1.1 Telkom SA Limited expresses its appreciation for the opportunity afforded to it to make representations on the Electronic Communications and Transactions Bill, 2002 ("the Bill").

1.2 Telkom’s submission addresses both the substantive and procedural aspects of the Bill and provides comment and recommendations in relation thereto. The key objective of our comment is to address issues arising from provisions that might adversely affect the interests of Telkom should the Bill be promulgated into an Act of parliament in its present formulation.

1.3 The Bill has as its primary objective the facilitation and regulation of electronic communications and transactions. It endeavors to entrench the legitimacy, trust, security and integrity of electronic communications and transactions whilst at the same time safeguarding the interests of consumers against commercial malpractice and exploitation. Telkom supports these objectives.

1.4 Telkom is however of the view that an alternative approach of achieving the objects of the Bill is by way of a general laws amendment to inter alia the Telecommunications Act, the Interpretation Act, the Interception and Monitoring Prohibition Act, the Criminal Procedures Act and so on. Telkom further submits that electronic transactions relate to something of a purely commercial nature to which electronic conveyance through communications forms merely an incidental component.

1.5 The objects of the Bill can only be partly realized and can for the most part not be enforced extra-territorially because of the international nature of the Internet -it is not bound to a single geographical area or jurisdiction. Such limitation potentially exposes local consumers to international commercial malpractice. This would increase due to the fact that international trade via the Internet is showing significant growth. Regulation of e-commerce on a global scale needs to therefore be considered.

2.1 Telkom submits that the legislation be called the "Electronic Transactions Bill" without any reference to communications due to the fact that the Bill relates in essence to commercial electronic interaction and transactions and not to communication as provided for in the Telecommunications Act as amended.

2.2 In section 11 and many other sections a double negative "is not without legal force and effect" is used. The use of a double negative creates confusion as to what the particular provisions mean. It is suggested that all the double negatives used in the Bill must be replaced with the phrase "shall be considered with force and effect".

2.3 Since the Bill establishes both an "Accreditation Authority" and a "Domain Name Authority", all references to Authority should be amended to refer to the "relevant authority". Lack of reference, to which Authority sections of the Bill refer to, create confusion.

3.1 Telkom supports the guiding objectives stated in the preamble.

3.2 One of the broad objects cited in the Bill is to promote universal access to electronic communications and transactions and the use of electronic transactions by SMMEs. Telkom submits that due consideration should be taken of the existing obligations awarded to Telkom in terms of the Telecommunications Act No. 103 of 1996 as amended as well as its Public Switched Telecommunications Licence.

4.1 1. Definitions

4.1.1 "cryptography" Although the Bill defines "cryptography product ", "cryptography provider", and" "cryptography service" the term cryptography is not defined. Telkom suggests that the following definition of "cryptography" be inserted in the Bill:

Telkom further submits that the drafters should take due consideration of the provisions of the Interception and Monitoring Bill when considering the concept of "crptography".

The Bill defines "cryptographic service" as any service that makes use of cryptographic techniques and is used by a sender or recipient of data messages for the purposes of ensuring (a) that such data can be accessed only by relevant persons; (b) the authenticity of the data; (c) the integrity of the data; or (d) that the source of the data can be correctly ascertained

4.1.2 "cryptography service" The phrase "any service" can be misconstrued to mean the entire internet and other data communication methods that require integrity checking as part of communication. Telkom proposes the following definition for the term "cryptography service"

"cryptography service" means a service which is provided to a sender or a recipient of a data message or to anyone storing a data message, and is designed to facilitate the use of cryptographic techniques for this purpose.

4.1.3 "data" The Bill defines "data" as electronic representations of information in any form. This definition is too wide and could lead to conflict in its interpretation. The Bill’s application to data should be limited in so far as it relates to transactions in electronic commercial transactions. The present definition of data in the Bill will govern the disposition and conveyance of all Telkom’s voice and data traffic as well as its storage of data not of a transactional nature. This is currently regulated in terms of the Telecommunications Act. Telkom submits that data should be defined as: the subject matter or content of an electronic transaction.

4.1.4 "electronic" The Bill defines the term "electronic" as digital or any other intangible form. This definition is flawed and misleading. The word intangible refers to anything that is formless. All formless things, for example the concept of emotions, are intangible but are not necessarily electronic. The Bill however does not provide a definition for the term electronic commerce. Telkom submits that it is more desirable to include a definition for the term electronic commerce as opposed to the term electronic.

