MTN (MOBILE TELEPHONE NETWORKS )
MTN welcomes the opportunity to make written submissions on the Interception and Monitoring Bill. We trust that our submission will address the following principles:
MTN is committed to supporting the endeavours of South Africa’s law enforcement agencies to reduce the incidence of crime in our country.
COMMENTARY BY MOBILE TELEPHONE NETWORKS (PTY) LIMITED ON THE INTERCEPTION AND MONITORING BILL
INTRODUCTION
MTN thanks the Portfolio Committee on Justice and Constitutional Development for an opportunity to share our views on certain elements of the proposed Bill.
At the outset it must be emphasised that MTN fully supports Government in its commitment to reduce crime. To this end, MTN itself has already invested millions of rands in crime reduction and prevention initiatives such as funding the Centre for Crime Prevention studies at Rhodes University, providing training opportunities for South African law enforcement officers, co-operating with law enforcement in respect of providing technological support and forging alliances with international operatives such as Scotland Yard, the FBI and the office of the Attorney General in the United States.
MTN will continue to do its utmost to support South Africa's law enforcement agencies in every ethical, practicable and viable way possible.
However, while thus committed, MTN nevertheless has serious reservations about certain elements of the proposed legislation. These call for urgent dialogue in principally three areas:
1. GENERAL COMMENTS
1.1 MTN accepts that electronic monitoring plays a significant role in the detection and monitoring of sophisticated criminal activities. However, it is necessary to strike a reasonable balance between the right to privacy as specified in the Constitution of the Republic of South Africa ("the Constitution") and the right of the State to intrude on that privacy in carrying out its responsibilities for law enforcement.
1.2 According to statistics released by the administrative office of the US Courts and the Department of Justice in the United States of America, court orders for electronic surveillance of criminal activities by State and Federal agencies as well as court orders for criminal and national security investigations, increased substantially in 1996. In all, interceptions were in effect for a total of 43,635 days in 1996. Moreover, according to the report, electronic surveillance continues to be relatively inefficient. Overall, 2.2 million conversations were captured in 1996. A total of 1.7 million intercepted conversations were deemed not "incriminating" by Prosecutors. Each interception sanction resulted in the capture of an average of 1 969 conversations. Of these conversations, Prosecutors reported that, on average, only 21.4% were "incriminating". It can therefore be argued that interception of telecommunications may not only be unnecessarily intrusive but also not necessarily efficient and therefore needs to be strictly controlled.
1.3 A society which exposes its citizens, at the behest of the State, to the risk of a permanent electronic recording of its citizens’ words everytime they communicate telephonically or via the Internet, may be superbly equipped to fight crime but it would also be one in which the citizen's right to privacy is sacrificed. MTN therefore believes that any legislative scheme should set impeccably high standards for obtaining sanction to monitor and intercept.
1.4 It follows then that disinterested and objective criteria should be legislated to protect citizens whose private communications may become the target of interception. In other words, there must be clear and transparent criteria for authorisation of interception. Such criteria must demand substantial and convincing evidence of criminal activities. Consequently it should be possible for an individual to call the State into account if it can be established that a given interception was not authorised in accordance with the legislated standard.
1.5 The need to protect the individual’s right to privacy from unjustified intrusion becomes ever more critical as the technology and opportunities to invade privacy, increase. Clear rules and guidelines protecting the privacy of communication and limiting any government’s ability to intercept electronic communications surreptitiously, need to be advanced and agreed upon.
1.7 In part, this is because electronic surveillance poses greater threats to privacy than do physical searches and seizures. Electronic surveillance tends to be indiscriminate, embracing communications that may not even be relevant to an investigation, much less contemplated by a Court Order. Electronic surveillance also tends to operate over extended periods of time. Moreover, it is conducted surreptitiously and without notice to the subject or other persons participating in the monitored electronic communications.
1.9 The wording of the proposed South African Bill suggests that the intention of the drafters is that every obligation placed on the State should be diluted in terms of the stringency of its requirements. For example, we refer to the fact that the Judge appointed to adjudicate a law enforcement request for interception or monitoring need not be "convinced" but merely "satisfied" by the information presented to him.
