Telecommunications Amendment Bill: deliberations

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
9 October 2001
TELECOMMUNICATIONS AMENDMENT BILL: DELIBERATIONS

 

Telecommunications Amendment Bill [B65-2001]
Vodacom Additional Sudmission
Summary of Submissions of Public Hearings
Proposed Amendments to the Bill - A – handed out at 11 October meeting
Proposed Amendments to the Bill - B – handed out at 12 October meeting [minutes not yet available]

SUMMARY
The definitions were discussed and some referred to the state law advisor and the Department of Trade and Industry for clarifying. Clauses 2 and 3 where broadcasting and telecommunications issues are conflated were not debated but flagged for later discussion. The confusion created by the regulation of a hearing in section 4 was discussed but left for later evaluation. The inconsistencies created by the section 5 licencing procedure were discussed, but any further analysis was similarly postponed.

In the afternoon session, the Committee discussed Clauses 6 and 15. The issues of resale, facility sharing and interconnection were pointed out as being the main themes of Clause 6. With regard to Clause 15, members felt that the clause should remain as is with the words 'Value Added Network Services' replacing 'electronic network'.

MINUTES
Introduction by Chair
The Chair commenced the proceedings informing the members that all newspaper articles dealing with the coverage of this Bill would be made available on request. He continued that a "balancing act" is required of the Committee in order to accommodate the interests of all the major stakeholders involved, but felt confident that the Committee’s efforts in this regard would be successful.

The Chair acknowledged the great challenge and difficulty inherent in any attempt at passing a law that will regulate as dynamic an industry as the technology industry. There is pressure on the legislatures world-wide to effectively regulate this industry and these discussions are not dissimilar to those occurring elsewhere. The primary concern is the balancing of interests of the Value-Added Network Services (VANS), customers, service providers, investors and indeed Telkom.

The Chair stated that the focus of this session will be an informal discussion of any concerns with the Bill on a question-and-answer basis. He thanked those interested parties who had made additional submissions in an attempt to further clarify their positions and concerns. He called for a single submission from all the service providers in which they reach an agreement and compromise on their respective interests and concerns. He recognised that it would not be possible to satisfy everyone but acknowledged that a law would have to be passed that ensures the achievement of the national objectives, including the creation of new telecommunication services and technologies that would best serve the customer and the unlocking of the potential in Information Communication Technology for economic growth and job creation.

He noted that the discussions on the Bill should be finalised by the end of this week, and this would provide a definite idea of the content and structure of the final version of the Bill. The Committee was still well within the timeframe allocated for deliberations on this Bill
which would not be rushed in order to ensure a constitutionally sound Bill, as well as protecting the interests of the industry as a whole and reaching the national objectives.

Discussion
Clause 1
"carrier of carriers"
Ms M Smuts (DP) stated that the proposal by Sentech, concisely captured on page 20 of the summary of submissions and in length on page 4 of their written submission, dealing with the fact that the current definition entrenches Telkom’s monopoly within the market, is preferred. Of further importance is that the current wording of the provision fails to provide for the buying of Sentech facilities by internet service providers (ISP), VANS and small/medium/micro enterprises (SMME). She stated that this is indeed a problem as these parties must be able to buy these facilities on a wholesale basis from Sentech. She noted that Telkom should be specifically included at the beginning of this definition.

Mr E Magashule (ANC) agreed with this proposal and said that the precise wording of the definition has to be clarified, but noted that the underlying principle is sound.

The Chair questioned the use and meaning of the term "wholesale" in this context, especially in relation to the phrase "end–users directly" at the end of subsection (b) of the definition. He questioned whether the provision of COC on a wholesale basis means that the bulkbuyer of telecommunication services involved Sentech facilities. He suggested the use of a neutral definition of COC here as well as the accommodation of SMMEs, under-serviced areas and "wholesale" within the proposed definition. He noted that the policy considerations underlying the Bill stipulate that Sentech may not provide international telecommunication services to "end-users directly", and called for clarity from the State Law Advisor’s office (SLA).