Telkom suggests the following definition for the term "electronic commerce":

4.1.5 "electronic agent" The phrase "used independently" is present in the definition of the term "electronic agent". It is uncertain as to what is meant by "used independently". There exists uncertainty whether the computer program must be used independently of other telecommunications facilities or independently of natural persons. This definition needs to be redrafted to reflect the true intention of drafter.

Telkom proposes the following definition for the term "electronic agent":

"Electronic Agent" means a computer program or an electronic or other automated means used to initiate an action either pro-actively or re-actively.

4.1.6 "electronic signature" Since "electronic signature" is defined with reference to "signature", the meaning of signature should also be defined. The term signature both in terms of normal and legal use refers to a distinguishing mark that identifies a person with a specific statement, declaration of will, factuality or with the terms of an account or agreement on which or in relation to which the signature is affixed or used. Telkom submits that this definition be inserted in the Bill to avoid conflict or confusion.

4.1.7 "Internet" The proposed definition of "Internet" fails to take account of the intricacies of the Internet. Written with a capital "I" "Internet" represents the single world-wide interconnected web of networks that use the TCP-IP suite of protocols whereas "internet" written in the lower case "i" describes any private interconnection of networks. Telkom submits that the term "Internet" be written with a capital "I".

4.1.8 "person" The term "person" is defined as including public bodies. The term public bodies needs to be defined to reflect the intention of the drafter.

4.1.9 "registrar" The Bill makes provision for two regulatory authorities namely an "Accreditation Authority" and a "Domain Name Authority". If the intention of the drafter is to refer to the "Domain Name Authority" in this definition then the full term must be used to avoid confusion.

4.1.10 "registry" and "repository" If the intention of the drafter is to refer to the "Domain Name Authority" in this definition then the full term must be used to avoid confusion.

4.1.11 "second level domain" The Bill defines "second level domain" as the subdomain or subdomains immediately following the ccTLD, signifying a category or type of domain name.

Telkom submits that "Second level domain" be defined as a sub-domain immediately under the ZA ccTLD.

4.1.12 "web site" The Bill defines a "web site" as any computer on the Internet containing a home page or web page; and "World Wide Web" as an Internet retrieval system for hyperlinked distributed information and includes all data messages residing on all computers linked to the Internet.

These definitions are very wide and could include private content on computers and even password files that have no relevance to web services. Telkom proposes the following definitions for the above terms:

4.2 2. Objects of Act

4.2.1 Telkom supports the detailed objectives stated in this section and particularly supports the intent of setting the public interest as of primary importance.

4.2.2 Telkom supports the recognition of the importance of the information economy to the future economic and social prosperity of the Republic, to prevent barriers to electronic transactions and to encourage investment and innovation in respect of electronic transactions in the Republic.

4.3 3. Interpretation

5.1.1 5. National e-strategy

5.1.1.1 Telkom regards the development of an e-Strategy for the Republic as of great importance given its potential to save time and resources. Success stories of entrepreneuring businessmen and women that have used the Internet to reach into global markets are well-known. A substantive strategy is however required to extend the benefits of e-commerce to as large a segment of the population as possible.

5.1.2 6. Universal access

5.1.2.1 "Universal service" is defined in the Bill as access by all citizens of the Republic to Internet connectivity and electronic transactions. The Bill does not however establish how this provision is going to be implemented. Telkom submits that the Bill should address the implementation of this provision.

5.1.2.2 Universal access obligations should be borne equally by all service providers without exclusion and universal service contributions already made by operators should be taken due cognizance of in determining the extent of further obligations contemplated.

5.2 Electronic transactions policy

Section 10 of the Bill provides that the Minister must formulate electronic transactions policy. To effect certainty Telkom submits that a timeline within which the Minister will formulate the policy must be included in the Bill.

6.1 11. Legal recognition of data messages

6.1.2 The use of a double negative in this section creates confusion as to what the provision means. It is suggested that the double negatives used in this section be replaced with the phrase "shall be considered with legal force and effect".

6.1.2 12 Writing

6.1.2.1 Telkom supports the equation of data messages (writing), declarations of will, signature, original, record, storage and electronically presented evidence with paper based or paper reliant equivalents and regards this as the single most important step in removing any existing uncertainties or uncertainties that may have arisen in the future in this regard.

