25 May 2006

The Chairperson

Portfolio Committee on Justice & Constitutional Development

P.O. Box 15

Cape Town 8000

Portfolio Committee on Justice & Constitutional Development

Dear Madam,

Cell C refers to the above-mentioned Amendment Bill and the invitation to comment thereon extended by the honourable members of Parliament. We are pleased to herewith submit our comments as well as proposed amendments.

Cell C furthermore wishes to take this opportunity to confirm that we will be making an oral submission to Parliament on 30 May 2006.

We trust the above is in order. Please feel free to contact the writer hereof should you have any questions or queries.

Sincerely,

Cell C (Pty) Ltd ("Cell C") welcomes the opportunity that has been provided by the Portfolio Committee on Justice and Constitutional Development ("the Portfolio Committee") to provide written comments on the Regulation of Interception and Provision of Communications-Related Information Act ("RICA") Amendment Bill [9-2006] which was tabled on 23 May 2006. Cell C would like to use this opportunity to furthermore express its interest in participating in the public hearing process.

Cell C’s supports the objectives of the Amendment Bill and hopes that its submission will assist the Portfolio Committee in finalising this very important piece of legislation. Cell C has been a staunch supporter of the shift from a paper-based to electronic subscriber registration process in an attempt to ease the burden of compliance on our subscribers, our distribution channels, and on Cell C itself. We further believe that an electronic solution which is more centralised, will be of more use to the law enforcement agencies (LEA’s) than the previously proposed paper-based model. We are therefore grateful to the Department of Justice and Constitutional Development ("DoJ"), Deputy Minister Johnny DeLange, and the Portfolio Committee for considering the mobile operators’ proposal to amend the legislation to facilitate this method of data capture.

Cell C’s main submission will address the following seven areas of the Amendment Bill which Cell C believes need strengthening:

1. Capturing information regarding MSISDNs as opposed to SIM cards
2. Capturing of Handset Information (IMEI)
3. Detail of customer information to be captured –

1. first and surname
2. single address

4. Address verification
5. Transfer of SIM cards and/or handsets
6. Period of registration for historical customers
7. Uniform Incentives

1. Capturing information regarding MSISDNs as opposed to SIM cards

A customer of a mobile telecommunication service provider is identified by a unique identification number (MSISDN) which is commonly known as the cell phone number (e.g. 084 123 4567). This number is the crucial identifier allocated by a mobile telecommunication service provider to a customer and enables a customer to make and receive calls. Without this number a customer cannot access the network at all.

A SIM card, on the other hand, is the security token that connects the handset to the network. SIM cards are routinely exchanged or swapped, for example if they are lost, damaged or stolen, but the MSISDN remains the same. Through the cell phone number (MSISDN), the attached SIM card is capable of being identified at any point in time. It is therefore essential to specify that the customer information associated with the use of a MSISDN, as opposed to a SIM card, is captured. Cell C’s view in this regard is consistent with that of the other operators and was raised by the mobile operators in our submission to the Department of Justice dated 27 March 2006.

In September 2006, Mobile Number Portability (MNP) will be introduced in South Africa. MNP increases competition in that it allows a customer to change from one cell phone operator to another while retaining his/her cell phone number (MSISDN). As such, if, for example, a Vodacom subscriber moves to Cell C, s/he will move with his/her cell phone number (MSISDN). Should the Portfolio Committee agree with the argument that the cell phone number (MSISDN) is the key identifier, and actually the number that is related to the customer, this will ensure that the requirements of RICA do not conflict with the requirement to implement number portability. In practice, as agreed with MTN and Vodacom, when a subscriber ports from one network to another, if his/her MSISDN is already registered, the old network will have to provide, at minimum, information confirming that the subscriber is registered to the new network. The subscriber will however, not have to re-register his or her cell phone number (MSISDN).

However, should RICA remain SIM-based, this will have a negative impact on number portability as although a subscriber will retain his/her cell phone number, s/he will have to re-register each time s/he changes from one network to another even though their MSISDN is already registered – this in turn will be a barrier to porting, which is a key initiative of the Department of Communications and the Independent Communications Authority of South Africa to facilitate competition in the market, which will in turn increase consumer choice and lead to lower prices.

In line with the above, it is proposed that, for the sake of clarity, section 40 be amended to read as follows:

1. Capturing of Handset Information (IMEI)

The mobile operators have previously made detailed submissions to the DoJ regarding the difficulty in implementing a separate registration process in respect of handsets. These arguments are based on the following facts:

1. The handset is a device that cannot be used without an active SIM card that enables access to a mobile cellular network. Further, a SIM card can only be activated if a MSISDN has been allocated for use by the customer;

and most importantly

2. each mobile operator’s fraud management system captures the MSISDN of each and every call that is made on its network together with the IMEI (the handset registration number) of the handset that is used to make the particular call. This allows the mobile operators to perform handset usage queries based on a MSISDN and/or based on an IMEI. The operators’ fraud management systems capture all IMEIs’ that have been used by a particular MSISDN and all the MSISDNs’ that have been used to make calls on a particular handset.