Mr E Daniels, the chief state law advisor, replied that he has not as yet examined the Sentech proposal but stated that "wholesale" does include distribution to end-users directly, and suggested that SMMEs and ISPs could presumably buy from Sentech.

The Deputy Director General (DDG) questioned whether businesses could in fact buy in bulk and, if so, whether they could get a discount, categorised as "end-users". He also questioned whether VANS and SMMEs could be classified as "carriers", for Sentech should be allowed to carry their traffic.

The Chair reminded all present that the purpose of this session is an informal discussion of key concerns to be dealt with in greater depth at a later date. He consequently stated that the inquiry as to whether an end-user could indeed be a licenced provider would thus be tackled later, perhaps when Section 32C is considered.

Ms Smuts stated that the key point here is the COC issue, and requested time for discussion on this point. The Chair consequently "flagged" the issue for a later discussion.

"carrier pre-selection"
Ms S Vos (IFP) turned the Committee’s attention to the definition proposed by the Independent Communications Authority of South Africa (ICASA) on page 19 of the summary of submissions and page 16 of their lengthier written submission. She suggested that ICASA’s concern is important and worthy of serious consideration.

Ms Smuts agreed saying that the distinction between carrier pre-selection (CPS) and carrier selection (CS) needs to be maintained. She noted that CPS allows the subscriber to select beforehand which communications service to use when making national long-distance or international calls, whereas CS involves the use of a code override device that allows the subscriber to decide whether to use the second national operator (SNO) or another service provider. She stated that both CPS and CS need to be included in the Bill, and further called for CPS to be prescribed as the default system and CS as a pre-selected option.

Mr Magashule stated that, even though he has not analysed the ICASA definition, the Bill’s current CPS definition is preferred.

The Chair drew attention to the article in Business Day by Tom Beale (Vodacom) that noted the two components of CPS, namely facility usage and a call-by-call option. The Chair stated that the current definition does make sense, but called for a single definition that would incorporate both these components. He "flagged" the issue for a later discussion.

"directories"
The Chair noted that this provision is directly linked to issues of privacy. Consumers have the right not to have captured the information stipulated in this provision. There was no disucssion by the Committee on this issue.

"end office"
Ms N Mtsweni (ANC) suggested that the definition be amended to read "local exchange" and the Chair accepted this proposal.

"ESI-TEL"
The Chair expressed his confusion about the business and actual existence of such a body. Once the DDG had explained that it is a subsidiary of Eskom, the Chair requested its founding documents to ascertain its legal existence. However Mr Daniels said that the current definition was not problematic and that an inquiry into its legal existence was not necessary.

Ms Smuts noted the problem with future licencees and urged for the enactment of elaborate principles of non-disclosure regarding licencing procedure. She suggested that this issue be revisited in greater detail at a later date. The Chair agreed.

"fixed-mobile service"
Ms Vos recommended the ICASA proposal in dealing with the practical problems inherent in implementing this facility. The current definition implies that this is a separate service, whereas it is nothing more than a local access service.

Ms Mtsweni agreed and called for a reformulation of the definition to accommodate a stipulated geographical radius in which this service operates, as well as the removal of restrictions contained in this provision.

Ms Smuts welcomed this approach and lent further support to the ICASA proposal regarding the inclusion in section 32B of a "wireless local loop technology", as this would further clarify the position regarding the "fixed-mobile service" definition. She noted that the proposed definition by Thintana on page 18 of the summary of submissions refers expressly to "fixed wireless".

The Chair cautioned Committee members against confusing "mobile" with "mobile cellular" in this context. He summarised the suggestions regarding "fixed-mobile service" in the form of three primary concerns: the limitation on a geographical radius in which such a service would operate, the call for mobility within this defined radius and the removal of dictating the precise kinds of technology to be used in implementing this facility. He requested a revised definition to accommodate these concerns.

Ms Mtsweni reminded the Chair of the Committee’s support for the Thintana proposal. The Chair noted this and called for further clarification at a later date.

"interconnect"
Ms Vos noted that ICASA states that the current definition is too vague as it provides for implementation on a reciprocal basis, but the definition fails to state clearly what this means.

