Telecommunications Policy Directions: briefing

Chairpersons: Mr N Kekana and Mr S Fenyane

Relevant Documents:
Telecommunications Policy Directions (see Appendix 1)
Media Statement Announcement of the Telecommunications Policy Directions - 26 July 2001
Statement Issued by Ministers of the Economic and Investment Cluster - 15 August 2001
(see Appendix 2 and 3)

SUMMARY
The Minister explained the context in which the Telecommunications Policy Directions were developed and then went on to them. After the announcement of the policy directions on 26 July 2001 certain revisions were made to these policy directions by Cabinet. These revisions included the possibility of a Third National Operator. The definition of a fixed-mobile was clarified by the Director-General.

MINUTES
Context in which the policies were developed
The Minister, Ms I Matsepe-Casaburri, said that the following had to be considered when developing policy directions for the Telecommunications sector:
- Universal access: they wished to include those who had been excluded historically.
- This is a growing industry in SA and how this imposes on other imperatives in the context of globalisation.
- The existing industries (and their contractual obligations)
- The Telecommunications industry is in a state of flux
- SA is part of Africa as a whole and its policy had to fit in with that of the African Union (which it had ratified).

On 8 August 2001 Cabinet examined the Telecommunications Policy Directions before it was to be submitted to Parliament.

Telecommunications Policy Directions submitted to Parliament
- Up to 30% ownership of major new operators will be reserved for empowerment purposes.
- Small/Medium/Micro Enterprises (SMMEs) will be licenced to provide telecommunications services in areas with tele-density of up to 5%. This is because approximately 50% of enterprises will be reserved for empowerment purposes.
- The Universal Service Agency will be restructured and the Universal Service Fund will be increased by collecting 0.5% of the total revenue from each operator in order to provide telecommunications services to the poor.
- Sentech will be licenced to provide international gateway telecommunications and multi-media services. Sentech will be given universal service obligations.
- Public emergency centres will be established and have a toll free number.
- A 50% discount will be given to public schools for Internet connections. A private network will be established to link public schools.
- A private network will be established to provide maritime services for the safety of life at sea.

Extensive consultations had followed after which some policy directions were revised. However these revisions only signalled the intention of the government and are not part of legislation.

The Cabinet approved that the following changes are being effected
1. A Second National Operator (SNO) will be licensed in 2002 and the decision on which State-owned enterprise is to be included in the SNO is to be determined. Depending on the outcome of a feasibility study, a Third National Operator (TNO) may be introduced in the year 2005. The Bill will provide for the conduct of a feasibility study prior to the licensing of a TNO.
2. There will be no broadband licensing. Broadband services will be available through the licensed telecommunications companies.
3. Carrier pre-selection and Number portability will begin in 2005.
4. There will be no legislative restriction of foreign ownership.

Outstanding issues
- The definition of fixed mobile is clarified, that is, fixed mobile is not a cellular licence (as had been assumed).
- Facilities sharing do not suggest unbundling.

Discussion
Ms S Vos (IFP) asked how consumers would benefit from the 'duopoly' being created. She noted that in the cellular market, there is no difference in the pricing of Vodacom and MTN, for example.

The Minister replied that there would be a responsibility on the Ministry and the Independent Communication Authority of SA (ICASA) to ensure that no collusion on pricing takes place. Should collusion be suspected, an investigation would take place.

Ms Vos suggested that number portability would present a problem.

The Minister said that number portability refers to the situation where people can retain their numbers even if they switch to a different provider. There is no longer any disagreement as to its introduction. It is just a question of timing, as they first need to settle in and to prepare for it. Everyone agrees as to its necessity.

Ms Vos asked if ICASA had the capacity to deal with an SNO. She added that Cabinet should have this information.

The Minister pointed out that the "strengthening of ICASA" could refer to several factors. On the one hand it refers to money although this is not the only factor. There is also a need to retain capacity or make it available in other forms. They also need people who understand the policy directions, as it is not enough to have the most skilled technical people if this technology does not improve the living conditions of people. In addition they have to look at paying employees enough to encourage them to stay instead of looking for jobs in the industry. With regard to finances, ICASA should develop its own budget and not rely on government to do so.

Ms Vos referred to Edu-net and asked if the Department was envisaging a Public/ Private Partnership (PPP).

