racial makeup of equity owners/holders in private businesses. 
The Electronic Communications Act mandates that 30% of a company seeking registration with regulatory bodies such as Icasa, as Starlink would have to do, must be held by “historically disadvantaged people”. This is a requirement to which US-based Starlink was not willing to acquiesce.  
Yet, despite this government-created restriction on our freedoms, the market still provided. IT Lec, an SA company based in the Northern Cape, took the initiative to import the equipment needed to access the Starlink network and distributed it so that South Africans — particularly those who cannot access high-speed internet any other way — could exercise freedom of choice and use it should they wish to.  
The enterprising nature of the company and the entrepreneurs behind it ought to be commended. High-speed internet is difficult, if not impossible, to access in many rural areas of SA, and Starlink is a solution to this problem. Demand for the equipment IT Lec imported was high — until Icasa decided that it knows better than those consumers. 
The government should be creating an environment wherein its citizens can exercise their right to make non-harmful choices, such as picking which internet service provider to use. Instead, it penalises those who seek to create this environment of expanded choice. In an ailing economy that would benefit from almost any form of new productive activity, our government regulators are sanctioning legitimate business operations. 
For a citizen living in a rural area, access to the internet brings with it a marked improvement in their standard of living. When government regulators inhibit that access through heavy-handed implementation of misguided legislation such as the Electronic Communications Act, the state actively contributes to the lessening of its citizens’ quality of life. 
The solution must be all-encompassing if this problem is to be fully addressed. In this instance, the provision of the act that requires 30% equity to be held by black people must be done away with. 
The need to boost the prosperity of the indigenous population of SA, who make up the bulk of the “historically disadvantaged”, cannot be overstated. But what does it say of the consciousness of the indigenous that their prosperity is seemingly contingent on being given a share of what others have built? 
The requirement to transfer part of the ownership of a company to individuals who can add no value does not fill potential investors with confidence. In fact, it puts them off investing. SA, like most jurisdictions, needs investment for the economy to grow. Forced equity transfers prior to an enterprise operating in the electronic communications industry is having a negative effect on economic growth.  
SA needs all the economic growth it can get; thus, the position of the government is short-sighted to say the least. Sanctioning a business should never be a solution, since the effect is not only on the business owners and their customers but on the broader economy itself through dissuading future investment in whatever sanctioned area. 
A reworking of the regulatory environment in the electronic communications space is needed. The cost of compliance to enter this market legally makes the prospect of doing so quite daunting for most of the historically disadvantaged people who make up SA society. Deregulating the space is the best way to ensure true organic transformation rather than seeking to give those who are historically disadvantaged a handout. 
Icasa as a regulator is guided by legislation, so the blame ought to go to those who make the law. It is our legislative regime that enables Icasa to shut down value-providing businesses and inhibit the operation of others. For Icasa to be called to order, the laws must change so they encourage businesses instead of punishing them. 


Zakhele Mthembu BA Law LLB (Wits) is a legal researcher at the Free Market Foundation.

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