The Chair urged the Committee to steer clear of philosophical concerns and focus on substantive amendments in this meeting.

"international telecommunications service"
The Chair noted the conspicuous absence from recent legislation, and indeed this Bill, of a concise and comprehensive definition of "the internet". Mr V Gore (DP) highlighted a similar absence of the commonly used terms "voice" and "internet service provider". The DDG replied that the Electronic Communication and Transactions Bill effectively remedies these issues.

The Chair stated that this definition was similar to that of the COC, and recommended that these issues be dealt with simultaneously at a later date.

"Minister"
Ms Smuts called for clarity on the definition of "Minister" in the Act. The Chair "flagged" the issue for a later discussion.

"mobile cellular telecommunications services"
Ms Smuts expressed great disapproval with this definition which she said was entirely illogical and nonsensical for a definition to refer to another relevant section for clarity. She insisted that the only appropriate location of the exact scope of the term or phrase be contained fully in the definition itself.

Mr Magashule stated that the section referred to does not provide a comprehensive definition either, and that this reinforces the need for a detailed definition at the beginning of the Bill.

Mr Daniels replied that the intention of the drafters was simplicity, as a statement of the content of the term in both the definition as well as the relevant section was considered an unnecessary duplication.

Ms Smuts reiterated her concern that it is undesirable to draft a law in this manner.

Mr Daniels responded that section 37 is "absolutely clear", and that in this particular case it was therefore not considered necessary to replicate its content in the definitions section of the Bill. He did concede that it is generally considered a "cop-out".

Ms Smuts maintained however that section 37 of the Telecommunications Act 103 of 1996 (the principal Act) was not "clear", but rather peculiarly vague. This section fails to define clearly who exactly the holders of such service licences are.

The Chair stated that section 34 of the principal Act refers to these different kinds of licences and the holders thereof. To ensure the passing of good law it might be best to re-evaluate this term so that a concrete and enforceable definition is created.

The DDG noted that there are a number of these references in the principal Act that are not clearly defined, and consequently called for all these definitions to be revisited and captured in a concise list that will be included in the Amendment Bill.

The Chair stated that any future discussion of the definition of "fixed-mobile service" should also consider the reference to "wireless local loop" in section 33(a) of the principal Act. He reiterated the concerns raised earlier regarding the need for a distinction between the two, and suggested that the term "wireless" be used instead of "radio".

"multimedia service"
The Chair proposed that this be later dealt with, together with the Sentech and COC definitions in terms of section 32C of the principal Act, in order to facilitate a wholesome discussion of all the related issues.

"national long-distance telecommunication services"
The Chair noted that this also needs a comprehensive definition instead of referring to section 38 of the principal Act for actual detail. The DDG agreed.

"private telecommunication network"
The Chair stated that the definition needs clarification.

Ms Vos pointed out that the definition proposed by ICASA is useful, clear and concise. The Chair accepted this proposal and agreed to examine the issue further at a later date.

Ms Smuts added that the primary problem here is the legislation’s repetitive conflation of the terms "broadcast" and "telecommunication". She envisaged numerous intricate constitutional criticisms as the status quo affords Telkom and the SNO certain advantages over the VANS. She called for the ICASA definition as it clarifies this issue and provides a feasible solution.

Mr Magashule also agreed.

Ms Smuts noted that three parties (the IFP, DP and ANC) supported the ICASA proposal and suggested that it be inserted into the Amendment Bill in an attempt to spare the SLA unnecessary effort of formulating and drafting a new provision.

The Chair disagreed, stating that that was not in accordance with parliamentary procedure. He continued that the purpose of this session is to identify key issues worthy of further consideration that might be submitted to the drafters of the Amendment Bill for redrafting.

"public switched telecommunication networks"/"public switched telecommunication services"
The Chair said that these definitions would be dealt with simultaneously.

Ms Smuts reiterated her objection to a definition referring to another section for substance.

The Chair questioned the need for the general definition in section 1 when a lengthy definition of a PSTN is in section 36A.

Ms Vos stated that the problem here is what this definition grants to Telkom and the SNO.

