INTERNET SOLUTIONS SUBMISSION Ė ELECTRONIC COMMUNICATIONS BILL

17 November 2005

 

  1. Introduction
  2. 1.1 Internet Solutions (IS) wishes to express its appreciation to the National Council of Provinces (NCOP) for the opportunity to offer our comments on the Electronic Communications Bill (the Bill) as was passed in the National Assembly as a section 75 Bill. The process which led to the current Bill was initiated by the Department of Communications and was introduced to the industry in a colloquium held in July 2003. IS noted with appreciation the participative manner through which the drafting of this Bill was commenced. It is therefore with even more heartfelt appreciation that we note that the NCOP has not detracted from this route and that the process of finalising the Bill remains as inclusive and consultative as it was during its initiation.

    1.2 IS has also noted the NCOPís intention to hold public hearings on the Bill set down for the 29 of November 2005 and we wish to take this opportunity to formally request an opportunity to make an oral address or presentation at such hearings at the appropriate scheduled time.

  3. General Comments

2.1 The Electronic Communications Bill (Bill) is envisaged to lower retail prices, unlock bandwidth and contribute to the development of modern infrastructure that puts South Africa at the forefront of economic competitiveness and increases opportunities for BEE players. The major driver of this Bill seems to be the current perception of retail prices that are not falling fast enough, little consumer choice given the lack of diversity of high end industry participants and input prices for bandwidth that are discouraging investment.

2.2 It is ISí submission that in order to attain these objectives and successfully transform the South African telecommunications market from a monopolistic market into a competitive one requires decisive legislative intervention. Without it, viable competition is not likely to emerge.

2.3 The market reality is that most disputes and discussions around communication issues ultimately come down to economics. Incumbents want to protect their market share, while new competitors need to establish a profitable market presence. The outcome of legislative decisions on creating a competitive environment often goes a long way towards determining how successful different operators will be in achieving those goals.

2.4 The objective of legislators therefore is to establish a statutory regime that is as balanced as possible. That way, the success or failure of competing operators will depend on their business strategies, rather than on a tilted playing field.

2.5 IS is confident that the NCOP through this Bill will be able to address these objectives and select the most efficient measures to achieve them so as to ensure that growth and development of the sector combined with effective and sustainable competition are achieved. We now turn to deal with pertinent issues that arise from the Bill.

3. The Bill as was passed by the National Assembly

3.1 At the outset IS wishes to put it on record that the process conducted by the Parliamentary Portfolio Committee on Communications was a very inclusive and participatory process that took into account various submissions both oral and written that were put forward by different stakeholders. The ultimate product therefore which was forwarded to and passed by the National Assembly mirrored most of these submissions and we believe as IS that the Bill in its current form will go a long way in creating a competitive industry that will bring down prices, lower the cost of doing business in SA, create jobs and position SA on a sustainable basis as an investment destination of choice in Southern Africa.

3.2 In overall the Bill seems to have a lot of positive aspects in as far it allows easy access to the sector by new entrants thereby lowering the entry barriers. The traditional market boundaries have also been substantially broken down a move that is likely to increase competitiveness in the market. All traits that allowed certain operators to exclusivity around provision of certain services have been eliminated and the Bill affords ICASA express and definitive powers on how deal with unfair or anti-competitive conduct in the market.

3.3 Our submission therefore is not designed to criticize the Bill but to bring to the NCOPís attention an omission in the Bill which if left in its current state is likely to create untenable ambiguity and instability that could jeopordise a key sector of the industry. We now turn to deal in detail with this issue.

4. Transitional Provisions of the Bill

4.1 It is a matter of record that when the final version of the Bill was tabled before the PPCC by the Department of Communications (DOC) attached to it was an annexure that contained a mapping model that would be used as a guide to both the regulator ICASA and to the industry as to how different licenses shall be converted once the Electronic Communications Bill had been promulgated into law (a copy of this annexure is attached herein for your ease of reference).

4.2 The inclusion of this annexure is standard and absolutely critical for purposes of creating stability as to how licenses shall be converted once the new regime is effected into law. In its absence the transitional measures would be in shambles and the continued viability of most business would be put under threat. It was probably with this in mind that the DOC proposed the inclusion of this annexure.