1.10 In the Naidoo case quoted in Chapter 1 of the South African Law Commission’s Discussion Paper 78, published in November 1998, it is stated that: "what is clear is, probably after the experience of police methods during the apartheid era, that the legislature saw fit to repeal the old provisions relating to interception of personal articles, telephone communications, etc in terms of which various Ministers could authorise such actions and to replace those provisions with the obviously extremely stringent and limited provisions of the Monitoring Act".
1.11 It is imperative that the Bill is not perceived to be compromising the citizen's constitutional rights in respect of privacy.
1.12 The Monitoring Act should be intended to balance three key objectives:
1.12.3 to avoid impeding the development of new communications services and technologies.
1.13 It is further proposed that, in terms of the checks and balances that are essential, this Bill should require the Director of Public Prosecutions or Minister of Justice to provide annually a numerical estimate of law enforcement’s anticipated use of electronic surveillance for 2001 and the future. By mandating such publication of numerical estimates of anticipated law enforcement surveillance activity, both Government and the public will have a mechanism for a greater transparency of the monitoring and interception process. The purpose behind such a provision would be to ensure that network operators receive adequate and timeous notice from the Director of Publics Prosecutions or Minister of Justice about the needs of law enforcement.
1.14 Furthermore, the legislation should provide that the Minister is required to report annually to Parliament on the number of interceptions monitored, the costs involved and the number of convictions achieved as a result of monitoring and interception.
1.15 It must also be stated policy that law enforcement agencies are not empowered or authorised to prescribe or interfere with the design of telecommunications networks subordinate to this Monitoring Bill. Such authority and prerogative must vest in telecommunications industry associations where all relevant parties with an interest would be able to have input.
2 COMMENTARY ON THE BILL
2.1 Ad Section 1 definition: "call-related information"
2.1.1 MTN is of the view that the extent of the information required is too intrusive and renders the network vulnerable. One questions why signalling information that identifies, inter alia, origin and direction, is needed by law enforcement agencies. Is it envisaged that the network operator will divulge sensitive transmission-link related information or routing information to comply with this requirement? If this is the intention, MTN believes that it places a prejudicial burden on the company because of the nature and frequency of changes made in any network operator’s infrastructure from time to time to engineer optimal performance.
The Bill would seem to intend that the Service Provider or Network Operator becomes an Agent of the law enforcement agencies in that such a network operator would be obliged to act as a surveillance agent for Government.
However, where the directive obliging MTN to divulge the information as to locality of the subscriber is validly issued by a judge of the High Court MTN will adhere to the condition of supplying the information.
2.2 Ad Section 1 definition: "serious offence"
The Bill proposes that the words "or other compelling national interests" be inserted in the definition. MTN is of the view that these particular words should not appear and should be deleted in their entirety.
MTN is of the view that the addition of paragraphs (a) to (g) would in any event cater for all criminal activities that are perpetrated. Alternatively, and as previously mentioned, MTN is of the view that the "other compelling national interests" should be very narrowly defined in the Bill. This would hopefully preclude potential abuse that may be occasioned by the addition of the words "other compelling national interests".
2.3 Ad Section 4(2)(b)
This proposed section, could be open to potential abuse. MTN therefore submits that the wording "the security or other compelling national interests of the Republic", be deleted in its entirety. Alternatively, it is proposed that a clear, unequivocal definition of "security or other compelling national interests of the Republic" be inserted in Section 1 of the Bill.
2.4 Ad Section 6
2.4.1 MTN is deeply concerned that the costs of facilities and devices necessary to meet the State's requirements for interceptibility are envisaged to be for the account of the operators and that the Bill makes no provision for the operators to recover such costs from the State. The cost of such facilities and devices for a company such as MTN would be in the region of R50 million to R70 million at the current time. This investment would provide the capacity for cellular phone calls to be intercepted. This does not take into account the costs that the state will have to incur to monitor and record the phone calls concerned.
2.4.3 It must be acknowledged by Government that, to impose the costs for interceptibility on the operators, would be untenable.
First, such costs were not a licence condition when MTN paid R100 million for its licence. It did so in good faith that the licence from Government was reliable, had integrity and would stand up to scrutiny for such qualities by the international economic community and potential investors in South Africa.
Secondly, since costs for interceptibility were not a licence condition, they were not part of MTN's business plan and, consequently not part of its tariff structures provided to the users.