Ms Smuts suggested that all that is needed here is not Clause 11 of the Amendment Bill but rather that PSTS is defined in section 1 as proposed section 36A(1)(a)-(c). There would then no longer be a need for the lengthy section 36A definition. Further Clause 11 seems to make this area the exclusive domain of Telkom and the SNO, which cannot be condoned. She contended that it might not have been the intention of the drafters to create this exclusion. She suggested that this section should only capture the core of the definition, and that the remaining considerations should become relevant when evaluating the granting of licences.

Mr Daniels appreciated the usefulness of this comment, and requested an opportunity to consider it further and report back to this Committee. The Chair agreed.

"resale"
Mr Gore stated that the definition refers to certain services provided by the PSTS alone. Ms Smuts pointed out that the concept of "resale" also captures applications and services relating to Voice over Internet Protocol (VoIP), and further called for the definition to be technologically neutral in its formulation.

The DG replied that this proposal would be duly evaluated.

"small business"
Mr R Pieterse (ANC) questioned whether the definition would sufficiently benefit customers.
The Chair replied that this inquiry is not relevant here, and should be ignored.

Ms M Magazi (ANC) asked if "small business" could indeed be successfully defined, and called for clarity on this matter. The Chair responded that this issue would be dealt with when the universal service fund is discussed.

Mr Magashule stated that a genuine attempt has to be made at a definition of this term, and perhaps recourse could be had to definitions employed by the Department in other relevant legislation. He said that the definition in the National Small Business Act of 1996 is unsatisfactory, and that consequently a brand new definition is necessary.

Mr Smuts, from the Office of the SLA, informed the Committee of the huge problems posed by such a task. He stated further that under that Act, the Minister of Trade and Industry had the authority to define the term.

Ms Vos stated that the definition proposed by ICASA was preferred as it called for the granting of such licences to businesses with black women as the majority shareholders, so that these businesses are not merely a "front" for big business conglomerates.

The Chair noted that it is important to define this term carefully because it deals with a "high, capital intensive project", and that inconsistencies between this Bill and the National Small Business Act of 1996 could not be tolerated. The latter could always be amended accordingly, but requested clarity on this from the Department of Trade and Industry.

Mr Daniels replied that such an amendment is indeed possible.

"telecommunication facility"
Mr Gore noted that the definition is problematic, and requested an evaluation of the proposed Thintana definition. Thintana also calls for an amendment of the Bill’s definition because it extends Telkom’s monopoly over the telecommunication market.

The Chair said this matter is related to the Sentech discussion mentioned earlier. He further called for clarity on the terms "right of way" and "co-location space" in the Bill’s definition. He suggested that these relate to the use and meaning of the term "interconnection".

Mr Daniels said that the aim of this formulation is to ensure competition within the telecommunication market as it broadens the definition so that Telkom and the SNO are now obliged to provide the same service and product. This prevented these two parties from asserting that they were unable to provide a service because of the absence of co-location space or a right of way. Thus the only difference between the two service providers would be the price demanded for the service. He asked that the definition remain unchanged.

The Chair said that this issue would be revisited at a later date, and called on ICASA to report back on its proposed "interconnection regime" in this regard. He also questioned Telkom’s submission on page 16 of the summary of submissions that "area", "right of way" and "co-location space" be deleted from this section.

Ms Smuts suggested that Telkom probably believes that the ‘right of way’ is a common law right and therefore does not have to be expressly legislated to have binding effect.

Mr Daniels replied that this suggestion makes sense only when the particular term is considered in isolation, but when viewed holistically it actually calls on the service providers to negotiate and do everything within its power to ensure the facility is provided. It is for this reason that this term is given the widest possible definition.

The Chair insisted on further clarity on the precise meaning of "right of way".

"Transtel"
The Chair questioned the definition as it seemed more complex than that of "ESI-TEL".

Mr Daniels explained the reason for this formulation is that ESI-TEL is a division of Eskom Enterprises which is in turn a subsidiary of Eskom, whereas no such chain of control exists with Transtel.

