Ms R. Schaafsma
The Secretary to the Parliamentary Portfolio Committee on Communications
PO Box 15
Cape Town 8000

Dear Mr. Kekana,

Bridges.org Analysis and Commentary: Telecommunications Amendment Bill number 65 of 2001

Bridges.org would like to take the opportunity afforded by the Portfolio Committee on Communications to provide written comments on the Telecommunications Amendment Bill that will soon be brought before Parliament.

Bridges.org: Who we are and why we care

Bridges.org is an international non-profit organization based in South Africa which holds that, if properly used, information and communications technology (ICT) offers huge potential to people in developing countries. ICT has the potential to empower people to overcome development obstacles, to address the most important social problems they face and to strengthen communities, democratic institutions, a free press and local economies.

Our mission is twofold: one, tackling the obstacles to ICT use at the grassroots level by helping people understand the technology and its utility, and two, working at the policy level to promote laws and policies that foster technology use. On the policy level, we have already participated in the public debate in the communications arena. Bridges.org has made submissions on the Draft Telecommunications Policy Directions, as well as the Interception and Monitoring Bill. It is our hope that these submissions, along with the range of policy briefs that we have begun to produce, will lay the groundwork for a productive and informative interaction on the policy issues relating to the effective integration of ICT in South Africa. We believe that sound ICT policies established in South Africa will provide an example throughout the continent and among other developing countries.

Bridges.org recognises that the South African Government needs to support the growth of the ICT industry, while concurrently ensuring universal and equitable service and access to information and communications technologies to the vast majority of South Africa's population. At the same time we recognise that the Government has a variety of constituencies to serve, and that the goals of one might appear to be at odds with the goals of another. For ICT growth, we believe that these goals will be best met within an enabling legislative environment overseen by an effective regulatory authority. To this end, we are particularly interested in the impact that the Bill will have on the level of certainty created within the telecommunications environment, as well as the ability of ICASA to regulate the environment effectively and with minimum constraint.

Our understanding of the current telecommunications policy environment in South Africa

Our analysis and commentary, which follow, are based on our understanding of the current telecommunications policy-making environment as described below.

The Telecommunications Amendment Bill, currently under consideration by the Portfolio Committee on Communications, resulted from a democratic and consultative process that began with the Telecommunications Policy Colloquium held in February 2001. Intended policy directions were gazetted on 23 March 2001, and drew upon recommendations and submissions made from the ICT sector, the public, policy advisors and stakeholders who attended the colloquium.

Following further public comment, the intended policy directions were revised and a new version was released on 26 July 2001. A final review process saw a third version of the policy directions released on 15 August 2001. These directions were included in the current Bill which is under review. This Bill will be brought before Parliament as an amendment to the Telecommunications Act 103 of 1996.

Analysis and Commentary

Overview

A liberalised telecommunications regime is crucial for economic development in South Africa, not only to improve access to telecommunications in previously disadvantaged communities, but also as a vehicle to stimulate demand and growth in the wider community. It is especially important in those sectors where ICT can have its greatest impact -- in small, medium and micro enterprises (SMMEs) -- to enable South Africa to compete globally in the new economy. We accept that the long-term goal of the Government's policy is greater liberalisation, and that the licensing of a Second National Operator (SNO) is an important part of this process. We believe that an important element of the long-term strategy must be consideration of the part that a Third National Operator could play, provided that a suitable stage of market development had been reached.

The Amendment Bill clarifies the position of the SNO and Sentech's role. It goes on to provide definitions for a range of services that are currently available and outlines provisions for the introduction of additional services.

Bridges.org welcomes the inclusion of the following provisions in the Telecommunications Amendment Bill:

• The redefinition of Sentech as a " carrier of carriers", allowing it to provide an international telecommunications gateway service but preventing it from offering services directly to the public, which would have given it an unfair competitive advantage.
  
  
• The provision for the SNO to be granted a public switched telecommunications service (PSTS) licence on equal terms with Telkom.
  
  
• The establishment of 112 Emergency Centres and an exclusive national public emergency number.
  
  
• The establishment of a national directory information database, the introduction of licence conditions that will protect privacy and personal data, and allowing the public access to carrier preselection services.
  
  
• The inclusion of s 35 (9) that allows telecommunication licence applicants recourse to the Promotion of Administrative Justice Act is to be applauded as it is in line with the principles of operating within a fair and transparent democratic environment.

These amendments will benefit all South Africans.

Bridges.org believes that the following provisions should be given further consideration:

We are concerned that certain provisions in the Bill will have the effect of preventing fair competition and the introduction of new technologies in the telecommunications and ICT environment; fair competition and new technologies would help to increase demand, lower prices and stimulate economic growth. We recommend that these issues be revisited before the final legislation is passed.

• Any legislation that is passed must play an integral part in a coherent policy environment that promotes economic growth and job creation. The underlying importance of cheap, widely available communications, particularly for SMMEs as a means to ensuring innovation, growth and job creation within the ICT and other business sectors is paramount. Telecommunications policy that is not in tune with this strategic direction will have a detrimental effect and stifle economic growth.
  
  
• Legislation must be technology neutral. Telecommunications technology is advancing rapidly, and legislation must be drafted with this in mind if it is not to become a burden to growth and development. We note that as it stands the legislation continues to ban the carriage of Voice over Internet Protocol (VoIP), which has been shown to stimulate demand and economic growth in other developing countries, and recommend that the decision to ban the carriage of VoIP by all carriers be reversed.
  
  
• As drafted, there is a need for greater clarity about the provision of VoIP services within areas with a teledensity of less than 5%. It is not clear whether the SNO is allowed to offer VoIP on a national basis or only within the underserved areas. The cost of rolling out infrastructure in the underserved areas is likely to be prohibitive. If the purpose of the legislation is to encourage smaller businesses to provide these services then it is likely to fail from the outset. If the SNO, and, by inference, Telkom, is allowed to offer VoIP, then there will be no incentive for other, smaller service providers to compete.
  
  
• The independent regulator, ICASA, must be given the financial and human resources to enable it to operate effectively, and to be given a clear mandate for its authority. The Bill gives the Minister power to determine the licensing conditions that will apply in specific circumstances. These specific circumstances should be clarified, together with ICASA's role in the process. The constitutional implications of giving the Minister such powers are not clear.
  
  
• The removal of the term "value added network" and its replacement by "electronic transaction" in Section 40 creates uncertainty. This suggests that the provider of (potentially) any electronic service would have to be licensed, creating an unnecessary financial and regulatory burden on smaller businesses, particularly those involved in e-commerce. If the legislation has the effect of stifling business initiatives it would be in direct conflict with the stated national aims of bringing e-commerce to smaller business and resulting job creation. If it is not the intention of the Bill to prevent economic growth, then Section 40 should be either removed or reworded.
  
  
• As drafted, Value Added Network Services (VANS) operators will be required to use "facilities" provided by Telkom or the SNO, and will not be allowed to develop and operate their own infrastructure. We believe that this could result in unfair competition, if Telkom or the SNO decide to enter the VANS market, and will limit growth. The duopoly would also be in a position to operate a price-fixing regime which could set artificially high prices, with a resulting detrimental effect on the market.
  
  
• The granting of a multimedia service licence to Sentech creates cause for concern. It is unclear whether any other parties would require a similar licence to provide these services, or if only Sentech can provide these services. It is also unclear whether the transmission of multimedia content over the Internet constitutes "digital broadcasting". The implications of any or all of these are serious for the growing Internet market in South Africa and for its service providers. The Bill should be clear on these points, and we advocate that it should not contain a provision that has the potential to limit growth, or even reduce capacity, in this important market segment.