Furthermore, since MTN is a listed company with local and foreign shareholders, it would be unacceptable to impose on the company an unbudgeted obligation amounting to some R50 million since this would impact investor value negatively. .
While the R50 to R70 Million may not seem to be a huge investment it should be seen in the light of the taxes (direct or indirect) that MTN is paying to Government on an annual basis. In addition to having paid R100 million for its operating licence, MTN annually pays 5% of its net operating income in tax to Government. This amounted to approximately R222 million during the last financial year. This is over and above its obligations of normal company tax, community service obligations, spectrum fees, VAT, import taxes and regional services council levies, amongst others, that MTN pays to Government. During the last financial year, MTN paid over more than R1Billion to government.
In its willingness to respond to Governments' aspiration of universal service and in that context providing for some 5 million of the previously disadvantaged communities to have, not only fully mobile, pre-paid cellphones, but also cellular-based community payphones operating at greatly subsidised rates, the industry has already accepted significant constraints to its budgetary visions. Cellular is highly capital intensive. Just as MTN may not in its business plan, have expected returns from as many subscribers as its has today, then neither did it expect to have to role out a network that today covers 900 000 square kilometres of South Africa's land surface to be within reach of 90% of the country's people, many of whom have the convenience and safety of a cellphone without generating the revenue stream that makes it an independently viable business proposition.
Furthermore, it should be borne in mind that budgeted marketing spend generates connections and, by implication, increases the revenue which the State derives annually from the operator. Conversely, unbudgeted spend on interception equipment has the reverse effect.
Our support of and expenditure on the African Renaissance initiative and MTN's thrust into Africa has been achieved at no small cost. While Nigeria, for example, holds the promise of generating significant off-shore income for South Africa as a result of MTN's willingness to take the risk of exporting South African skills and technology, that licence alone cost $285 million US instead of the expected $100 million US.
MTN proposes that the costs of interceptibility, comprising chiefly an investment of some R50 million to R70 million in hardware and software, be deducted from the 5% of NOI and that Government then budgets its disbursement of the balance. In this way, interceptibility can be funded once-off in one year, Government would still receive approximately 80% of the NOI figure to budget for disbursement in the following year, while the shareholders and foreign investors will not lose confidence and, at the same time, the operator will not be constrained from meeting the challenges of an affordable universal service and the prospect of generating of foreign income for South Africa.
It is the understanding of MTN that a meeting between the Department of Finance and representatives of the cellular operators is being facilitated within a matter of weeks. At this meeting the operators will propose the above resolution. We trust that members of the Portfolio will support the proposal.
2.4.4 Furthermore, MTN submits that the telecommunications industry needs to be satisfied that the peripheral costs of providing intercepts do not become an undue burden on companies and that the number of intercepts will be of such a nature that:
2.4.5 MTN is of the view that, inter alia, the following goals should be adopted:
protected;
2.4.6 In the USA, similar legislation ("CALEA"), was vigorously opposed by industry and civil liberties organisations. The legislation was, however, adopted once the Government offered to set aside $500 million out of unallocated budget surplus to fund the initiative. In addition, Congress approved a resolution allowing the CALEA to be funded by money reprogrammed from intelligence and law enforcement agencies. Thus interceptibility was established as a financial obligation for Government and the law enforcement agencies themselves.
2.6 Ad Section 7(2)
This section proposes that the Minister of Communications may issue a directive to state the period within which the necessary facilities and devices to enable monitoring of conversations must be operational. This, in MTN’s view, would provide the Minister with more powers and jurisdiction than the Minister has under the current Telecommunications Act. In terms of the Telecommunications Act, the Minister has the power to issue directives relating to the policy that will be applied by the Government of the Republic of South Africa relating to telecommunications but not to operational matters affecting the implementation of that policy.
2.7 Ad Section 7(3), 7(4) and 7(5)
2.7.1 MTN believes the intentions detailed in this particular Section are less than reasonable. The Bill proposes to empower the Minister of Communications to be able to determine the security, technical and functional specifications of the facilities and devices to be acquired for the sanctioned monitoring of conversations or communications. Although the Bill provides for a consultative process, MTN is concerned that legitimate problems raised during this consultation may not be taken into account by Government prior to issue of the directive.
