SENTECH'S SUBMISSION ON THETELECOMMUNICATIONS AMENDMENT BILL

Submitted to the Parliamentary Portfolio Committee on Communications19 September 2001

1. INTRODUCTION

Sentech welcomes the introduction of a managed liberalisation of the telecommunications industry in which consumers will benefit from increased competition and choice. Sentech server applauds the Ministry and the Department of Communications for its brave initiatives with regard to the education rate and universal access and service. Sentech looks forward to playing an active and meaningful role in the new telecommunications environment. Overall, Sentech supports the amendments made in the Bill but wishes to make a few comments, which it believes will assist the Ministry and the Department of Communications in achieving the policy objective. The new Telecommunications Amendment Bill presents a few challenges to Sentech. It recognises that Sentech has a telecommunications infrastructure which enables it to provide gateway and multimedia services. As the common carrier for broadcasting, Sentech has a track record of dealing with a host of broadcasters in SA and other parts of Africa in a professional and equitable manner. Now Sentech will be able to broaden its base so that, as a convergent, multimedia carrier and operator, it will bring the same quality of service to its growing customer base in SA, Africa and the world. Sentech, it is hoped, will make its contribution to South Africa in coming an international telecommunications hub.

The Information and Communication Technologies (ICT) sector has been identified as a major driver of the Africa Initiative. Sentech's new entitlements under the Bill will enable to play a significant part in the linking of Africa into the global CT revolution, by connecting under-resourced African ICT operators at an affordable level.

Although the Bill largely facilitates Sentech's development in these areas, we would submit to the committee that there are certain provisions that could be amended in order for greater clarity to be achieved in the definition of Sentech's powers, rights and duties.

AREAS OF CONCERN
The principal areas of concern are the following:
- the definition of 'carrier of carriers"
- the definition of "multi-media"
- telecommunications infrastructure
- interconnection and carrier pre-select provisions
- emergency centres

1.1 Carrier of Carriers

The draft definition reads as follows:

'carrier of carriers' means a telecommunication service (including any signal conveyed by means of the telecommunication system of that service) which -

(a) originates on the telecommunication system of a public switched telecommunication service licensee or mobile cellular telecommunication service licensee in the Republic and terminates in a telecommunication system in another country; or

originates and terminates in a telecommunication system of an operator licensed in another country to provide international services, but is conveyed via a telecommunication system in the Republic on a wholesale basis, but which specifically excludes the termination of international telecommunication services to end-users directly;

The definition is similar to the definition contained in Newton’s telecoms dictionary which is based on accepted definitions in the telecommunications industry. The Definition which may be of assistance in finalising the definition of carrier of carrier reads as follows –

"Carrier's carrier: is a company that provides telecommunication services to interexchange carriers or telephone companies. A carrier's carrier does not provide service to the public and therefore is subject to fewer regulations."

Sentech hopes that the Regulator and the Ministry will take cognisance of this definition when finalising the terms and conditions of Sentech's license.

The proposed section 32C grants a license to Sentech, to provide, inter alia, an international telecommunication gateway service, "enabling it to operate as a carrier of carriers." The implication of this definition is that Sentech will only be licensed to provide services to South African public switched telecommunication service providers, South African mobile cellular service providers and service providers that provide international services in other countries. Although "end-users" are specifically excluded, the definition is silent on other service providers such as VANS, SMMEs and lSPs. It is Sentech's submission that the definition of "a wholesale service" does apply to these service providers who are not, in any event, end users.

We are of the view that the Bill should contain a specific reference to other service providers such as VANS, SMMEs and lSPs if the license is to be of real immediate value. As it is, the SNO will be locked in with Telkom through facility sharing and Telkom itself may not wish to utilise the services of Sentech for international services as it has its own infrastructure. The mobile cellular service providers have all concluded long-standing agreements with Telkom for the international carriage of their traffic.