The Minister said that the Department would work with the Department of Education. They have to look at whether the market will be able to handle a third operator and whether this would enable them to get facilities to schools and clinics more easily.

Mr Gore (DP) referred to the confusion surrounding fixed mobiles. He asked if fixed mobile would be given mobile licences in the future.

The Director General, Mr A Ngcaba, replied that fixed mobile does not refer to a licence but to a type of technology. When Telkom rolled out services in the rural areas they would use a mast (as used by Vodacom and MTN) so that houses within a certain radius of such mast can enjoy telephonic services without there being a wire between the mast and the telephone. Fixed mobile operates according to the same principle. It is however very limited in that one cannot move outside a certain radius of the mast.

Mr Gore referred to Voice over Internet Protocol (VoIP) and asked how the government intends to police this since it is freely available over the Internet.

The Director General replied that Voice over Internet Protocol is a way of ensuring increased access in areas with tele-density of up to five percent. This aims to address universal access. The issue of policing is being grappled with all over the world. He added that it is difficult to see what the 'packets' are carrying, as they do not have the technology to look at the voice-over IP in a particular area.

Mr R Pieterse (ANC) asked if the policy takes the New Africa Initiative program into account.

The Minister replied that they had developed the policies in such a way that the issues with which SA is grappling are clear to the rest of the continent, such as the fact that SA has an asymmetrical society. In developing these policies they had to consider the rest of Africa and how one could improve telecommunications for the continent as a whole. In fact Sentech was given an international licence and many countries are already requesting their assistance. The new policy allows for this practice.

Mr Pieterse asked how the rolling-out of telephone services would assist people in areas like the Karoo and empower them.

The Minister answered that a person working in the fields can now be accessed by the use of the telephone. It is therefore improving the lives of ordinary people. In terms of empowerment it enables the rural subsistence farmer to establish links with cities and this person can then start selling his/her produce outside the rural areas.

Ms N Mtsweni (ANC) referred to the fact that one would be able to choose operators. She asked if Telkom would have to come and remove their cables if a person were to choose a second operator.

The Director General replied that this would not happen as there would probably be commercial relationships between operators. Such issues would have been worked out between the two operators.

Mr Pieterse asked whether it would be possible for a foreign company to come in and buy everything.

The Minister said that they had not wished to specify as to how much of the market foreign companies could own. Changing this figure at a later stage would have been very difficult if it was entrenched in law. It is preferable to deal with such specifics in the shareholders agreements, voting pools or licencing arrangements. The industry is at present in the process of change and it is therefore necessary to be flexible.

Mr S Mongwaketse (ANC) said that technology does not usually create job opportunities. He asked if the new policies would definitely lead to new job opportunities.

The Minister agreed that technology does not usually create many jobs. However it does create many new opportunities. She gave some examples. A person in a small town can now find out whether a dealer in a city 50 km away has the spare parts needed in his business before actually travelling the 50km to the city. This increases the efficiency of his business and allows it to grow. Basket or pottery makers in the rural areas can now expand their markets by selling their produce anywhere in the world.

Mr Mongwaketse referred to the fact that the fixed mobile only worked within a certain radius. He asked what this radius was. He asked if it meant that one could only make telephone calls within your own area. For example, if one is in Cape Town one can only telephone to areas within Cape Town.

The Director General explained that the limitation did not refer to the distance one could telephone but the extent to which one could move with that telephone. For example, one cannot take the telephone beyond a particular radius.

Mr Gore stated that Business Day had referred to the process as having been 'flip- flop'. It had started with the Colloquium and had been followed by the first and second Policy Directions that had been issued in July and August. He asked what effect the 'flip-flop' nature had had on the process thus far.

The Minister argued that the process had not been 'flip-flop'. Initially they had issued draft policy directives. She stressed that at that stage they had been dealing with a draft and not with the policy directive itself. The public had been allowed to comment and changes had been made which had resulted in the draft. This had happened before the colloquium. It had been decided that the chairpersons would make a joint report to the Minister. In this report it had become clear that there was overwhelming support for a SNO and many had even argued for a TNO. They had however decided that more research was needed before a TNO would be allowed. This had in fact been the only change between 26 July and the final version.

Ms W Newhoudt-Druchen (ANC) asked if Edu-net had dealt with the schools for the disabled as well.