6.1.3 13 Signature

6.1.3.1 Section 13(1) of the Bill provides that where the signature of a person is required by law, that requirement in relation to a data message is met only if an advanced electronic signature is used.

6.1.3.2 The provision loses sight of the borderless and international nature of e-commerce and the Internet and of the fact that products and services of internationally acclaimed authentication providers whose services are not accredited will in some instances only be valid for extra-territorial use. In fact, there is no guarantee that all municipally accredited products and services will be acceptable to foreign trading partners. The Act must take this into account so that International Trade through electronic means is not stifled.

6.1.4 15. Admissibility and evidential weight of data messages

6.1.4.1 Section 15. (1)(a) of the Bill provides that in any legal proceedings, the rules of evidence must not be applied so as to deny the admissibility of a data message, in evidence on the mere grounds that it is constituted by a data message.

6.1.4.2 Given the wide nature and intricacies associated with electronic communications, the provision that the normal rules of evidence should not preclude the admissibility of a data message is supported by Telkom.

6.1.5 21. Automated transactions

6.1.5.1 Section 21 of the Bill provides that in an automated transaction an agreement may be formed where an electronic agent performs an action required by law for agreement formation; and that no agreement is formed where a natural person interacts directly with the electronic agent of another person and has made a material error during the creation of a data message and (i) the electronic agent did not provide that person with an opportunity to prevent or correct the error or that person notifies the other person of the error as soon as practicable after that person has learned of it.

6.1.5.2 The Bill provides that a natural person (as opposed to a juristic person) is not bound by the terms of an agreement inter alia if he made a material error during the creation of a data message and he notifies the other person of the error as soon as practicable after he has learnt of his error. It appears inconsistent that no reciprocity is provided for mistakes made by electronic agents.

6.1.5.3 This provision also defeats the cooling-off period provided for in section 45 that is restricted to seven days due to the fact that a transacting party can also according to this provision retract from an agreement if he/she committed an error in the process of creating a data message.

6.1.5.4 Section 21(e)(ii) is going to create a situation where people who want to get out of the agreement they have concluded will be able to do so at the prejudice of the other party to that transaction. It creates a situation where a party to a transaction may allege that it only learned of errors after a long period after the conclusion of an automated transaction. This will create uncertainty and confusion regarding the validity and implementation of transactions concluded by automated electronic messages and introduces a risk of such contracts being challenged after a very long time after their purported conclusion.

6.1.5.5 Telkom submits that this section of the Bill needs to be deleted to avoid inconsistency with section 45 of the Bill and common law principles applicable to contract.

6.2 Communication of data messages

6.2.1 22. Variation by agreement between parties

6.2.1.1 Section 22 of the Bill provides that parties are allowed the liberty to reach agreement outside the provisions of the Bill on issues involving generation, dispatch, receipt, storage and processing of data messages. Telkom supports this provision as it will promote and encourage the use of electronic commerce.

6.2.2 23. Formation and validity of agreements

6.2.2.1 Section 23 of the Bill provides that an agreement is not without legal force and effect merely because it was concluded partly or in whole by means of data messages, and that an agreement concluded between parties by means of data messages is concluded at the time when and place where the acceptance of the offer was received by the offeror.

6.2.2.2 It is not clear as to what will constitute an offer in this regard. The Bill must clearly specify what is an offer such that it is clear whether the offer is made by a person who responds to an invitation to buy placed on a website. The invitation itself should not be regarded as the offer.

6.2.3 24. Time and place of communications, dispatch and receipt

6.2.3.1 Section 24(c) provides that a data message must be regarded as having been sent from the originator's usual place of business and as having been received at the addressee's usual place of business.

6.2.3.2 Due to the fact that not every contracting party operates a business the reference to "usual place of business" should be rendered "domicilium citandi et executandi" which refers to a place where a person is deemed to be resident.

6.2.4 26. Attribution of data messages to originator

6.2.5.1 Section 26 of the Bill provides that a data message is that of the originator if it was sent by the originator personally; a person who had authority to act on behalf of the originator in respect of that data message; or an information system programmed by or on behalf of the originator to operate automatically.