Trends the world over have shown a steady rise in data traffic, which, in some countries has exceeded voice traffic. This traffic is largely generated by VANS and ISPs who require international access to connect to the Internet. Given that SMMEs will be authorised to provide VOIP (i.e. a form of data) it ought to be made clear that Sentech will be licensed to carry traffic generated by SMMEs on behalf of end users. These service providers, as the Bill stands, will have no choice in respect of which carrier they may use for international traffic, as there will be no competition in the area of data carriage as Telkom's monopoly will effectively remain.

Sentech is concerned by the possible implications of part (b) of the definition which restricts the service to be offered to "licensed international" carriers in other countries. Surely the intention of the legislature is to restrict Sentech's service offerings within the Republic but not outside its borders? Also, the question of what is a "licensed carrier" in other countries may prove problematic. In this regard, will Sentech be entitled to offer services to persons outside of the Republic who do not require licenses in their own countries? For example, VANS are unlicensed in countries such as the United States. We believe that our proposed change below to the definition addresses this issue without derogating from the principles and policies of the Department of Communications.

The legislature has seen fit to award Sentech an international license and Sentech urges the legislature therefore to make it clear that it is a full licence that can generate maximum value not only for Sentech but for the industry as a whole. The investment to be made in respect of infrastructure needs to receive a proper return. This is in line with the stated intent of liberalizing the industry and does not derogate from the policy of excluding end users. The ultimate beneficiaries will, of course, be the consumer and the South African taxpayer if Sentech is allowed to offer the full spectrum of services and use its infrastructure efficiently within the meaning of carriers' carrier.

If it is the intention of parliament to allow Sentech to provide international services to VANS, ISPs and SMMEs then the new Bill must also make provision for the fact that these service providers will be permitted to obtain telecommunication facilities from Sentech for their international services.

We recommend that the proposed definition of carrier of carriers be amended to read as follows:

‘carrier of carriers' means a telecommunication service (including any signal conveyed by means of the telecommunication system of that service) which-(a) originates on the telecommunication system of a public switched telecommunication service licensee or mobile cellular telecommunication service licensee or internet service provider or licensed value added network service licensee or SMMEs in the Republic and terminates in a telecommunication system in another country or vice versa; or

(c) originates and! or terminates in a telecommunication system in another country but is conveyed via a telecommunication system in the Republic on a wholesale basis but which specifically excludes the termination of international telecommunication services to end-users directly in the Republic,

Sentech strongly urges the lawmaker to reconsider it's position with regards to the proviso that Sentech not be allowed to provide international carriage to end users. This prohibition over looks the fact that Sentech’s resources will be under utilised if Sentech in not allowed to provide international services to end-users. Once again we believe that appendix A illustrates this point. We further believe that the lawmakers have an obligation to ensure that state assets such as Sentech receive maximum value for the infrastructure. We believe that it is a matter of national interest that Sentech be allowed to provide maximum return to its shareholder, the government and people of South Africa.

Section 40 (2) of the Act must include a reference to Sentech's facilities in order to give content to the proposed amendment to the definition of carrier of carriers. VANS licensees should be entitled to use the telecommunication facilities provided by the PSTN licensees and Sentech.

1.2 Multimedia

What is not clear from this definition is to what extent Sentech will be entitled to provide the return path in the interactive broadcasting environment. Given the difficulties surrounding the understanding of broadcast" it would be preferable to have this specified in the Act for the avoidance of doubt. Sentech's infrastructure is ready to be extended to enable it to provide multimedia services (Please refers to Appendix A).

The proposed definition reads as follows:

multimedia service' means a digital broadcasting service that combines various forms of media to communicate information or content in an interactive format, including services such as-
1. internet through television;
2. pay-per-view;
3. video on demand;
4. electronic transactions (including e-commerce);
5. text;
6. data;
7. graphics;
8. animation;
9. audio;
10. visual content.

but shall not include mobile cellular telecommunication services and public switched telecommunication services and includes the right to provide the return oath and telecommunication facilities related thereto in the interactive environment;

We would accordingly suggest that Sentech's right to provide the return path be entrenched in the enabling provisions contained in 532C.