The DG replied that the call centre is structured so as to deal with all languages, with faxes and e-mails. It is therefore equipped to deal with the needs of the deaf.

Concluding remarks by the Chair
Mr Kekana stated that the Committees welcomed input from the public and the industries. The Committees would advertise the following week inviting suggestions and comment. These suggestions would have to be informed by law and should not just be generalisations. He therefore suggested that the industries have their legal advisors present when these submissions are later presented to the Committees.

Appendix 1:
DEPARTMENT OF COMMUNICATIONS

21 August 2001

POLICY DIRECTIONS ISSUED BY MINISTER OF COMMUNICATIONS
I, Ivy Matsepe - Casaburri, Minister of Communications, pursuant to section 5 (4) (a) read in conjunction with section 2 of the Telecommunications Act, 1996 (Act No. 103 of 1996)("the Act") hereby issue revised Policy Directions in the Annexure hereto .

Ivy Matsepe - Casaburri MP

In furtherance of and consistent with the objects as set out in Section 2 read with section 5(4)(a) of the Telecommunications Act, 1996 (Act No. 103 of 1996) (the "Act") I, Ivy Matsepe-Casaburri, hereby direct:

OBJECTIVE

This Policy Direction contemplates the promotion of a managed liberalisation of telecommunications matters in the public interest, pursuant to section 2 of the Act.

1. Application of this Policy Direction

1.1 This Policy Direction shall be applicable to the telecommunications industry in the following matters:

1.1.1 the provision of telecommunications services;

1.1.2 the provision of universal access and universal service;

1.1.3 the provision of telecommunications services to public schools;

1.1.4 the advancement of economic empowerment of persons from historically disadvantaged groups;

1.1.5 the advancement of consumer protection;

1.1.6 the provision for the administration of numbering, number portability and carrier pre-selection;

1.1.7 the provision of public emergency communications services; and

1.1.8 the provision of directories and directory inquiry services.

1.1.9 the provision of maritime services

1.1.10 the establishment of a telecommunications museum

1.2 In this Policy Direction, unless the context indicates otherwise, all terms shall have the meanings assigned in terms of the Act and, where appropriate, the South African Schools Act, 1996 (Act No. 84 of 1996), the Interception and Monitoring Prohibition Act, 1992 (Act No. 127 of 1992), the National Heritage Resources Act, 1999 (Act No. 25 of 1999), the Sentech Act, 1996 (Act No. 63 of 1996).

1.3 This Policy Direction shall become effective on the date of publication.

2. Interpretation of the Policy Direction

2.1 For the purposes of this Policy Direction, the following meanings-shall apply:

2.1.1 "Directories" means the compilation of customer information of designated licencees which shall include, at a minimum, for each customer in the relevant area (other than those customers who have specifically asked not to be included): their names, addresses, and telephone numbers; a list of national and international dialling codes; and a listing of the numbers of national, provincial and local government authorities, institutions and offices, and the public emergency number;

2.1.3 "Directory enquiry service" means the provision of information contained in directories;

2.1.4 "Fixed-mobile service" means a connection to the public switched telephone network that will be provided by the holder of a PSTS licence by means of a wireless connection between such licencee's end office and the end user's premises, provided that nothing in this definition shall exempt the provider of a fixed mobile service from holding a licence under section 30 or section 37;

2.1.5 "Major licence" means a telecommunications service licence as contemplated in terms of section 34 (2)(a) of the Act;

2.1.6 "Public school" means any primary or secondary ordinary school, a public school for learners with special education needs that is funded by the state and public further education and training institutions(FETIs) in terms of section 34 of the South African Schools Act, No 84 of 1996;

2.1.7 "Public switched telecommunications networks or PSTN" means the telecommunications systems which are installed or otherwise provided, maintained and operated by a licencee for the purpose of providing the public switched telecommunications services and fixed - mobile services as defined;

2.1.8 "Second National Operator (SNO)" means the holder of the second public switched telecommunications services (PSTS) licence;

MARKET STRUCTURE FOR TELECOMMUNICATIONS SERVICES

1. Second National Operator ("SNO")

1.1 An Invitation to Apply ("the ITA") for the SNO for a PSTS licence shall be issued in 2001 by the Minister.

1.2 The SNO shall be permitted to use Telkom's telecommunications facilities until 7 May 2004, in accordance with an agreement between the parties, to be concluded within 60 days of the issuing of the PSTS licence. Provided that where the parties fail to agree, ICASA shall, within 30 days, determine such terms and conditions.