1. Detail of customer information to be captured

In the mobile operators’ joint proposal presented to the Deputy Minister on 14 November 2005, it was suggested that the mobile operators capture only the MSISDN and the ID number of the customer. However, based on feedback received from the Deputy Minister and the DoJ this information would not be sufficient for the law enforcement agents and the mobile operators therefore revisited their proposal and notified the DoJ on 2 February 2006 that we were beginning system development and proposed capturing the customer’s:

• MSISDN;
• ID number;
• first name and surname; and
• address.

The mobile operators’ proposal differs from that which has been tabled before Parliament in that the Amendment Bill specifies much more information to be captured including full names, and three addresses – residential address, business address and postal address.

Cell C, in line with a commitment we made to the Deputy Minister of Justice and DoJ in November 2005, has begun developing its electronic data capture system in parallel with the amendment of the legislation. We had anticipated that the Bill would be tabled in the last session of Parliament, and that the final legislation would give us guidance in the development of our systems. In the absence of legislative certainty, we developed our systems in line with the proposal to the DoJ set out above, and the existing information requirements set out in RICA.

Cell C continues to support the proposed information requirements as set out above, and urges the Portfolio Committee to give consideration to the fact that the information has to be captured whilst the customer is standing in front of the Registration Officer and the customer’s SIM card cannot be activated until such information is collected and sent back to Cell C. The data-capture systems, particularly in the informal sector which accounts for approximately 30% of pre-paid sales, are not configured to capture the proposed additional information. At this late stage it is not practical to re-configure the systems. It is important to keep data capture requirements as simple as possible, while obtaining the necessary information, as the proposed use of handsets in the informal sector may lead to both system and human errors that will negatively impact on data integrity.

Cell C’s technology choice for the implementation of subscriber registration is "WIG" which is an application that can be rolled out on even the most basic handsets. This is a cost-effective solution which ensures that even persons in rural and underserviced areas who may have older handsets can become Cell C registration officers and thus register our subscribers. Given Cell C’s technology choice for the electronic solution, there are also some size limitations that restrict the level of data that can be captured. If the requirement remains to register all the data fields as currently proposed in the Amendment Bill, it would possibly mean that our "WIG" technology choice may not be suitable and we will have to do additional development. A further consequence of this may be that registration will only be possible at the formal distribution channels where advanced handsets and devices are available for registration. This will in turn mean that the subscribers who are located in rural areas, or in areas that are not close to a formal channel will be prejudiced, thus impacting negatively on crucial economic growth in this sector.

Cell C respectfully submits, as it previously did with the other mobile operators, that the LEA’s can, with a view to validation, obtain the full names of a subscriber from the Home Affairs database if the ID number is known. The capture of the first name and surname, as proposed, would provide an added level of validation. It is accordingly proposed that the first name, surname and ID number of a subscriber be captured. Further that only a single address relevant to the customer is captured. We believe that further data can be obtained by the LEAs with reference to other sources of data such as Home Affairs and from financial institutions in terms of FICA.

Cell C therefore proposes that the following amendments be made to accommodate our concerns:

1. Address verification

Cell C respectfully draws to the Portfolio Committee’s attention the fact that RICA does not currently require the provision of any documentary proof of address and the amendment therefore introduces a new requirement for mobile operators. We are further concerned that the submission of proof of address introduces a "paper-based" element to the electronic solution that we seek to achieve. This is not in line with the stated objectives of the Amendment Bill, which include the introduction of an electronic subscriber registration solution.

Cell C is further concerned that a customer will not always have a permanent residential, business or postal address. This is true due to the fact the customers may move from one residence to another, or from one place of employment to another. Furthermore, customers who live in informal settlements, or are tenants may not have their own proof of address in their own names. Similarly, persons visiting South Africa from other countries who are purchasing pre-paid SIM-cards for the duration of their visit, may not have proof of address with them. The obligation for address verification, even if the level of proof is subjective, is therefore, in Cell C’s view, not manageable, and Cell C thus suggests the deletion of section 40(3)(b) which requires the submission of proof of address to Cell C’s satisfaction.

2. Transfer of SIM cards and/or handsets

Given that as explained in paragraph 2 above, mobile operators will always have a customers’ handset number (IMEI) if the customer is registered, Cell C proposes the deletion of the reference to "cellular phone" in s40(5):

Furthermore, Cell C is concerned that section 40(5) introduces a hybrid paper-based/electronic registration process in cases of transfer of ownership. While we understand the value of tracing the initial owner and subsequent owners for investigative purposes, we respectfully suggest that the manner in which it is proposed that this happens in the Amendment Bill may create a situation which could lead to fraudulent transfers since any person can claim that s/he transferred his/her SIM card to another person by mere reference to details he or she has written down.

It is for this reason that the Cell C proposes that the obligation be placed on the new owner of the SIM card to register his or her details in terms of the standard registration procedure set out in section 40(2) as would include face-to-face verification. This obligation together with the existing obligation on the existing owner in terms of section 41(1) to report the loss/transfer of a SIM card should ensure that updated customer information is retained in case of transfer of ownership.

