CAPE TELECOMMUNICATION USERS' FORUM
COMMENTS ON TELECOMMUNICATIONS AMENDMENT BILL NO.65 OF 2001

For attention:
Rita Schaafsma, Committee Secretary, Portfolio Committee on Communications

The Cape Telecommunications Users' Forum (CTUF) was formed in April 2001 to provide a forum through which telecommunications users in the Western Cape could participate in public debate around telecommunications policy and regulatory issues. Our goal is to represent the interests of telecommunications users and consumers, rather than investors or any other group. The CTUF has made submissions on the draft policy directions and the Interception and Monitoring Bill, as well providing an ongoing email-based discussion forum open to all interested parties.

CONTEXT

The CTUF recognises the strategic importance of telecommunications for South Africa, not only as an important industrial sector but also as a key enabler for growth and job creation in other sectors. We recognise particularly the importance of widespread, cheap telecommunications to the growth of small, medium and micro enterprises (SMMEs), and to the provision and use of electronic government services.

We note the apartheid legacy of inequitable development that has left many South Africans, especially rural dwellers, with no or inadequate access to telecommunications services. We acknowledge that ending this social and economic marginalisation is a key policy imperative, which we support.

We believe that the goal of broadening access will be best served by a regulatory and policy regime that encourages competition and that promotes, rather than hinders, private investment in this sector.

COMMENTS

1.Technology neutrality

The objects of the existing Act include promoting universal and affordable provision of telecommunication services to all South Africans. If this is the case, licensed telecommunication
operators should not be restricted in the means they can employ to achieve these goals. What
matters is the price, quality and range of services available, not the technology used to provide
them. This is especially important because current rapid technological change in the
telecommunications sector means that the kinds of services that can be provided, and the
technical means used to provide them, are evolving constantly. Legislation that makes
reference to specific technologies can never hope to keep up, and will only stifle the very
development it intends to promote.

In this context we are very concerned that the Amendment Bill continues to distinguish between different kinds of telecommunications service on the basis of technology. as in the distinction between "fixed-line operator" and "mobile operator".

2. Multimedia licence

The Bill proposes that Sentech be granted a licence to provide a "multimedia service". which is defined as follows:

"a digital broadcasting service that combines various forms of media to communicate information or content in an interactive format. including services such as
(a) internet through television:
(b) pay-per-view:
(c) video on demand:
(d) electronic transactions (including c-commerce):
(e) text:
(f) data:
(g) graphics;
(h) animation:
(i) audio;
(j) visual content.
but shall not include mobile cellular telecommunication services and public switched telecommunication services:

A broadcasting service, in turn, is defined by the IBA Act of 1993 as "any form of unidirectional telecommunication intended for the public or sections of the public". Yet the definition of multimedia above includes services that are inherently bi-directional. such as electronic commerce. This creates dangerous uncertainty around the definitions of multimedia and of broadcasting that may create a loophole for Sentech to claim that all forms of multimedia. including many thousands of existing websites, fall within the exclusivity created by its licence.

Even should Sentech choose not to interpret its licence in this way, the mere possibility that this could happen (especially given the history of Telkom's attempts to extend the preserve of its exclusivity} may have a chilling effect on Internet investment in South Africa.

We are confident that this was not the intent of the Bill, but it does demonstrate that technologically defined limits can generate unintended consequences -- including strangling existing service provision

3. Value Added Network Services (VANS)

The Bill proposes that VANS licences should encompass "any electronic transaction service. including. but not limited to. electronic data interchange. electronic mail, protocol conversion. access to a database or a managed data network service".
We are concerned that this potentially means that every provider of an e-commerce website or email service in South Africa will be defined as a VANS operator and will be compelled to apply for a licence.

4. Over-regulation will stifle small business development

In general, licensing should be kept to the absolute minimum required to ensure orderly regulation of an industry. A proliferation of licence requirements is a strong disincentive to investment, especially by small businesses.

In this respect, the Bill seems to give with one hand and take away with the other. It explicitly intends to promote SMMEs, and contains several provisions to facilitate SMME involvement in telecommunications service delivery in under-serviced areas. But at the same time it threatens to introduce a range of new licensing requirements (as discussed under point 3 above) that will make participation in this sector much more difficult, and more expensive, for precisely those small businesses.

5. The ban on carrying voice over internet protocol (VOIP) should be lifted

The Bill proposes to allow holders of under-serviced areas licences to carry VOIP, but the ban on VOIP for VANS operators and others has been reconfirmed. We believe that this ban is unworkable, unsustainable and harmful. Swimming against the tide of technological process is likely to widen the digital divide between and within nations, not narrow it. Evidence from the ITU suggests that where 'P telephony has been allowed, the economic and social benefits to users of lowered national and international call prices have been considerable.

The ban should be lifted to benefit all South Africans; failing that, all SMMEs, not just those in areas with teledensity less than 5%, should be allowed to carry VOIP. The exception should also be extended to SITA, to lower parastatal interconnect costs and reduce the burden on taxpayers.

6. Uncertainty and scope for litigation should be reduced as far as possible

The lesson of the past five years of disputes between Telkom on the one hand, and first ISPs and then VANs operators on the other, has been that companies will exploit to the maximum any legislative loopholes that might help them to entrench their own market position or stifle their competition. While these disputes raged, investment was put on hold and the extension of services was halted.

The Bill plugs one of these loopholes, by specifying that VANS operators may operate virtual private networks without additional licences.

We are concerned, however, that some of the provisions discussed above - such as the multimedia licence for Sentech - create the scope for yet more opportunistic legal actions.