BRIEFING NOTES ON regulation of interception of communications and provision of communication-RELATED INFORMATION AMENDMENT BILL, 2006, TO THE PORTFOLIO COMMITTEE ON JUSTICE AND CONSTITUTIONAL DEVELOPMENT ON 23 MAY 2006

1. Introduction

1.1 The Bill is intended to amend the Regulation of Interception of Communications and Provision of Communication-related Information Act, 2002, (the Act) so as to amend the registration of cellular phones and SIM-cards, by moving away from a "paper-based" system to an "electronic solution" and to provide for matters connected therewith. These amendments originate from the cellular phone telecommunication service providers themselves, that is VODACOM, MTN and Cell C. When the provisions of the Act were in the process of being implemented last year, these service providers urged Government not to implement sections 40 and 62(6) of the Act, dealing with the registration of cell phones due to numerous practical issues they identified. The implementation of these provisions was consequently delayed pending the promotion of the amendments contained in the Bill.

1.2 The briefing will cover the following areas:

(a) First a brief overview of the relevant provisions of the Act.

(b) I shall then refer to practical difficulties with the implementation of sections 40 and 62(6) of the Act.

(c) Thereafter I shall discuss individual clauses in detail.

(d) I shall furthermore refer to the advantages or benefits of the proposed solution.

(e) Finally, I shall provide you with information as to how the electronic solution will function in practice.

2. Exposition of sections 40 and 62(6) of the Act

2.1 Section 40 places the following obligations on a person who sells or in any other manner provides a cell phone or SIM-card to another person:

2.1.1 (a) If the recipient is a natural person:

(i) The following must be obtained by the seller from the recipient:

(aa) Full names;

    1. ID number;
    2. residential and business or postal address; and
    3. certified copy of ID document;

    1. the seller must retain a certified copy of the ID document
    2. the seller must verify -
      1. the photo;
      2. full names; and
      3. ID number.

    1. If the recipient is a juristic person:

    1. The seller must obtain from the person representing the juristic person, the following:
      1. In respect of the representative:
      2. *his or her full names, ID number, residential and postal address; and

        *a certified copy of the representative’s ID document.

      3. In respect of the business:

      * the name and address and registration number (if applicable) of the business; and

      *a certified copy of the business letterhead.

    2. The seller must retain certified copies of the ID document and the letterhead.
    3. The seller must verify -
      1. In respect of the representative:
      2. *his or her photo, full names and ID number.

      3. In respect of the business:

*the name and registration number thereof.

      1. The seller of the cellular phone or SIM-card must ensure that proper records are kept of -

  1. the information and copies obtained and any change in information;
  2. the cellular telephone number or any other number allocated to the recipient;
  3. the number of the cellular phone concerned; and
  4. any other information required to identify the recipient.

    1. Section 62(6) places an obligation on a person, who at the

date of commencement of the Act, is the owner of a cellular phone or SIM-card (the so-called "historical owners") to provide the information mentioned in section 40. The information must be provided –

  1. in the manner and within the period determined by the Minister by notice in the Gazette; and
  2. to the person who sold or provided the phone or card or the telecommunication service provider or another person, mentioned in notice.

In respect of the notice, the following requirements are set out:

(a) Different periods may be determined by the Minister;

(b) the Minister must consult the telecommunication service providers before exercising this power; and

(c) the notice must before publication be submitted to Parliament.

Practical difficulties with implementation of sections 40 and 62(6)

The following practical difficulties in the implementation of the said sections were highlighted by the Mobile Cellular Industry:

(a) The Mobile Cellular Industry makes intensive use of informal distribution channels in respect of pre-paid communication services in traditionally under-served markets, mainly rural areas. This paper-based system will have a negative impact on job creation and employment in the informal distribution chain with a resulting negative impact on services and access.

(b) Law enforcement agencies will experience difficulties in tracing documents through a cascading decentralised paper-based system. In other words, law enforcement agencies will have to approach different persons and organisations, which form part of the distribution channels, in order to gather information and trace the documents and cellular phones as the distribution channels are not structured.

(c) Difficulties will be experienced in enforcing and monitoring the registration of cellular phones and SIM-cards already in circulation since there is no central control mechanism to establish whether a customer has failed to register or not.

(d) Difficulties will be experienced in enforcing the registration of cellular phones.

