Emerging trends in telecommunications and postal services: capacity building workshop for new Members

Telecommunications and Postal Services

05 September 2014
Chairperson: Ms M Kubayi (ANC)
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Meeting Summary

Ericsson, a multi-national provider of communications technology and services, and the Swedish Post and Telecom Authority (PTS), briefed the Committee on the current market, technology, policy and regulatory trends in mobile broadband technology.

The pace at which the world had changed over the past 20 years was greater than during industrialization. The global market for broadband mobile technology and services was growing, with Ericsson projecting that 50 billion devices that benefited from a network connection would be connected by 2020. There had been impressive growth in mobile service subscriptions in Africa, with the demand for data on the rise. The youth were seen as an important segment of the market in bridging the digital divide in Africa.

Developments in technology had changed the way a lot of things were done.  For example, the advent of social media had opened new ways of learning, over and above the traditional classroom model.  Mobile technology was evolving fast, with the latest to be introduced being the Long-Term Evolution (LTE), with a speed 10 times higher than third generation (3G) technology. Research in developing fifth generation (5G) technology was already in motion.

Ericsson had been collaborating with broadcasters around the world with a view to utilizing the bands that they were not using. The demand for mobile broadband technology had led to a number challenges, particularly in the management of limited radio spectrum and cost of rolling out these technologies to rural areas.

PTS, among other functions, was mandated to ensure that limited resources, such as frequencies and numbers, were assigned and managed efficiently and that networks and services were reliable and secure. PTS used the established market practice of spectrum sharing at the wholesale level to ensure efficient and cost-effective usage of the limited spectrum.  PTS also monitored spectrum usage to ensure compliance with licences, as well as consumer protection. Harmonization of relevant policies and standards was seen as a positive step from a regulatory perspective.

 Members asked what could be done to ensure South Africa rolled out mobile broadband technology to rural areas. The possible ways of ensuring the rural rollout of mobile technology was said to include licensing of low frequency bands, in order to lower the cost of rolling out broadband to rural areas; inclusion of coverage obligations when issuing lower spectrum licences so that operators are obliged to roll out to rural areas; and allowing operators and licensees to share infrastructure or spectrum.

Members acknowledged the wide-ranging benefits and possibilities that mobile broadband technology presented, but urged the need to find ways of embracing the technologies while ensuring the associated risks, such as job losses and security, were properly managed.  They asked if there were any collaborative efforts between PTS and the Independent Communications Authority of South Africa (ICASA). They were told that PTS and ICASA had had information exchange sessions on a number of occasions.  

Members also asked how PTS monitored and ensured compliance with spectrum usage. It was stated that PTS gave operators clear borderline guidelines regarding their frequencies, and the operators monitored each other in such a way that if there was interference, the affected party brought the issue to the attention of PTS, which in turn checked and measured to determine if there was in fact interference. Where licence requirements were not followed, PTS could revoke the licence of a non-compliant operator.  Members expressed appreciation for the informative interaction with the delegation.

Meeting report

House Keeping Matters
The Committee adopted the minutes of its meeting held on 1 August 2014, following a proposal by Ms L Maseko (ANC) seconded by Ms M Mafolo (ANC).

The Committee considered its revised programme of work. Ms M Shinn (DA) asked if the programme was tailor-made for the Committee, or if the Communications Committee was included.  

The Chairperson responded that the programme was tailor-made for the Committee, but the Committee on Communications could benefit.   She would engage the Chairperson of the Communications Committee on the possibility of getting that Committee’s members included. The modalities involving the costs and other logistics were being worked out and as soon as they were finalized, Members would be advised accordingly.

Ms Maseko stated that she had no problem with the oversight programme, but that she would have problems attending the Wits University training programme because she would be writing examinations at the time.

Mr Mackenzie (DA) said the post office mail centre appeared to be the most affected by the current strike.  He asked if the Committee could be more proactive in getting a quick brief on what was happening at the post office, as opposed to waiting until the time scheduled for a visit to the mail centre. This would help Members to provide answers to their constituents, who were asking about the strike. The Committee should consider being flexible with travel and accommodation arrangements in order not to burden the tax payers unnecessarily. Members like him, who lived in Gauteng, could arrange their own accommodation as a cost saving measure on the national purse.

