SUBMISSIONS TO THE PORTFOLIO COMMITTEE ON JUSTICE AND CONSTITUTIONAL DEVELOPMENT: THE INTERCEPTION AND MONITORING BILL, 2001
INTRODUCTION
Vodacom wish to express its sincere appreciation and thanks to the portfolio Committee for this opportunity to make a submission on the Interception and Monitoring Bill, 2001.
It is Vodacom’s submission that while commendable in principle, the Bill remains unsatisfactory in the manner in which it deals with certain issues, which are of concern not only to Vodacom but the industry as a whole and consumers. The Bill still contains provisions which if implemented places priority on law enforcement at the cost of other important considerations such as the affordability of telecommunications services, universal service and universal access. It also undermines the viability of small, medium and micro telecommunications enterprises, the independence of the judiciary and protection of rights, which are guaranteed by South Africa’s Constitution. In this written representation we will deal with these and other issues of serious concern to Vodacom, in particular, the impact of placing additional obligations on telecommunications operators. The most important of these obligations are:
To acquire the facilities and devices for monitoring and interception at own cost, and
To obtain, at the various points of sale, and keep records and physical addresses as well as proof of identity of contract and pre-paid subscribers.
Background The Interception and Monitoring Bill, 2001 has gone through some fairly lengthy and extensive policy formulation processes, which have been transparent and characterised by a high level of openness amongst all participants. The original Bill can perhaps be traced to January 1999 when the South African Law Commission published a discussion document and a draft Interception and Monitoring Bill to which Vodacom and various stakeholders contributed. This exercise was entitled "Discussion Paper 78 - Project 105" and invited comments on the content and format of the applicable legislation. This was followed in October 1999 by another document entitled "Project 105 – Review of Security Legislation". The fact that to-date, the Bill has not been passed into Law is undoubtedly indicative of the complexity of the issues involved. It highlights the need for all stakeholders, government in particular, to tread with caution in an area which everyone agrees entails the balancing of key competing interests such as law enforcement, the protection of privacy and attendant justifiable limitations and the creation of a business environment in which the provision of telecommunications services will flourish to meet the universal access and service objectives of the Government. All of these interests are important and therefore one cannot be sacrificed for the other.
Vodacom has throughout its submissions strived to maintain such a balanced approach and sets out below the most important key issues Parliament needs to consider when finalising the amendments to the Monitoring and Interception Prohibition Act.
KEY ISSUES TO BE CONSIDERED: Vodacom respectfully request careful consideration of the following key issues:
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The imposition of a statutory obligation to acquire monitoring and interception facilities and devices at own cost constitutes a material breach of Vodacom’s Telecommunications Licence – Section 7 (2) and (3) The Multiparty Implementation Agreement (to which the Government is a party) and which forms an integral part of Vodacom’s National Cellular Telecommunications Licence provides that no legislation or regulatory action (excluding legislation of general application), will be enacted during the licence period, which will subject Vodacom to any obligations other than those specified in its Licence. It furthermore stipulates that Vodacom will be entitled to claim damages in case of breach. Additional obligations should therefore not be imposed without Vodacom’s agreement.
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Telecommunications operators are entitled to "reasonable remuneration" for providing monitoring and interception services – Section 6 (2) (3) and (4) The prevention and investigation of crime is essentially the responsibility of the State and therefore the cost associated with discharging this duty should be borne by the State. However, at the same time, Vodacom as a responsible corporate citizen is committed to providing legally required and technically acceptable levels of assistance to Government authorities in order for them to discharge the aforementioned duty. It is therefore not an opportunity for commercial gain, but rather a service to the country, for which Vodacom or any other telecommunications operator should be remunerated on a cost oriented basis.
The Bill makes provision for "reasonable remuneration" to be paid to network operators for providing monitoring and interception services. It however specifies that the remuneration is only in respect of direct costs and may not include the cost of acquiring the monitoring facilities. Vodacom submits that the correct interpretation of "reasonable remuneration" indeed includes a capital component plus interest, maintenance and other variable costs. This can be achieved by a fixed monthly charge by which the network operator will be compensated over time for the cost of procuring, installing and upgrading the facilities and equipment (including software) as well as a monthly charge in respect of the monthly variable costs related to the operation, maintenance of the system, rental of office space, salaries, security clearance, training of personnel etc.
It is also arguable that the obligation imposed on the operator to acquire the monitoring and interception facilities and equipment at own cost constitutes an expropriation of property by the State in violation of section 25 of the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996).
As at the beginning of August 2001, the mentioned cost to Vodacom stood at R90 million. Given the Rand’s downward slide in strength relative to other currencies, it is however likely to have increased substantially by the time the Bill is passed into an Act. This significant operational cost will regrettably have to be passed on to the consumer, which will inevitably have a detrimental effect on the realisation of the universal service objective stated in section 2 of the Telecommunications Act, 1996 (Act 103 of 1996).