1.3 The SNO shall develop their own facilities and infrastructures by 7 May 2004. Defined targets of infrastructure roll-outs, universal service obligations, universal access targets and time frames and, penalties associated with failure to achieve the infrastructure roll-out shall be specified in the ITA and in the licence.

1.4 The make up of the SNO is to be determined.

1.5 Pursuant to section 2(1) of the Act, the licencees of the SNO, and any new major licencee shall include a shareholding of up to thirty percent (30%) for economic empowerment of persons from historically disadvantaged groups.

2. Telkom SA Limited

Telkom's current licence shall be amended to allow for the provision of PSTS in the form of fixed-mobile services.

3. Sentech (Pty) Ltd

3.1 The Act shall be amended to license Sentech (Pty) Ltd. to provide international telecommunication gateway services enabling it to operate as a carrier of carriers and multimedia services with effect from 7 May 2002. Accordingly, the Sentech Act, 1996 (No. 63 of 1996) shall be amended.

3.2 Sentech licence shall exclude the termination of international telecommunication services directly to end users in the Republic.

4. Additional licences(s)

4.1 The Minister shall direct ICASA to conduct a market assessment to be completed by 31 December 2004 into the economic feasibility of the provision of additional PSTS licences and shall make known its findings by notice in the Gazette.

4.2 The Minister shall issue an ITA for at least one or more services-based licencee(s) to commence with the provision of services in 2005.

5. Under-serviced areas

5.1 Small, micro and medium enterprises (SMMEs) shall be permitted to provide telecommunications services including Voice over Internet Protocol (VoIP) for the specific purpose of advancing universal access in geographical areas with a teledensity of up to five percent (5%) from 7 May 2002.

5.2 SMMEs shall be permitted to provide such services using their own or leased infrastructure.

5.3 A standard interconnection regime applicable to all SMMEs shall be developed by ICASA for implementation as from 7 May 2002.

6 Value Added Network Services (VANS)

6.1 The prohibition to carry VoIP and voice in terms of section 40(3) of the Act, is subject to the following:

(a) the exception as specified in clause 5 above;

(b) Telkom's existing privilege under the PSTS licence; and

(c) the SNO's privileges, as contemplated in this Policy Direction.

6.2 VANS operators shall have the privilege to provide end-to-end electronic commerce services.

6.3 VANS shall have the right to operate Virtual Private Networks to provide telecommunications services except voice.

6.4 The Minister shall after a period of two years conduct a policy review in order to determine the feasibility of extending VoIP to other operators in the telecommunications industry.

7. Assignment of 1800 MHz Radio Frequency Spectrum

7.1 Within six months of publication of this policy direction ICASA shall:

7.1.1 assign the 1800MHz radio frequency spectrum to Cell-C, MTN, the SNO, Telkom and Vodacom; and

7.1.2 make regulations for new conditions of access and a new interconnection regime.

7.2 Access fees in respect of 1800 MHz shall be determined by the Minister.

7.3 In computing the access fees for 1800MHz radio frequencies the Minister shall have regard to, amongst others, the following considerations:

(a) MHz pair per population per licence year;

(b) provision of paired/unpaired spectrum; and

(c) technical and administrative cost of spectrum management.

7.4 Sale, alienation or disposition of assigned spectrum by any operator(s) and/or persons shall be prohibited.

8. Third Generation (3G)

8.1 ICASA shall on application and payment of the fee determined by the Minister, issue the third generation service licences to Cell-C, MTN, the SNO, Telkom and Vodacom.

8.2 In computing the licence fee for the 3G licence the Minister shall have regard to, amongst others, the following considerations:

(a) MHz pair per population per licence year;

(b) provision of paired/unpaired spectrum; and

(c) technical and administrative cost of spectrum management

8.3 ICASA shall make regulations to provide for conditions of the licence and interconnection guidelines.

UNIVERSAL ACCESS AND UNIVERSAL SERVICE: BRIDGING THE DIGITAL DIVIDE

1 Universal access and universal service objectives

1.1 Pursuant to the objects as set out in section 2 (a), (c) and (h) of the Act, the targets for universal access shall include accelerated access for differently abled persons to services such as text and speech relay services, emergency speed dialling and specialised operator assistance.

