COMMUNICATIONS USERS ASSOCIATION OF SOUTH AFRICA (CUASA)

REPRESENTATION ON THE TELECOMMUNICATIONS AMENDMENT BILL

The Communications Users Association of South Africa (CUASA) thanks the Parliamentary Portfolio Committee on Telecommunications for giving us the opportunity to make representation on the Telecommunications Amendment Bill.

CUASA primarily represents the real users of telecommunications services, as the majority of our members do not generate their income and revenues from telecommunications services, but from using telecommunications as a tool to enable them to operate their businesses.

At the outset, we wish to express our dissatisfaction with the overall processes which have led up to the production of the Bill. In spite of our repeated submissions, responses and presentations at numerous SATRA and ICASA Hearings on various aspects relating to the Telecommunications Act, we feel that the contents of the Bill indicates that our input has essentially been ignored.

Various associations such as SAVA and ISPA have already made/will be making their positions known to you, but we have to reiterate that a number of actions taken by parties such as Telkom, in recent years, have, we feel, been very heavy-handed. These include the withholding of services to various parties. Actions which we feel were unfair and which have affected their ability to conduct their businesses in the local telecommunications industry.

We wish to state that many of the parties in this industry have started from humble beginnings. They appear to be viewed with suspicion and as a threat by the likes of Telkom, even though they represent but a tiny fraction of the size of our monopoly Operator. Users, and we include the small users, feel threatened by such actions, and attempts to have these addressed by the Regulator have essentially been unsuccessful.

Moving on to the main aspects which CUASA would like to cover this afternoon, I would like to focus on some of the Telephony aspects of the Bill which we have concerns about. These include Number Portability, Carrier Pre-selection and PTNs.

Many users, particularly the SMMEs, strongly believe that Number Portability is essential to their continued existence in their respective markets. It also goes almost without saying that the SNO will be at a definite disadvantage if Number Portability is not provided for, from their first day in competition to Telkom. Businesses, especially the smaller ones, rely almost exclusively on the telephone, to enable them to conduct their business. They do not have the funds or resources to enable them change their telephone numbers. Number Portability is essential, if they are to be empowered to obtain their telephone services from the SNO.

Carrier Pre-selection and Carrier Selection are other functions that are essential, we believe, to enabling the SNO to have any real chance of survival. We believe that Carrier Selection should be obligatory from May 2002, with the provision of Carrier Pre-selection a year later.

We all know that the SNO will be unable to get any sort of critical mass, unless they can attract most of their initial customers from the formal and larger business sector. They need to be given at least a fair chance of survival, and as they will be unable to install much by way of local loop in the short term, Carrier Selection is a must.

We are amazed that the term "voice" is not defined in the Bill. It needs to be defined, to clarify the references to it, such as on page 5 line 12. As voice is so strongly restricted in the Act, we believe a clear and unambiguous definition is essential to this legislation.

Furthermore, the term "interconnected" needs to be defined, to clarify the references to it in the Bill, such as on page 14 line 22.

We fail to understand why focus is placed on Voice over Internet Protocol (VoIP), such as on page 5 line 12, page 12 line 8 and page 27 item 2.14. There are many other methods of transmitting voice, such as voice over Frame Relay, Voice over Asynchronous Transfer Mode (ATM), etc. Does this mean that all other forms of the transmission of "voice" are not restricted by these clauses?

Moving on to what is very much a sore point with particularly the larger businesses, is the whole issue of PTNs.

With reference to page 14 lines 19 to 24, and as there is no definition of the meaning of the word "interconnected", this implies that virtually every user of a network which is in any way interconnected to the telecommunication system of Telkom or any other person providing a public switched telecommunications network service, will need a PTN licence. We believe that the real reason/s for the need for a PTN licence has/have been lost during the confusion which has existed in the industry since the promulgation of the Act in 1996. This means that ICASA will likely be inundated with PTN licence applications. Besides ICASA being unlikely to be able to process these in a reasonable time, we believe that this is not what was initially intended from the PTN licence concept. In addition, we feel that this is totally impractical, and tends to minimize any real reasons for users having to have a PTN licence in the first place.