Furthermore, Vodacom wish to point out that the aforementioned cost must not be seen in isolation. Vodacom submits that it is critical for Vodacom and all telecommunications operators that the total financial impact of all obligations being imposed on telecommunications operators be assessed. These consist of inter alia, direct and indirect taxes, telecommunications service licence fees, spectrum fees, Universal Service Fund levies, contributions to the Skills Development Fund, other commercial commitments in respect of infrastructure investment as well as economic and social development commitments such as community service phones and subsidised community service tariffs. The imposition of more obligations particularly on, Cell C, the Second and Third network operators and the effect on their viability, needs careful consideration.
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The broadening of the scope of the Act to include all telecommunications operators will have a detrimental impact on the telecommunications industry as a whole – Definition of "Service Provider" in Section 1. Vodacom notes with some concern that notwithstanding its previous submissions to the contrary during various policy formulation stages, that the Bill still obliges all telecommunications operators to provide monitoring and interception services. Vodacom further notes that the definition of "Service Provider" in the Bill has been broadened to include Value Added Network Service Operators as well as Private Telecommunications Networks. As we have previously stated, these operators operate in relatively small niche markets that do not command the mass-market services such as those provided by Telkom, Vodacom and MTN. These markets are extremely competitive and the imposition of further financial obligations on such operators at this stage will undermine their viability and growth. Accordingly, Vodacom submits that the decision as to which categories of telecommunications licencees should be obliged to comply with the Act, should be made by the Minister of Justice in consultation with the Minister of Posts, Telecommunications and Broadcasting as well as the Independent Communications Authority (ICASA).
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The obligation to obtain and keep records of addresses and proof of identity of all subscribers (including pre-paid users) is impractical and seem to have been made without regard to the Telecommunications Act, 1996 (Act 103 of 1996) – Sections 11 (1) (2) (3) Vodacom regrettably notes that the provision requiring operators to obtain and keep records of both contract and pre-paid customers has been retained. Section 11(3)(b) however seems to recognise that there could be instances where pre-paid customer information is not available to a service provider. Vodacom assumes that this provision was inserted to address the difficulties of obtaining information in respect of current pre-paid customers whose information was not previously requested.
It is however not clear whether this provision will apply to prospective pre-paid customers after this Bill has been passed into an Act. We recommend that the Portfolio committee provide clarity on this issue in order to avoid costly and unnecessary litigation.
Vodacom however maintains its submission that the information of pre-paid customers should be excluded from this obligation. The imposition of an obligation to require such information in respect of pre-paid users will result in the commercial decline, if not the demise of the product. The price and success of Vodago and other pre-paid products, which already constitute over 90% of Vodacom customers, are due to the ease and lower cost of distribution.
Vodacom’s channel of distribution does not have the necessary features to allow users to complete identity forms, e.g. at a till. Vodacom or its distributors will have to dedicate personnel at each point to manually take down this type of information. Currently Vodacom has over 8153 formal distribution points and thousands of informal pre-paid distribution points. The formal channels of distribution consist of a highly complex structure made up of a number of outlets, national channels, independent Vodacom dealers, Vodago-Only-dealers (who are not involved in the cellular network, but only in the sale of Vodacom products), small stores in outlying districts and franchisees. The informal channels of distribution are extremely difficult to measure and consist of an estimated ten thousand bulk-buyers and hawkers. Given the nature and structure of our distribution channel, it is not clear who will ultimately bear the responsibility of collecting, verifying and storing such information.
The media constantly reports on the presence of illegal aliens and immigrants entering South Africa daily and who are not in possession of identity documents. In addition to this segment of our market are minor children and international travellers, all of whom use our Vodago products. It is questionable whether obtaining unauthenticated particulars of an illegal alien will have any benefit for law enforcement agencies. Will operators be required to have proof of their lawful presence in the RSA? The implication of requiring permits and other proof of lawful presence of such prospective customer in the RSA as a precondition for concluding a sale of the product will further seriously undermine the success of the Vodago pre-paid product.
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Definition of a "Judge", Separation of Powers and the independence of the Judiciary – Section 1 In the definition section of the Bill, the judge authorising the monitoring and interception will be a retired judge. This definition appears to have overlooked the importance of the separation of powers between the executive and judiciary which, is one of the cornerstones of our constitutional checks and balances. In view hereof, we submit that the definition should be amended to provide that the judge should be "a judge in active service" and not retired or discharged, unless he/she is endowed with the same constitutional standing and independence to resist undue executive pressure.
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Request for provision of call-related data – Sections 9(1) and 10 Vodacom respectfully submit that the requirement to furnish call data on a real time basis, without the actual monitoring of a call constitutes the surveillance of a caller. Given the level of intrusion into the individual’s right of privacy in these cases, it is Vodacom’s submission that a judge’s direction is essential.