We accordingly suggest that wording be included to the following effect -

"Sentech shall be entitled to provide the return path and facilities required in order to provide a return path."

1.3 Infrastructure

Although the proposed amendment makes provision for new licenses, it is relatively silent on the right to roll out infrastructure. We suggest that this also be placed beyond doubt i.e. Sentech should be expressly entitled to establish, construct maintain infrastructure that is required to provide the licensed services under each licence. Such clarity is of importance so as to give content to the licence and certainty to Sentech. Aside from encouraging investment in new infrastructure, such provisions will be the foundation for Sentech's continued prosperity and success in a converged communications environment.

We suggest that S32 be amended to include the following -'Sentech shall be entitled to construct and maintain telecommunication and multimedia facilities required for the provision of these services."

In addition, we respectfully refer the Committee to the appendix attached hereto as Appendix A which Sentech wishes to use in support of efficient use of infrastructure through proper licensing. Sentech is of the view that the Appendix supplies a telling and persuasive argument in favour of right to provide telecommunication facilities and the maximum use of that infrastructure for the public good.

1.4 Interconnection

Sentech wishes to bring to the attention of the committee that the bill provides for the possibilities to renegotiate interconnect agreements for a period of five years. The Bill only deals with the guidelines for establishing interconnection agreements but is silent on some key requirements establishing the interconnect date.

The international telephone revenues are more than 50% dependent on terminating traffic locally. If this is not addressed the opportunity of Sentech will be tremendously reduced. The second national operator is not yet up and running, hence proper termination rates in interconnection agreement must depend on the lowest national termination rate. The present incumbent should not determine what the interconnection rate should be. The regulator should determine the rate. Not only will the matter of interconnect affect Sentech, but also the SNO will be affected if the present incumbent is allowed to dictate the process of establishing an interconnection rate.

Sentech suggests the addition of ( F) under clause 18 to read as follows.

(I) "The establishment of interconnect rates shall be transparent"

(II) "The present incumbent shall not unilaterally determine the rate on its own"

(III) The interconnection rate must depend on national termination rate.

(IV) The termination rate must be public information available at ICASA.

(V) A common interconnection rate must be offered to all players".

1.5 Emergency Centres

Sentech welcomes the establishment of emergency centres but however,

suggest for establishment of a rational digital radio communications services (RSRCS) Network, to be operated by a single operator.

Sentech foresees a problem if emergency centre can be allowed to establish their own radio van networks using different solutions.

It is unclear whether the lawmaker intends Sentech to be a role player in the provision of emergency centres. It is Sentech's view that Sentech is ideally placed to provide these services and already has infrastructure which can be used. Sentech submits that it would be a grave oversight for the lawmakers to exclude Sentech from the application of Chapter X of the proposed amendment. Sentech urges the lawmakers to make the necessary changes to this chapter as it appears that Sentech may have been overlooked in error. Sentech will make further representations in this regard at the hearings into the amendments and requests the Committee's indulgence in this regard.

2. GENERAL REMARKS

Sentech appreciates the strengthening of the minister's powers in the licensing process. The decision process has been tightened and the element of uncertainty will definitely be avoided. The independence of the authority still exists. The telecommunications industry is a crucial and strategic factor for South Africa to lead the advance of the African Initiative.

Telecommunications is a dynamic, fast moving environment. The authority must keep up the needs of the industry.

The suggested changes to section 35 of the Act seeks to clearly define the relationship between the Policy makers and the Regulator.

3. CONCLUDING REMARKS

Sentech thanks the Ministry, the Department and the Portfolio Committee for the opportunity to make these representations. Sentech also requests that it be given an opportunity to make oral representations and looks forward to hearing from the Committee in this regard.

Finally, Sentech again wishes to commend the Ministry and the Department for the strides made towards liberalising the industry and the introduction of further competition.

DATED AT JOHANNESBURG THIS I9th DAY OF SEPTEMBER 2001.