However, if having large numbers of PTN licences is what is actually perceived, the Network Operators could, as a possible better alternative, simply charge an additional amount on the rentals of the services they provide, pass this on to ICASA, and thereby obviate the need for having PTN licences. A much more efficient and practical option, we believe.

With reference to page 19 lines 1 and 2, we believe that PTN Licence holders should be exempt from having to pay any USF contributions. Firstly, they will already be paying these as their part of the rental fees for the telecommunications services they are using from Telkom or the SNO.

Secondly, there is no scarcity value to having a PTN licence.

Thirdly, PTN users do not generate direct funds or profits by operating a PTN, as they are exclusively prohibited from offering these services to third parties.

Fourthly, the specified maximum contribution of 0.5% of a licencee's annual turnover could be an excessive amount, particularly in the case of large organisations/companies which could operate a PTN. In examples such as one of the four large South African financial institutions, would this mean 0.5% of their gross annual turnover? If it does, an example quoted would amount to an annual USF contribution from that single organisation of around 39 Million Rand. This would obviously negate any possible reason to operate a PTN.

Fifthly, the Bill provides no specified basis to differentiate on the USF contribution amount based on the size or benefit of the PTN. A PTN could range from being a single line interconnecting two sites, to a very large network interconnecting hundreds or even thousands of sites. This is totally unreasonable and impractical.

I'd like to describe some of the practical aspects surrounding PTNS, as they affect our everyday businesses. Take a company with an office in each of two towns or cities in South Africa. Each of these two sites would typically have a PABX, with lines to and from the PSTN. Should the company wish to lease a line/circuit to interconnect these two sites, they could obtain a Diginet line from Telkom. This could be used to provide data and computer connectivity between the two offices. No problem? Is this "interconnection"? Does it require a PTN licence?

Now, should they wish to use this line to enable them to make voice calls between the two sites, they can. This is permitted in the Act, but does it require a PTN licence? We don't believe it does, unless the mere fact that it is connected to their PABX systems means that it is "interconnected".

Now, what if site A received a call from a customer who needs to speak to someone at site B. They could ask the customer to make another call to site B. Not very good customer service. They could also offer to get the person at site B to call the customer back. However, that would take some time, and might also not be considered good customer service.

They could enable their PABXs to interconnect the PSTN line to the leased line, and thereby transfer the call to the person at site B. Excellent customer service. But is this now deemed to be "interconnected"? Would this require them to be classified as a PTN?

What if the person at site B is out of the office, and has diverted his/her calls to his/her cellphone? Many of us do this every day. Is this permitted? Is this now a PTN?

What if the person the customer needed to speak to was in fact based at site A, but out of the office and his/her calls diverted to his/her cellphone? No leased lines would be involved. But is this permitted? What if Corporate Connect (cell routers) were used? Does this constitute a PTN?

The Act and the Bill do not clearly define or explain any of the above questions. And these are simple examples. Things can get much more complex and involved in large companies, having centralised Call Centres, with calls entering at multiple sites, and with specialists at various locations around the country (or around the world).

Take Radio 702 and Cape Talk. What happens when a Cape Town caller makes a local call to the Cape Talk telephone number (021 area), and speaks live on the radio to Jon Qwelane or Professor Harry Seftel who is sitting in the 702 studio in Sandton (011 area). Does this mean they are operating a PTN? Do they have a PTN licence? Might Primedia need to pay up to 0.5% of their annual turnover as a USF contribution? Plus an as yet unknown PTN licence fee? What about the SABC? Might they need to pay 0.5% of their annual turnover as a USF contribution?

CUASA respectfully asks how companies can be expected to plan for the future under these unclear conditions? No clarity is provided regarding the cost of the PTN licence, or of the USF contribution amount.

We at CUASA strongly feel that the whole matter of PTNs needs to be re-considered. We endeavored to arrange a PTN Stakeholders Workshop after the ICASA Hearings on VANS and PTNS in July, due to the obvious confusion amongst all parties involved, including ICASA. However, these requests failed to materialize, we believe due mainly to the timescales and the pressures under which ICASA and the DOC find themselves. This situation cannot be allowed to continue. If it does continue, we are going to be left with another Act that is vague, incomplete, which results in additional confusion in the industry, and which we believe is going to be un-enforceable.