4. Overview of individual clauses

4.1 Clause 1

This clause amends section 1 of the Act, which deals with definitions. A definition of "family member" has been inserted. The definition has a bearing on section 40(5), which will be discussed in detail later. In brief, this section requires a customer or owner of a cell phone, who wants to sell or give a cell phone and SIM-card to another person, to obtain and verify certain information. The effect of the definition is that the cell phone owner does not have to do this if the cell phone or SIM-card is sold or given by the owner to a member of his or her family, namely -

(a) a person who is related to another person biologically or by law, including customary or religious law; or

(b) a person’s permanent life partner.

As the identity and whereabouts of the persons included in the definition of "family member" are well-known to the customer, it would not be difficult for the law enforcement agencies to trace such persons, should it be necessary.

4.2 Clause 2

Clause 2 forms the crux of the Bill and can be summarised as follows:

4.2.1 Clause 2(1)

This subclause prohibits a telecommunication service provider who provides a mobile cellular service (eg VODACOM, MTN and Cell C), from –

(a) activating a SIM-card; or

b) allowing the use of a cellular phone,

on its system unless the particulars of the phone or the card have been recorded and stored.

In terms of this provision, it is irrelevant where and by whom the cellular phone or the SIM-card was provided. Through this requirement, all handsets (cellular phones) and SIM-cards will be registered even if they are bought abroad, sold or provided by persons other than telecommunication service providers because the duty to register will, in terms of the proposed amendments, be on the service providers (VODACOM, MTN and Cell C) to facilitate/ensure registration and not on the distributors.

      1. Clause 2(2)

In terms of this subclause, an obligation is placed on a telecommunication service provider, at own cost, to implement a process to record and store, and to record and store:

  1. The MSISDN –number of the SIM-card; (Unique identifying number of a customer on the telecommunication system of a mobile cellular operator)
  2. The IMEI-number of the phone; (The mobile cellular handset number) and
  3. the full names, identity number, residential, business and postal addresses of the person who wants to make use of the service.

In terms of the "paper-based" system, the obligation relating to registration rests on the distribution channels whereas in terms of this subclause the obligation falls squarely on the mobile cellular operators. It needs to be mentioned that another difference between this clause and the existing section 40(1) of the Act is that no distinction has been made in the Bill between the information to be recorded in the case of a natural person and that of a juristic person.

      1. Clause 2(3)

This subclause deals with the verification of the information to be recorded and stored. The following is expected of a telecommunication service provider:

  1. Verification of the full names and ID number of the person/recipient with reference to his or her ID document;
  2. Requiring from the person/recipient to submit documentation, to the satisfaction of the service provider, in which his or her addresses are identified.

This subclause introduces a new requirement in respect of verification, namely the verification of the addresses of the person.

4.2.4 Clause 2(4)

In terms of this subclause, an obligation is placed on a telecommunication service provider to ensure that the process, the required information and the facility in or on which the information is recorded and stored, are secure and only accessible to persons designated by a service provider. The purpose of this subclause is self-explanatory. Section 40 of the Act does not contain a similar provision, the reason being that the Bill introduces the concept of central points of registration by telecommunication service providers.

      1. Clause 2(5)

This subclause has a bearing on owners of cellular phones or SIM-cards after the commencement of these amendments. In terms of this subclause, a customer who, from the date of commencement of section 40 of the Act, sells or provides a cellular phone or SIM-card to another person/receiver, other than a family member as defined in section 1, must do the following:

  1. Obtain from such person a document stating the following:
    1. Full names;
    2. ID number; and
    3. residential, business and postal addresses.

  2. Verify –
    1. the photo;
    2. full names; and
    3. ID number,

    with reference to the ID document of the recipient.

  3. Retain the information obtained.
  4. Notify the telecommunication service provider –
    1. of his or her name and identity number;
    2. of the date on which the cellular phone or SIM-card was handed to the recipient; and
    3. of the information obtained.

The particulars of subsequent owners which are to be obtained by the customer are the same as the particulars to be recorded and stored by telecommunication service providers as required in terms of clause 40(1).

      1. Clause 2(6)
      2. In terms of this subclause, the telecommunication service provider must be able to record and store the information received in respect of the subsequent owner. In doing so, it is possible for law enforcement agencies to trace all the previous owners.

        The provisions of clause 40(2) are applicable.

      3. Clause 2(7)

This is a consequential amendment. This subclause provides that section 39(3)(a) and (b) and (4) applies in respect of a telecommunication service provider who provides a mobile cellular service. Section 39(3) enables a law enforcement agency, when applying for an interception direction, to request a telecommunication service provider to provide certain information about the customer whose communication is to be intercepted. Section 39(4) places a concomitant duty on a telecommunication service provider so requested, to comply with the request.