1. Period of registration for historical customers

Cell C understands and supports the urgency in registering existing subscribers given the importance of such information for the Law Enforcement Agencies. We will try to ensure that existing subscribers register well ahead of the deadline for subscriber registration, but alerts the Portfolio Committee that a one-year timeframe to register all existing subscribers, the majority of whom are pre-paid and many of whom are not resident in urban areas, is neither practical nor is there any indication that in the circumstances it will be workable.

Cell C urges the Portfolio Committee to give consideration to the fact that although Cell C’s electronic subscriber registration solution will be ready for use on 30 June 2006, Cell C’s footprint or coverage of registration points and registration officers will not be complete. We will continue to roll out more registration points and officers over the course of the year, but the existing registration points will not be operating at full capacity from day one. It is therefore critical that sufficient time is provided in which to resolve initial teething problems associated with the registration of new subscribers before Cell C can attend fully to the registration of historical subscribers.

It must also be noted that the introduction of mobile number portability in 2006, will allow customers to change operators (and by necessity, the SIM card) but retain their MSISDN’s. In order to do this, customers will have to interface with the mobile operators. Where customers’ MSISDN’s were not already registered by MTN and Vodacom, but they are porting to Cell C, Cell C will in terms of its statutory mandate, attend to the registration of these subscribers.

In Cell C’s case, with 3 million subscribers to register, the proposed one-year timeframe will require that we register 250,000 subscribers a month over twelve months. This does not take into account the new subscribers that will have to be registered. Further should the proposed SIM-based process be retained, not only will new subscribers have to be registered, but porting subscribers will have to be re-registered.

It is accordingly proposed that the timeframe be reconsidered. Further given the explanation provided in paragraph 2, Cell C proposes that the reference to cellular phone be deleted as follows:

In line with the joint proposal made by all mobile operators to the DoJ on 27 March 2006, Cell C proposes that the Portfolio Committee introduces a uniform incentive fee for the registration officers of all three networks subject to compliance with the appropriate legal requirements. The principle being that registration is a statutory obligation and is not a competitive action, but merely serves to ensure compliance with RICA.

There is precedent for the imposition of a requirement for the mobile operators to agree a uniform tariff in other instances where due to a non-competitive, statutory obligation, the mobile operators must cooperate in the determination of prices, under the watchful eye of the regulator, ICASA. Two such instances are in the determination of tariffs for our Community Service Telephones which are rolled out in under-serviced areas, and in the determination of the retail tariff for the free SIM cards that operators must provide in terms of their universal service obligations.

Cell C’s proposed amendment will ensure that an element of competition is not introduced into what is essentially a legislative requirement, with potentially negative implications. Cell C proposes that the following be included in the Amendment Bill:

Finally, Cell C wishes to re-iterate that it has been well-aware of the 30 June 2006 deadline that exists with respect to the implementation of sections 40 and 62 of RICA. Cell C has thus tried to be proactive in preparing to meet it subscriber registration obligations, given the limitations that it faces in developing a technical solution and designing business processes without the finalisation of the legislative requirement. Due to the late finalisation of the amendment, we have not been able to finalise development of the solution yet, although we are now a month away from implementation, however, amongst our accomplishments to date, we have:

• conducted a national road show through which we have managed to communicate all of the elements of our proposed solution to our distribution partners, to alert them to the key changes that will occur in our business processes from 1 July 2006;

• commenced the development of the application for the electronic solution and ordered devices to support such application, which devices and application should be ready for 1 July 2006 provided there is no change to the data capture requirements;

• developed a technical interface for retailers to send subscriber information to our database so that they can be activated, in consultation with the other mobile operators;

• in conjunction with the other operators, almost finalised a joint media and communication campaign to educate our subscribers (we have done much of the conceptual and creative work, but are awaiting the finalisation of this legislative process in order to confirm the information that will be contained in the brochures, fliers, posters and point of sale material, as well as the text for the radio advertisements, as would support the RICA process, as it is critical that the information is accurate); and

• established a "RICA Office" at Cell C to manage the appointment of officers and the administrative processes associated with the collection and storing of subscriber information.

As mentioned above, the development and implementation of the electronic subscriber registration solution is underway and Cell C has proceeded on the basis of our consultation with the DoJ, as is reflected in our submission to the Deputy Minister of Justice in November 2005. The understanding of all stakeholders that the electronic data capture process’ development would proceed in parallel with the legislative amendments with a view to ensuring that the 30 June 2006 deadline is met.

Needless to say, Cell C is committed to meeting the objectives of the Act, and therefore confirms that its comments as contained in this submission are based largely on a concern that the Amendment Bill in its current form is not consistent with what Cell C has been developing, in good faith, on the basis of prior consultations with all concerned. Thus despite the best efforts that Cell C has put into trying to ensure that we are ready to register subscribers by 30 June 2006, we have identified a significant risk in the fact that the electronic registration process that has been tabled constitutes in some respects a revision to understandings in respect of processes and this may negatively impact Cell C’s ability to comply with the legislation.

Cell C thanks the Portfolio Committee for the opportunity to provide written comments, and looks forward to presenting our submission to you on 30 May 2006.