2. Restructuring of the Universal Service Agency (USA)

2.1 The USA shall encourage, facilitate and offer guidance in the evaluation, monitoring and implementation of universal access and service schemes. Institutional capacity to support effective evaluation and monitoring of attainment of universal access and service schemes shall be a priority.

2.2 The Minister shall appoint a board comprising seven persons, one of whom shall be a chairperson, to oversee the schemes.

2.3 The Board shall report to the Minister from time to time and/or as required by the Minister.

3. Contribution to the Universal Service Fund (Fund)

3.1 All telecommunications licencees, including Value Added Network Service licencees, shall from April 2003 contribute to the Fund a percentage of their turnover as prescribed by the Independent Communications Authority of South Africa (ICASA). Provided that the prescribed percentage shall not exceed 0.5%.

3.2 The PTN's and under-serviced area licencees shall be exempt from the provisions of this section.

3.3 The extent of the contributions shall be reviewed by the Minister from time to time.

EDUCATION RATE (E - RATE) AND EDUCATION NETWORK (EDU - NET)

1. E-rate

1.1 Public schools shall be entitled to a fifty percent (50%) discount on all calls to an internet service provider and any connection or similar fees or charges levied by an internet service provider for accessing the internet and/or transmitting and receiving any signals via the internet.

2 Edu-Net

2.1 The Minister, in consultation with the Minister of Education, shall establish an entity to operate an educational network (EDU-NET).

2.2 Edu-Net shall be deemed to be the holder of the PTN licence, as defined in the Act, to link all public schools as well as other educational and training institutions determined by the Minister of Education.

ECONOMIC EMPOWERMENT OF PERSONS FROM HISTORICALLY DISADVANTAGED GROUPS

1. Economic Empowerment of persons from historically disadvantaged groups

Pursuant to the objects set out in section 2(1) and (q) of the Act it shall be a condition of all new major telecommunications licences issued, that an aggregate amounting up to thirty percent (30%) of the shareholding of an applicant company and/or entity shall be set aside for the above mentioned groups. In this regard ICASA shall;

1.1 ensure incorporation of this condition in all new major telecommunications licences;

1.2 when considering any applications for other telecommunications licences, it shall give due regard to applications from persons from historically disadvantaged groups including women; and

1.3 will be required to develop the necessary criteria that will give priority to persons from historically disadvantaged groups including women.

2.1 ICASA shall:

2.1.1 make regulations for all operators, service providers, equipment suppliers and vendors regarding their contributions to the economic empowerment of persons from historically disadvantaged groups including women;

2.1.2 formulate licence conditions for all operators and service providers regarding their respective contribution towards the economic empowerment of persons from historically disadvantaged groups including women;

2.1.3 ensure that such regulations and licence conditions will provide that no reduction in the level of the shareholding of persons from historically disadvantaged groups including women in all major telecommunications licences shall be permitted without prior consent of the Minister; and

2.1.4 from time to time report or at the instance of the Minister report on the overall status of the economic empowerment of persons from historically disadvantaged groups including women in the telecommunications industry.

CONSUMER PROTECTION

1. Furtherance and Ensuring Consumer Protection

Pursuant to the objects set out in section 2(fl and (m) of the Act, ICASA shall:

1.1 make regulations to promote the development and the protection of the interests of telecommunications users and consumers;

1.2 from time to time report or at the instance of the Minister report on the overall status of consumer protection in the telecommunications industry.

NUMBERING

1. Numbering

1.1 Number portability shall be introduced from April 2005;

1.2 ICASA shall:

(a) allocate numbers, maintain, manage and update the central database system on an impartial and non-discriminatory basis, by no later than May 2002;

(b) on a monthly basis require all operators to submit data on new numbers allocated, including numbers of pre-paid subscribers to be included in the central database;

(c) develop a cost allocation model regulation, for the apportionment of costs for the maintenance of the database and the routing system;

(d) develop a cost allocation model regulation, for the apportionment of costs for, number allocation, number portability and carrier pre-selection;

(e) prescribe a fee on all operators for the costs and maintenance contemplated under paragraph (c) above.

1.3 Mechanisms, including carrier pre-select, shall be introduced to ensure effective competition among service providers from 7 May 2005.