The Chairperson answered that she had hoped to get a quick briefing from the Minister, but had been informed that the Minister and his entire team had left for Gauteng to try and help resolve the strike. Efforts would be made to look into the matter.

Ms J Kilian (ANC) asked if there had been a change of the Committee to which the State Information Technology Agency (SITA) reported.

The Chairperson said SITA reported to the Committee.

The Committee adopted its revised programme of work following a proposal by Ms Maseko, seconded by Ms N Ndongeni (ANC).

Mobile broadband market trends and technology developments

Presentation by Ericsson
Mr Shiletsi Makhofane, Head of Government and Industry Relations at Ericsson, said the company’s vision was to have 50 billion devices connected around the world by 2020. More people were getting on the Global System for Mobile (GSM) communication platform.  Research done by Ericsson in Africa showed growth in the sector. The links between market, policy and Information and Communication Technology (ICT) should be harnessed for the creation of the necessary synergies that benefited the continent.

Mr Mikael Halen, Director of Government and Industry Relations at Ericsson, said the pace at which the world had changed over the last 20 years was greater than industrialization.  Ericsson’s vision 2020 was that everything that benefited from a network connection should be connected. Developments in technology had changed the way a lot of things were done. For example, the advent of social media had opened new ways of learning, over and above the traditional classroom model.

The use of ICTs depended on three industry forces -- policy enablement, market conditions and technology developments. At the policy level, addressing cross-cutting ICT issues such as protecting the right to privacy was cardinal.  The move by Facebook to introduce an application that can access the camera and microphone on one’s phone without one’s consent, was an issue that touched on privacy rights that may need to be addressed.

The key drivers of economic growth were devices and local content, national broadband plans, high performing networks and having ICT in key sectors of the economy. A networked society offered a great opportunity to transform economies and improve the wellbeing of citizens, but technology alone was not sufficient. Benefiting from transformational change required sound public policy. Mobile subscriptions had grown rapidly globally over the years; mobile data subscriptions had also increased significantly, with video mobile data leading. Mobile data traffic was expected to increase fourfold by 2019 globally. There would be more than 930 million mobile subscriptions in sub-Saharan Africa by 2019. There seemed to be a high demand for the service, which needed to be managed properly. It was projected that GSM/EDGE (Electronic Database for Global Education) population coverage in Sub-Saharan Africa would be at 80% by 2019.

Key consumer trends in sub-Saharan Africa showed that consumer usage of mobile services was rapidly becoming data-driven; the digital footprint was spreading to rural areas; and social media and internet browsing were taking the top spot behind Short Message Service (SMS), driven mainly by the youth who were integral to the region’s efforts in bridging the digital divide. Network and device performance drove customer loyalty. The pace of change in ICT informed the projection that 50 billion devices would be connected by 2020.

Technology Developments
Mr Halen said broadband capacity was an issue that many countries struggled with, because it was very expensive for an operator to build its own infrastructure countrywide. Therefore, network sharing presented a more cost-effective way of expanding coverage.

Mr Makhofane said African countries would have to deal with the issue of how to best to utilize broadband capacity when broadcasters moved out of the digital band. It would be necessary to look at what the operators were able to do currently with what they had, and what they could do when the digital band was freed by the movement of broadcasters. This was an area that policy makers could start thinking about in the context of network sharing.

Mr Halen stated that mobile technology was evolving fast, with the latest to be introduced being the Long-Term Evolution (LTE), with speed ten times higher than third generation (3G) technology.  Research in developing fifth generation (5G) technology was already in motion. Ericsson had been collaborating with broadcasters around the world with a view to utilizing the bands that they were not using. Harmonization of relevant policies and standards was probably the way to go, moving forward.

The Chairperson noted that on key growth drivers, the use of ICT also improved the quality of life. For example, in the education sector, more learners could be reached through the use of ICT devices in the learning process than in a traditional setting. What was the percentage of growth of mobile data subscriptions in Africa as a whole, and in sub-Saharan Africa as a region?

Mr Halen answered that the mobile data growth figures he had were global, but added that the growth figures were more impressive in Africa.

Ms Kilian said there was no doubt about the benefits that came with ICT, but South Africa was in a little bit of a catch-22 situation, because expansion into rural areas was slow due partly to topography.  What had other African countries done to roll out ICT to rural areas?  Was it a policy, incentive or licence-driven issue?  What had been Ericsson’s experience?  What was currently happening in the developed world with regard to managing potential information risks that came with ICTs?  How could ICTs be used for the benefit of the people, while ensuring they were not harmed?