4.3 Clause 3

This clause seeks to amend section 51 of the Act, which deals with offences and penalties. It, in other words, gives teeth to the amendments, by criminalising non-compliance with these amendments. This will ensure that registration does take place. The following is relevant:

(a) Section 51(1)(a)(i) of the Act is amended by the deletion of the reference to the failure of the customer (who sells or gives a cellular phone or SIM-card to a non-family member) to comply with section 40(1), (2) and (3), which section is now amended. Failure to comply with the provisions of the new section 40 is now dealt with in the newly inserted section 51(3A).

(b) The newly inserted section 51(3A) deals with non-compliance –

(i) of sections 40 and 62 by the telecommunication service providers; and

(ii) of section 40(5) by customers selling or giving their cellular phones and SIM-cards to non-family members (subsequent owners).

Non-compliance by telecommunication service providers can result in a fine not

exceeding R100 000 for each day on which such failure to comply continues. Non-compliance by a customer can result in a fine or imprisonment not exceeding 12 months.

The other amendments provided for in this clause are of a technical nature.

4.4 Clause 4

This clause replaces section 62(6) of the Act. In terms of this clause, an obligation is placed on telecommunication service providers who provide a mobile cellular service, to record and store the particulars of all SIM-cards and cellular phones which are used on their systems if they have not already been recorded and stored in terms of section 40. This must be done/completed within 12 months from the date of commencement of this section, The registration process is the same as the process envisaged in section 40(2). What happens after 12 months and a cell is still not registered? This clause takes care of this effectively by prohibiting telecommunication service providers from continuing service to those cell phones, other the following services:

  1. emergency calls;
  2. customer care calls; and

(c) calls for the purpose of complying with the registration.

This will force customers to ensure that their particulars are registered. While section 62(6) of the Act places an obligation on historical owners to register, this clause shifts the obligation to telecommunication service providers. It is believed that by placing the obligation on telecommunication service providers, improved enforcement will be ensured as the de-activation of any service will result in huge financial losses for the service providers. This subclause also eliminates the need for a notice by the Minister.

This subclause furthermore makes section 39 of the Act applicable in respect of the information recorded and stored in terms of this section.

4.5 Clause 5

This clause deals with the short title and commencement of the Bill. Because the President has, in terms of section 63 of the Act, already determined a date for commencement of sections 40 and 62(6) of the Act, it appears to be advisable to include a commencement clause, the result being that the Act will not commence on the date of publication in the Gazette.

      1. Advantages and Benefits of Bill

The proposed amendments have the following advantages or benefits:

  1. They will improve the effectiveness of the Act, especially from the perspective of law enforcement agencies. As the necessary customer information will be available centrally at each network operator, the time and resources of law enforcement agencies will be saved. They can approach a central source to obtain the information they require, rather than having to follow a paper trail.
  2. The solution is not reliant on Government sources. This will eliminate the need to place a huge administrative burden on already under-resourced offices and officials.
  3. The infringement and disruption that the registration process will cause on the citizens of the country will be reduced.
  4. The service providers will be able to control access to their systems by way of "blocking" or limiting services to their customers in the case of non-compliance.
  5. When the Bill is assented to by the President, mobile service operators and historical customers will be well aware of their obligations and the time period within which registration must be completed so as to prevent de-activation of services.
  6. The burden on the informal distribution points will be reduced.
  7. A uniform application of the system is more likely.
  8. Because the obligation to register is now placed on mobile service operators and not historical owners, appropriate steps will be taken by such operators to ensure compliance so as to prevent economical losses.

      1. Application of electronic solution

Mobile cellular operators, during their discussions with the Department on the proposed electronic solution, indicated that the solution will be applied in practice in the following manner:

    1. There is an existing process through which the required information in
    2. respect of post-paid customers is obtained. In so far as this category of customers is concerned, they already comply with the requirements.

    3. In respect of pre-paid customers, they will have to create registration

points which are located in –

    1. the formal distribution channels of the operators; and
    2. the informal distribution channels.

Registration agents will be designated by the operators for purposes of the registration points located in the informal distribution channels. The registration agents will collect the information, conduct face-to-face validations and then the information will be sent from there to the database of the operators. Mobile operators will be able to trace the registration agents and enforce compliance through their contractual relationship with the agents.