PUBLIC EMERGENCY COMMUNICATIONS

1. 112 Emergency Centre(s)

Public Emergency Communications Centre(s) (PECCs) designated as 112 Emergency Centre(s) shall be established to promote the health, safety and security of all persons and to provide efficient support and co-ordination of public emergency communications.

2. Public Emergency number

2.1 112 shall be the exclusive national public emergency number;

2.2 the 112 Emergency Centre(s) shall have voice, data and global positioning systems (GPS) capability; and

2.3 calls to the 112 Emergency Centre(s) shall be free and override any other calls.

2. Standards and operating procedures

The 112 Emergency Centre(s) shall develop and apply common technical standards and standard operating procedures which shall be published by notice in the Gazette with the approval of the Minister.

3. Public safety radio communications service (PSRCS)

3.1 There shall be a common and interoperable digital public safety radio communications service.

3.2 Any of the existing public and future radio communications infrastructure in the Republic shall be utilised only for a public safety radio service.

DIRECTORIES AND DIRECTORY ENQUIRY SERVICE

1. Subscriber privacy

1.1 Specific procedures must be implemented by licensed operators to prohibit unauthorised disclosure and use of subscriber information.

1.2 Subscribers shall have the right to elect not to have their personal details/particulars published in a directory or made available from directory enquiries.

1.3 No subscriber information may be used for any purpose other than the purposes listed below:

1.3.1 providing directory or directory enquiry information;

1.3.2 billing for any service or equipment ordered by the customer;

1.3.3 fraud prevention;

1.3.4 facilitating roaming and interoperability between operators;

1.3.5 providing assistance to law enforcement agencies subject to the Interception and Monitoring Prohibition Act of No 127 of 1992 and the Promotion of Access to Information Act No. 2 of 2000, and

1.3.6 providing assistance to a public emergency communications centre(s).

2. Directories and directory information

2.1 There shall be a single consolidated database for all telecommunications directory information and it shall be made accessible, free of charge, to each subscriber to a telephone line service within the Republic of South Africa.

2.2 A national directory information database shall be established by May 2002 and maintained by an entity designated by the Independant Communications Authority of South Africa (ICASA) for mat purpose.

2.3 All operators shall submit to the database existing and future telephone numbers, within a period as prescribed by ICASA.

2.4 The allocation of pre-paid telephone numbers to any person shall be made upon receipt of identification and contact particulars of the applicant, which shall be recorded and submitted to the database.

2.5 All operators shall ensure that all pre-paid numbers allocated prior to the date of publication of this Policy Direction shall be verified for confirmation of identity and contact particulars of the subscribers for submission to the database. This verification shall be completed by no later than January 2003. Any numbers not verified by this date shall be re-allocated.

3 Directory enquiry services

3.1 Directory enquiry services must be available throughout me Republic of South Africa including from payphones and must be provided free of charge.

3.2 Any network operators licensed to provide directory enquiry services ma conclude a contract with any person in terms of which such person will provide such services, provided that such person is subject to the same conditions for providing such services as those provided for under the licence of the network operator.

MARITIME SERVICES

1 Maritime

1.1 The Minister of Communications in consultation with the Minister of Transport shall establish an entity to construct and operate a private telecommunications network to fulfil South Africa's obligations in terms of the International Convention for the Safety of Life at Sea (SOLAS) 1974/78, Annexure 12 to the Convention on International Civil Aviation, to be referred to as Maritime and Aeronautical Radio Services (MARS).

1.2 MARS shall be deemed to be a holder of a PTN licence as defined in the Act.

MUSEUM FOR COMMUNICATIONS IN SOUTH AFRICA

1. Museum

1.1 A Museum depicting the evolution and the history of the Communications sector shall be established in the Republic in terms of the National Heritage Resources Act, 1999 (No. 25 of 1999) in consultation with the Minister of Arts, Culture, Science and Technology.