Mr Halen responded that ensuring access to broadband was important. There were a number of ways to enhance rural coverage. The first was the licensing of low frequency bands, because this lowered the cost of rolling out broadband to rural areas. Secondly, it was necessary to include coverage obligations when issuing lower spectrum licences, so that operators were obliged to roll out to rural areas. Thirdly, operators and licencees should be allowed to share infrastructure, or spectrum. There was a need to draw a line between legitimate invasion of privacy for law enforcement, and government spying on people.  Perhaps the developed world had not gone far enough in addressing this issue.

Ms D Tsotetsi (ANC) said there was a need to ensure that technology developments did not result in unnecessary job losses. The negative effects of technological developments called for appropriate solutions to address them. There were network problems in rural areas, whereby phones lost networks even in open spaces.  Did the LTE technology perform better in such areas, in light of the efficiency associated with it?

Mr Halen agreed that there was a downside to technological developments, but emphasised the need to focus more on the positives that came with the developments.  LTE technology had the capacity to perform very well, but the quality of service could be affected by too much traffic on the network, resulting in network interference.  Broadband technology could penetrate buildings.

Mr Thabiso Thukani, Manager of Government and Industry Relations at Ericsson, added that capacity from LTE technology, for example, was much more even, with limited spectrum in comparison to earlier technologies such as High Speed Packet Access (HSPA) and GSM.  As the technologies evolved, they were able to carry more traffic than earlier technologies. They utilized the spectrum more efficiently. The industry should be allowed to evolve without having to be subjected to a lot of red tape.

Mr Mackenzie noted that the National Development Plan recognised the importance of Public-Private Partnerships (PPPs) as a vehicle for growth in the ICT sector.  Inequality was a problem in South Africa, as in some rural areas children did not have access to classrooms, while access to devices was also a problem. Perhaps ensuring that people had the capacity to utilize these devices would be a good starting point, before the country addressed the issue of rolling out broadband to rural areas.  Most mobile service providers saw data as the main source of revenue as opposed to voice calls, and the temptation was to exploit consumers in this regard. There was a need for user education, to protect consumers from exploitation by service providers, and regulators should spearhead this education and ensure it reached the consumers. The progress made, and the anticipated progress, in connectivity was gratifying. Would the survey focus only on mobile data devices, or would it include laptops?  Did Ericsson collaborate with other companies in developing technology, or did each company do it on its own?  Could the technologies in respect of which research was currently underway, already exist, or be advanced with defence systems that were historically known to be usually ahead technologically?

Mr Halen responded that there was intense collaboration among companies from the early stages of developing technology to the standardization phase, where each company developed its own devices. When business was on the table, the competition among the companies was fierce. It would be gratifying to get hold of the advanced technology, if it existed.

Mr Makhofane said a lot was possible with the move into the digital space. The parameters of surveys depended on a lot of factors, including the use to which a device was being put by a consumer.

Ms Maseko asked if the mobile data growth rates were annual or quarterly. It would have been interesting to include sub-Saharan Africa statistics, to see how Africa was faring with regard to phone usage.

Mr Halen responded that the growth rate figures were annual.

Mr Makhofane said Ericsson was doing some studies on phone usage in Kenya, Nigeria and South Africa, and that the findings of the study would be shared.

Ms Mafolo asked when the sub-Saharan Africa study would be completed. She looked forward to when the research would be completed. There was a website called ‘toilet’, which was being used to slander people. How did such sites get on the network?  The Facebook scam, where a person could purport to be someone else, was causing discomfort in society.

Mr Halen said people who posted anonymous material on the internet could be identified through police investigations, for instance.

Mr Makhofane said the study was expected to be concluded around October this year and the findings would be shared with the Committee, through the Chairperson.

Regulatory Policy Developments and Spectrum Management: Swedish Post and Telecom Authority (PTS)
Dr Bo Andersson, Chief Economist at PTS, said that a regulator’s job was to give users a choice. South Africa had a higher mobile phone penetration than Sweden. The Swedish government looked to ensuring that Sweden had world class broadband, and 90% of the households would have access to 100 Mbit/s by 2020.  LTE penetration in Sweden stood at over 95%. PTS was mandated to ensure that everyone had access to good telephony, broadband and postal services; that there was functioning competition in the market, resulting in a good range of options and low prices for consumers; that limited resources, such as frequencies and numbers, were assigned and managed efficiently; and that networks and services were reliable and secure.

