The Bill fails to provide adequate protection of Vodacom’s investment interests and changes the rules of the game midstream. It is of cardinal importance that an investor is able to determine its licence terms and conditions (i.e. total sum of rights and obligations) prior to investment and be guaranteed that these would not materially change during the licence period. Vodacom’s business case was and still is based on the aforementioned.

Please note that Vodacom is in its 11^th year of its licence and its licence provides that if ICASA or the Minister intended not to renew Vodacom ‘s licence that they should have notified Vodacom no later than 5 years before the expiry date of the licence, i.e. 31 May 2004. This did not happen and accordingly Vodacom’s licence, has in legal terms been extended for another 15 years from the expiry date 31 May 2009, i.e. until 31 May 2024. See Paragraph 5.4 of Vodacom’s licence as well as section 49 of the current Act. Based on this Vodacom has decided to roll-out a 3G network.

1. Although Section 84(1) and section 85(6) provide that a licence remains valid until converted in terms of section 85, Section 84 (5) and (6) provide that a licensee must within 90 days from the effective date of the Act offer to surrender its licence and that failing to offer to surrender its licence, that licence will expire 180 days after the ninety day period.
2. There is therefore no automatic conversion of current licenses in terms of the Convergence Bill.

1. Chapter 13 of the draft Bill is silent on the terms on which Vodacom’s existing licences will be converted.
2. The only references to rights and obligations is found in section 84(5) which authorises ICASA to grant additional rights with commensurate obligations whilst converting an existing licence and section 5(10) which clearly states that existing licenses will have the right and obligations contained in their current licence until converted into new converged licenses. This implies that after conversion the rights and obligations of a licensee may be amended.
3. Vodacom is not adverse to having its current MCTS Licence converted to fit into the new Convergence licensing framework, but submits that conversion should be automatic and take place on no less favourable terms than the existing licence terms and conditions.
4. The Bill should also guarantee existing licensees that the total monetary value of obligations of a licence holder who in terms of the new Convergence Licensing framework will hold two or more licences to provide the same services it is providing in terms of 1 licence prior to Convergence must remain at the same level in respect of the same rights for the full duration of the licence.
5. Further, the proposed licensing framework will result in an artificial split between wholesale and retail cellular services, which will definitely have a very negative impact on the mobile cellular business case, which is based on an average revenue per user (ARPU) model, i.e. include incoming and outgoing revenues per subscriber. Vodacom should therefore be deemed to be a holder of a communications networks service licence in terms of which it is should be allowed to provide both wholesale and retail services.
6. Vodacom’s proposed amendments to the Bill which will address the aforementioned concerns are attached in Annexure A and relate to sections 5 , 84 and 85.

2. Amendment to individual licences - Section 10

1. The Convergence Bill (section 10) gives ICASA very wide and even arbitrary powers to amend an individual license at any time without due process , i.e. if in ICASA’s opinion the amendment is necessary for universal access or universal service purposes.
2. An investor has to be able to determine its licence terms and conditions (i.e. total sum of rights and obligations) for incorporation into its business case prior to investment and be guaranteed that these would not materially change during the licence period.
3. The current Telecoms Act and Vodacom’s licence provide this protection, i.e. amendments to the licence only in agreement with Vodacom in the case of technological necessity or to ensure fair competition, i.e. make terms and conditions of similar licenses similar or as requested by the licensee.

3. Vodacom accepts that ICASA must be empowered to amend licenses in specific instances but amendments to an individual licence should be done in agreement with a licensee and the amendments must be informed, i.e. amendments relating to increased universal access obligations, must be preceded by a market analysis and assessment process to identify the true access gap and the most appropriate, proportionate and least intrusive regulatory remedy to address any such gaps.
4. The aforementioned should also apply when ICASA is making regulations which will result in additional obligations, i.e. universal service, and price, fees etc.
5. Vodacom propose an amendment to section 4 and 10 which will address the aforementioned concern in a reasonable manner and still allow amendments to licences in specific instances and regulations which will be informed and non-discriminatory. See Annexure A.

3.2.2 The amended wording in section 5 will address this concern.

4.1.1. Government directory enquiry service – Section 62(7)

1. The Bill requires that the cost of providing the government directory information service must be borne by the licensee.
2. Furthermore and by implication the call will initially be circuit switched voice but will eventually progress to SMS and full data connectivity.
3. This is a substantial change to current status quo as found in section 89B of the Telecommunications Act of 1996 as amended, which does not place an obligation on the network operators to provide a service for free.
4. This will have a negative impact on current and future investments if networks are expected to provide a service without the right to any remuneration.
5. Vodacom therefore propose that section 62(7) be deleted and replaced as proposed in Annexure A.

1. The Convergence Bill contains the aforementioned 5 sections relating to the regulation of operators with significant market power or operators in control of essential facilities or the regulation of prices at both retail and wholesale levels.
2. Vodacom recognises that regulation is necessary in real or potential market failure instances, but believes any market intervention must be light touch and preceded by a due and transparent process which provides for market identification, market assessment to identify the market failure and the market power of relevant operators as well as the identification of the most appropriate and proportionate remedy.
3. The current Convergence Bill does not provide for the aforementioned.
4. Vodacom however believes that section 4 and section 61 of the Bill could be amended to provide for the aforementioned which will ensure that any regulatory intervention (price or additional universal service obligation imposition) is informed and comply with due process requirements.