SCHEDULE _________________________________________________________________________

No and year of the PolicyTitleExtent of amendment or Direction withdrawal _________________________________________________________________________

Policy Direction No 3 issued under Notice 775 Fund of 1997
Universal Service
Withdrawn with effect from April 2003

Regulation under Government Notice R 730 of 1999
Universal Service Fund
Amendment of Regulations issued under Government Notice R 730 of 1999 to give effect to this Policy Direction

Policy Direction No 1756 of 2001 published on the 23rd July 2001
Policy Directions
Amended with effect from 21st August 2001 as follows:
Broadband licences and services withdrawn
Fixed-mobile definition revised
Foreign ownership restriction removed
Number portability and Carrier pre-selection postponed to 2005
Sentech licence provisions clarified
TNO licence postponed subject to feasibility study

Appendix 2:
STATEMENT ISSUED BY THE MINISTERS OF THE ECONOMIC AND INVESTMENT CLUSTER/
15 AUGUST 2001, PRETORIA

On 8 August 2001, Cabinet examined the Telecommunications Policy Directions and the legislative amendments necessary before submission of the Bill to Parliament for further deliberations and decision making.

The Cabinet discussion took place within the context of government's objective to ensure that consensus is achieved around key issues before legislation is finalised. Further to consultations with stakeholders, revisions have been made to certain aspects of the policy directions announced on 26 July.

In order to promote universal access, foreign and local direct investment, SMMEs in under-serviced areas and black economic empowerment, Cabinet reiterated its policy decisions of 14 March, and its commitment to the managed liberalization of the sector. Managed liberalization in the telecommunications sector will ensure coordinated introduction of new operators to enhance economic growth, national development and reconstruction.

The following policies will be reflected in the Bill to be sent to Parliament:
1. Up to 30% ownership of major new operators will be reserved for empowerment purposes.
2. SMMEs, including co-operatives, to be licensed to provide telecommunications services including Voice over Internet Protocol in areas with teledensity of up to 5%.
3. The Universal Service Agency to be restructured and the Universal Service Fund to be increased through a collection of not more than 0.5% of total revenue from each operator for the purposes of providing telecommunications services for the rural poor.
4. Sentech will be licensed to provide international gateway telecommunications and multi-media services. For these purposes, Sentech will operate as a carrier of carriers and will not provide international services directly to consumers or end users. Like other licensees, Sentech will be given universal service obligations.
5. Public emergency centers will be established and operated through a nation wide accessible public emergency number (112), free of charge.
6. All public schools will be entitled to a 50% discount for Internet connections. A private network will be established to link public schools.
7. A private network will also be established to provide Maritime services for the safety of life at sea.
Following extensive consultations with stakeholders, a decision was taken to revise some aspects of the policy directions announced on 26 July. These revisions are being effected on the understanding that policy directions only signal the intention of government and are not legislation. Government believes that it is crucial to achieve consensus around the key issues before the law is finalized. Accordingly, the revisions represent the outcome of the consultation process, which started at the beginning of this year.

The Cabinet approved that following changes are being effected:
1. A Second National Operator (SNO) will be licensed in 2002 and the decision on which State-owned enterprise is to be included in the SNO is to be determined. Depending on the outcome of a feasibility study, a Third National Operator (TNO) may be introduced in the year 2005. The Bill will provide for the conduct of a feasibility study prior to the licensing of a TNO.
2. There will be no broadband licensing. Broadband services will be available through the licensed telecommunications companies.
3. Carrier pre-selection and Number portability will begin in 2005.
4. There will be no legislative restriction of foreign ownership.

Outstanding issues:
1. The definitions of fixed-mobile is being clarified to reflect that fixed-mobile is not a cellular license.
2. Facilities sharing do not suggest unbundling. The exact details of the interconnection agreement are to be finalised between the parties and the Independent Communication Authority of South Africa (ICASA).

Government believes that these changes will ensure the legislation is finalized before the end of the year. This will pave the way for the development of the regulations, the determination of SMME licences and the issuing of the Invitation to Apply by the Minister.

It is our intention that the draft Bill, which carries the support of our Ministries, will be presented to Parliament early next week and addressed as a matter of priority in the forthcoming Parliamentary session.

The conclusion of this phase marks the beginning of the process to amend the Telecommunications Act, for ICASA to develop regulations and for the ministry of communications to issue the Invitation to Apply.
Once more we would like to thank all the local and international stakeholders for their participation since the beginning of the process.

Special thanks to colleagues in government for their unwavering commitment and support during the process.

Appendix 3:
MEDIA STATEMENT ANNOUNCEMENT OF THE TELECOMMUNICATIONS POLICY DIRECTIONS - 26 JULY 2001
Today, 26 July 2001, the Minister of Communications, Dr Ivy Matsepe-Casaburri announced the Telecommunications Policy Directions, thereby paving the way for the amendment of the Telecommunications Act.