2.7.2 The time period referred to in Sub-Section 4, which shall not be less than three months, does not take into regard the realities of telecommunications. Configuration of new systems into an existing network, such as that operated by MTN, could mean that the systems specified by the Minister prove to be incompatible and hence defy integration into the existing network. In such an instance, MTN could be deemed to be in breach of a directive, and, in terms of the proposed Bill, in breach of a licence condition. Once again this directive must be acknowledged as a unilateral amendment to the current MTN Licence.
2.7.3 Sub-section 5 gives the Minister of Communications the power to specify in respect of such matters as capacity, the systems to be used and connectivity. The current wording of the suggested Sub-Section 5 seems to indicate that it will be the obligation of the Network Provider to ensure connectivity with the designated central monitoring centres.
2.7.4 This will mean that, in an instance where the systems of the network operator cannot connect with or, in other words, handshake with the systems of the central monitoring centre, the network operator may be deemed to be in breach of obligation as a result of being unable to provide such connectivity.
2.7.5 It should further be noted that, as the Bill currently reads, the Minister may issue such directive, with which MTN disagrees, and could in effect approve a supplier whose equipment may potentially be incompatible with the network of a network operator and even cause problems on that network.
2.8 Ad Section 9
We have addressed the matter previously but need to reiterate it is imperative that any request envisaged in terms of this section must comply with provisions similar to those contained in Section 4(2). MTN is concerned about the lack of judicial involvement in this proposed Section, as organs of Government may make requests for confidential information without any input or permission from a Magistrate or Judge.
Secondly, the section does not indicate whether the "call-related information" is historical or current of nature. MTN is of opinion that this request should relate only to historical data since Section 10(1)(a) seems to provide for the provision of current data.
2.9 Ad Section 11(1)
It is the intention of this particular Sub-Section that a network operator shall ensure that proper records regarding identities, addresses, and allocated numbers are kept in respect of clients to whom telecommunications services have been provided on the basis of a written contract. Currently an average of 16 500 mobile phones are stolen each month in South Africa. Analysis has shown that by far the greater number of these thefts are not reported to the police and the majority of stolen phones are not blacklisted by their owners. In the circumstances MTN can only undertake to use its best endeavours to ensure that operational numbers at all times match the signatory of the original contract.
Simultaneously, the constraint will prevent the realisation of universal service through the development and distribution of affordable, telecommunication services and products throughout South Africa
Within the abovementioned constraints MTN will use its best endeavours to comply with the requirement but it must be reiterated that we cannot be held responsible or accountable where we do not comply with the requirement.
2.11 Ad Section 12
2.11.1 Of concern to MTN is the fact that the security structure seeking an interception or monitoring directive could, after having been granted such directive on an oral basis, approach the network operator with an oral request to do the necessary monitoring. Clearly this cannot be the intention of the Legislature and therefore it is suggested that Section 12(2) be amended to ensure that the network operator is protected in the event that the oral directive differs from the specifications of the subsequent written directive. MTN should not be required to divulge any confidential information on the basis of an oral directive only.
2.11.2 MTN further believes that, the sensitive nature of the information it may be called upon to provide justifies responses to directives being made by way of affidavit. Furthermore, MTN requests the creation of a mechanism or structure whereby its employees will not be required to testify in Court but, instead, the aforementioned affidavit would suffice to address the requirements of any judicial proceedings. Furthermore, network operators personnel who have been summoned to give evidence in Court have been the victims of harassment and threats by criminals.
2.11.4 MTN records its preference for written directives being served upon MTN at a central point so that the requirements of the Bill can receive adequate response.
2.12 Ad Section 15
In its current form the Bill would seem to criminalise a network operator for not complying with a directive issued by the Minister of Communications. In effect, an operator like MTN, that renders a service with limited assistance from the State, may be held to be in contravention of the Act and could lose its operating licence. Given the nature of the industry, the complexities of responding to directives and the subtleties of Constitutional rights, such vulnerability would be untenable for the network operators.
2.13 Ad Section 16
In MTN’s view this should be seen as an amendment to the current MTN Licence. This Section does not comply with any of the provisions contained in the current MTN Licence or the Telecommunications Act and we therefore submit that this particular Section should be deleted in its entirety.
3. CONCLUSION