4.3 However due to time constraints and the fact that the annexure had not been brought before the PPCC during the deliberations stage of this process its inclusion as part of the Bill was rejected. The merits of having such an annexure as an attachment to the Bill were therefore never dealt with. The decision to exclude it was therefore purely procedural or technical and the substantive consequences of moving into a new regime without a mapping structure or model as was proposed by the DOC were consequently never considered. This decision as I will demonstrate herein if not revisited is likely to cause untold prejudice and will substantially disadvantage a certain sector of the industry whilst giving undue advantage to the other. Such unintended consequences could not have what was intended neither by the PPCC nor by the NCOP.

4.4 Section 93 (4) of the current Bill sets a framework that ICASA must use for converting and issuing new licenses. However this framework only gives guidance to ICASA in relation to conversion of licenses that are traditionally infrastructure licenses. Nowhere in the Bill is it set out as to how ICASA shall convert other licenses that are not of an infrastructure origin. The annexure attached herein containing a licence mapping structure proposed by the DOC was designed to close this gap. In its absence the entirety of the sector that falls outside the one defined in the Bill will be left open and vulnerable to all kinds of uncertainty as to how those licenses shall be converted going forward. Such uncertainty is likely to negatively affect the businesses of these licensees and may cause to them irreparable financial harm.

4.5 This could have broader negative effects for the industry, the consumers, competition, the economy and investor confidence and appetite on these licensees primarily and on the communications sector in general.

5. Conclusion

5.1 IS would therefore like to appeal to the NCOP that it should consider the inclusion of the annexure on licence mapping as was proposed by the DOC so as to ensure that it becomes part of the Bill when it is promulgated into law.

5.2 It is our submission that the exclusion of this annexure was on technical grounds and it was not foreseen that its exclusion would have such dire and direct consequences for a certain sector of the industry.

 

 

 

 

 

 

APPENDIX A

Guidelines for Conversion of Existing Licences

LICENCE CATEGORY

INDIVIDUAL

CLASS

EXEMPT

Communication

Network Services

  • Common and private carrier networks for

Broadcasting signal distribution;

  • Carrier of carriers;
  • a mobile cellular telecommunication network;
  • a public switched telecommunication network;
  • an under service licence area network;
  • a public broadcasting station
  • a commercial broadcasting station;
  • a multimedia network

Value Added Network Services (Vans) having the following: (a) Lease facilities from other Public Switched Telecommunications Service Licensees, Operate and maintain international telecommunication services, Points of presence internationally and in major metropolitan areas, Provide wholesale virtual networks to other Vans , Operate peering with other Vans using dedicated links.

  • Broadcasting signal distribution

Category III

  • Self Help Stations
  • Value Added Network Services
  • Wireless LAN
  • Radio apparatus
  • WiFi

Communication

Services

  • Multiplex service;
  • Common and private carrier broadcasting signal

distribution services;

  • International telecommunication services;
  • Local access telecommunication services;
  • Mobile cellular telecommunication services;
  • Mobile data telecommunication services;
  • National long distance telecommunication

service;

  • Public switched telecommunication services;
  • Under service licensed areas

Value Added Net work Services (Vans) having the following: (a) Lease facilities from other Public Switched Telecommunications Service Licensees, Operate own international gateways, Operate and maintain international gateways, Provide wholesale virtual networks to other Vans , Operate peering with other Vans through use of dedicated links. Provide Voice calls

 

 

 

 

  • Value Added Network Services
  • Multimedia Services
  • Broadband, except voice using

numbers from the

National numbering plan

Broadcasting Services

  • Public, commercial and community television

and sound broadcasting services

  • Low power sound broadcasting
 

Radio Frequency

Spectrum

  • 1800 MHz
  • 3G
  • 900 MHz
  • Maritime ship station licences
  • Radio amateurs
  • Spectrum licences (of general

nature

  • Wireless LAN
  • WiFi 2.4 GHz
  • and 5.8 GHz
  • Short range devices Citizen Band

(CB) Radio