6.2.4.2 Section 26 imposes a non-rebuttable presumption as to who the originator of a data message is. It is suggested that this provision must be amended by inserting "deemed to be" after the phrase "A data message". This will enable a person deemed to be the originator to rebut of an electronic message and if a person is not such originator he/she can rebut the presumption that he/she is the originator.

7.1 Due to the fact that the promotion of electronic communications is regarded as a national priority and many more citizens are likely to benefit from e-government services than from e-business, one would expect Government to play a leading role in the implementation of e-government services.

No comment.

9.1 Section 36 of the Bill provides the following: "Subject to section 31(1), a person may, without the prior authority of any other person, sell or provide authentication products or services in the Republic."

9.2 The perception created in the Bill that accreditation is voluntary is misleading. Only authentication service providers whose authentication products and services are accredited are permitted to issue advanced electronic signatures and only advanced electronic signatures can satisfy certain basic legal requirements.

10.1 44. Information to be provided

10.1.1 Section 44 of the Bill sets out the information to be provided to consumers on the web site where goods or services are offered.

10.1.2 The fact that existing consumer laws apparently provide adequate protection for the consumer notwithstanding, the Bill sets out certain consumer protection provisions of its own that cannot be contracted out of. A consumer can retract from a contract on the basis of a failure to comply with any listed consumer protection provision, irrespective of whether it is material or immaterial. No reasons for retraction or cancellation need to be advanced, full refunds must be made, and no penalties can be provided for. The provision provides more than adequate safeguard to consumers against exploitation.

10.2 45. Cooling-off period

10.2.1 Due to the fact that consumers must -in addition to being provided with all the elaborate detail prescribed by section 44(1) to effect a transaction, provision of a cooling-off period is superfluous and grossly unnecessary.

10.2.2 This provision read with section 44 is a sure recipe for inhibiting the adoption of the electronic medium and the Internet as a trading environment. It creates additional encumbrances on e-merchants not present in the world of paper reliant transactions dealing with entirely the same issues and subject matter.

10.2.3 Due to the aforementioned considerations in addition to problems associated with partial performance or services partly provided prior to cancellation of an order and reverse auction, transacting via an exchange of electronic data messages the e-commerce option may be the medium of last resort.

10.2.4 Section 45 provides for a cooling-off period of seven days after the conclusion of the transaction. This provision defeats the purpose of, and discourages the, use of the Internet as a quick and efficient way of doing business. In order to avoid risk, the supplier of goods and services will have to wait for seven days before delivering the goods or providing the services. This hampers the business efficiency and convenience of using electronic messages to conclude transactions. As the existing consumer protection laws already protect the consumer, it is suggested that section 45 must be deleted in its entirety.

10.3 48. Applicability of foreign law

10.3.1 Section 48 of the Bill provides that the protection provided to consumers in this Chapter, applies irrespective of the legal system applicable to the agreement in question.

10.3.2 This provision may be impossible to enforce consistently due to the global nature of e-commerce and the Internet and extra-territorial enforcement will in fact be impossible.

12.1 54. Identification of critical data and critical databases

12.1.1 Section 54 provides that the Minister may by notice in the Gazette (a) declare certain classes of information which is of importance to the protection of the national security of the Republic or the economic and social well-being of its citizens to be critical data for the purposes of this Chapter; and (b) establish procedures to be followed in the identification of critical databases for the purposes of this Chapter.

12.1.2 The Bill defines "critical data" as data that is declared by the Minister in terms of Section 54 to be of importance to the protection of the national security of the Republic or the social well-being of its citizens.

12.1.3 Section 36(1) of the Promotion of Access to Information Act No2 of 2000 provides that the information officer of a public body must refuse a request for access to a record of the body if the record contains-

12.1.4 Telkom submits that although the above section does provide some protection against "critical data" which if declared public information or provided to third parties would be commercially detrimental to the parties providing the information, the following provision should be added to the Bill to prevent conflict in interpreting both the pieces of legislation.

Telkom submits that a further proviso should be added to this section to the effect that: Where information is commercial in nature and divulgence of this information could be commercially detrimental to the entity providing the information, the Minister must not declare public or make this information which has been placed under the category of "critical data" available to any other party.

No comment.

No comment.

No comment.

16.1 Due cognisance should be taken of the Law Commission paper on Computer Related Crime for a fuller and more extensive exposition of the subject.

No comment.

No comment.