The policy directions cover a wide range of issues based on the Cabinet decisions of 14 March. New issues, which came out of the consultative process, were also incorporated within the context of government's commitment to the managed liberalisation of the sector.

Government adopted the new policy directions to promote amongst others, foreign and local investment, effective market competition, universal access, empowerment and skills development.

Key policy issues announced by the Minister include:
1. Definition of fixed mobile
Fixed mobile means a service that will be provided by the PSTN licencees by means of a communication device in a static or mobile environment, using fixed or mobile infrastructure or combination, or any technology enabling such service to be provided. Government believes that this approach will prepare the SNO and TNO for competition in the liberalised market.
2. Market structure
Two operators, the Second National Operator (SNO) and Third National Operator (TNO), will be licensed at the end of the Telkom's exclusivity period in May 2002. According to the new approach Esi-tel will be part of the SNO and Transtel will be part of the TNO. This approach will ensure the maximum utilisation of the available infrastructure to enhance economic growth and social development.
The two licencees will be permitted to use Telkom's facilities until May 2004 (2 years), in accordance with an agreement between the parties, to be concluded within 60 days of issuing the PSTS licences. This arrangement will give the SNO and the TNO reasonable time to establish their own infrastructure.
Within 6 months of the publication of the new policy, ICASA shall assign the 1800MHZ frequency to MTN, Cell C, Vodacom, SNO, TNO and Telkom. During the same period, the regulator will develop regulations for interconnection.
Sentech licence will be extended to offer international telephone services and other multi-media products. The extension of Sentech's mandate is informed by technological changes, particularly the convergence of technologies.
3. Universal access
The Universal Service Agency (USA) will be restructured to facilitate and offer guidance in the evaluation, monitoring and implementation of universal access targets.
As a result, all telecommunications operators, including Value Added Network Service (VANS) licencees shall from April 2003 contribute to the Universal Service Fund a percentage of their turnover as prescribed by the regulator, provided that it will not exceed 0.5%.
Government is of the view that universal access will benefit both the communities and the private sector as more South Africans will become part of the information society through activities such as e-commerce transactions.
4. Education Rate
Public schools will be entitled to 50% discount on all calls to an Internet service provider and any connection or similar fees or charges levied by an ISP for accessing the Internet. This policy position will ensure easy access for public schools to the Internet thereby introducing young people to the Internet and related services from an early age.
5. Economic empowerment
Empowerment is a crucial in our endeavours to deracialise and redistribute the economy. Pursuant to the provisions of the Act, all new major telecommunications licencees will be required to set aside up to 30% for empowerment purposes.
6. Consumer protections
ICASA shall make regulations to promote the development of and the protection of the interests of telecommunications users and consumers.
7. Number portability
Number portability will be introduced from April 2003. ICASA shall allocate numbers, maintain, manage and update the central database system on an impartial and non-discriminatory basis, by no later than May 2002.
8. Public emergency communications
Public Emergency Communications Centres (PECCs) designated as 112 emergency centre (s) will be established to promote the health, safety and security of all persons and provide efficient co-ordination of public emergency communications. This re-engineering will also include the rollout of services to rural areas.
9. Under-serviced areas
In all areas with the teledensity of up to 5%, SMMEs will be permitted to provide telecommunications services including Voice Over Internet Protocol (VoIP) for universal access purposes. The licensing of SMMEs will also facilitate local economic development in under-served areas. Telkom, SNO and the TNO will be allowed to offer VoIP without any restriction.
9. Broadband licences
Based on submissions from various stakeholders, the Invitation to Apply for the broadband licences will be issued before the end of 2001. The licensing of the broadband will enhance the capacity, efficiency and speed of the South African services, particularly the data services.
Regarding the process to amend the Telecommunications Act of 1996, the Minister indicated that the Act will be on top of the agenda when parliament resumes. In the meantime, consultations with ICASA and the Portfolio Committee on Communications will be expedited to ensure that they are in step with the developments regarding the development of legislation.
The Minister further announced that government accepted the proposal from various stakeholders to streamline the application process. The shortening of the process will ensure that government meets the deadline for the licensing of the SNO and TNO.