PTS was funded partly by the government and partly from the fees paid by operators.  PTS reported to the Ministry of Enterprise, Energy and Communications and collaborated with international organisations like the European Union (EU).   EU and Swedish law governed PTS.  

Telecommunications was a moving market, in that consumers demanded access everywhere at anytime on every device. Some of the challenges faced by PTS in fulfilling its mandate included the scarcity of radio spectrum, and increased demand for wireless services and spectrum. The strategy for long-term and transparent spectrum management involved making spectrum available, using spectrum efficiently, maximising the economic benefit of spectrum for society, meeting the needs of society, and giving the market better chances to fulfil the increasing demand for wireless services.

Network sharing was one of the ways of using spectrum efficiently. The key issues for network sharing included collaboration on the provisioning of radio capacity (strictly on a wholesale basis), the use of a Chinese wall for retail operations to safeguard a competitive retail market, keeping the commonality of cost low to facilitate the differentiation of services, and network sharing to contribute to improved coverage. Spectrum sharing was an established practice in the market.  PTS recognised that spectrum was a key asset, and as spectrum sharing could enable high capacity mobile services, it should be allowed as long as competition in the retail market was maintained.

Mr Mackenzie asked what the exchange rate between the Swedish Kroner and the Euro was. Had PTS engaged with the Independent Communications Authority of South Africa (ICASA), the local regulator, for information sharing sessions in the context of auctions?  In terms of urbanization being a mega trend for the future, with its attendant pressure on municipalities’ services, rolling out the networks to rural areas so that they were connected virtually, would go a long way.
Dr Andersson said the exchange rate was about nine Swedish Kroner to one Euro.  A roll out of networks to rural areas would ease the pressure on municipalities’ service delivery systems.  PTS had had engagements with ICASA, at which information had been shared on several issues. ICASA had been represented at a two-day workshop PTS had held, and in April this year PTS had visited ICASA.

Ms Mafolo asked whether the employees of PTS were all in Sweden. South Africa was gender and disability sensitive when it came to employment -- what was the situation in Sweden on this matter?

Dr Andersson responded that PTS employees were in Sweden, and almost all of them were stationed in Stockholm. The employment ratio across the gender divide was almost equal for women and men. The management group had more women than men.  He did not have the statistics on the employment levels of persons with disabilities.

The Chairperson asked how spectrum usage was monitored and compliance ensured. How did you deal with the issue of cartels? How was the auction of spectrum done?  Did the big players participate in the auctions?

Dr Andersson said PTS gave the operators clear borderline guidelines regarding their frequencies.   The operators monitor each other in such a way that if there is interference, the affected party brings the issue to the attention of PTS, which in turn checks and measures to determine if there is in fact interference. Where licence requirements were not followed, PTS could revoke the licence of a non-compliant operator. The participation in an auction depended on the band being targeted. There was also a cap on the size of spectrum an operator ccould buy at an auction.

Ms Shinn asked if PTS had revoked any operator’s licence. The commonality cost was low at the wholesale level; how many network players were in the wholesale region?  Did one get these players to agree on the pricing structure for their services? Was there no danger of the players forming a cartel, and pushing the price or cost up?

Dr Andersson answered that no licence for the big operators had been revoked, but some small ones with limited coverage had been revoked. The cost-sharing mechanism among the operators was not regulated by the PTS; the operators agreed among themselves.  While PTS looked into the pricing structures in order to detect any cartel behaviour, the competition among the operators and the service they rendered to the consumers suggested the absence of cartel behaviour currently. However, PTS monitored them constantly in this regard.

Closing Remarks
The Chairperson said that the presentations had been very informative for the Members, especially as they were new to the Committee and not from the telecommunications industry. She thanked the delegates who had travelled from Sweden for the interaction with the Committee.

Ms Tsotetsi, in her vote of thanks, said the Committee needed to guard against the unintended consequences of technological developments, such as job losses. Members should be well versed in ICT issues in order to perform their functions.  

The meeting was adjourned.

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