"VANS"
Ms Smuts voiced her approval of the definition proposed by ICASA on page 26 of its written submission, and suggested that since it has already conducted all the research the definition should be adopted. Ms Vos agreed.

Ms Mtsweni stated that the definition is problematic, and suggested it be referred back to the Department of Trade and Industry for further clarity.

The Chair stated that all submissions relevant to VANS are to be considered, and that the proposed ICASA definition will not merely be transposed verbatim into the Bill. He called for a comprehensive definition from the DG and the Department of Trade and Industry.

"virtual private network" (VPN)
Ms Smuts stated that the definition is unsatisfactory and proposed that the ICASA definition be accepted as it defines VPN in terms of the use of a software-based intervention. She noted that this formulation of the definition avoids any future legal problems caused by confusion with the PTN.

The Chair wondered if there is a reliable definition of "software" in any South African legislation, and noted that the eagerly awaited e-Commerce Bill has dealt with this issue.

Mr Smuts (SLA) stated that this word is so commonly used that a statutory definition is not necessary, because a definition is only really required to expand or restrict the meaning of a word. He noted that the same reasoning applies to "the Internet".

The Chair questioned whether a definition of this term is necessary and suggested that it be revisited once the Department of Trade and Industry has considered the matter and reported back to the Committee.

"VoIP"
Mr Gore stated that the problem with the definition is that it is not technologically neutral. The legislature is attempting to stipulate precisely what technology is to be used to implement this protocol. He further questioned the need for Parliament to legislate in this regard.

Mr Magashule agreed with the Bill’s definition, but inquired of the DG when it intends to offer this facility.

The DG replied that it should be available at the next round of debate on the issue, and that a debate has been scheduled for just before 2005 to discuss this matter.

The Chair requested Mr Gore to spell out the exact problem with the definition.

Mr Gore responded that there is no problem with the specific formulation of the definition per se, but rather whether there is a need for a statutory definition of such technology at all.

Clause 2 and 3
Ms Vos sternly suggested that the entire issue of the incorporation of broadcasting in a Bill dealing with telecommunications be flagged for postponement to a discussion of "multimedia".
This same concern – the conflation of broadcasting and telecommunication issues within the same Act - applies to Clause 3 of the Bill, and that discussion on this be similarly postponed.

Ms Smuts stated that what is needed here is a converged broadcasting and telecommunications bill, and that the current attempt to only amend the Telecommunications Act is not the solution. She called for the deletion of any provision relating to multimedia in this Bill.

The Chair agreed that these issues be discussed in detail at a later stage.

Clause 4
Ms Smuts stated that this clause relates to a frequency band plan (FBP), which falls within ICASA’s jurisdiction. She noted that ICASA called for a hearing to not only provide for the relevant shareholders input to ensure transparency, but also to guarantee procedural rights. She stated that there seems to be no valid reason for the removal of these hearings.

The Chair called on ICASA to elaborate on the discretionary powers it is requesting.

Mr Michael Markowitz, advisor to the ICASA chairperson, stated that instead of completely removing its power to call a hearing, ICASA requests that it be granted a discretion power to conduct a hearing when it deems necessary. He stated that the reason for this proposal is that this discretion would allow matters not requiring a hearing to be fast-tracked.

The Chair acknowledged the need for flexibility in conducting hearings in this regard.

Mr Daniels questioned the legitimacy of ICASA’s complaint as section 29(5) of the principal Act in any case affords the requisite authority the right to call a hearing should it see fit. He stated that surely ICASA could use this section. Section 29(5) of the principal Act imposed an obligation of the authority to hold a hearing, but that section 29(5)(2)(b) granted the discretionary power.

Mr Markowitz informed Mr Daniels that section 29(5)(2)(b) of the principal Act has indeed been repealed by the ICASA Act 13 of 2000, and that consequently the residual discretionary power afforded by that subsection no longer applies.

Ms Smuts reiterated her earlier sentiments regarding the inherent virtues of hearings, and stated further that it resulted in less paperwork and less time being utilised.

Mr Daniels conceded to the ICASA submission.

Clause 5
Ms Smuts questioned whether it is the role of Parliament to allocate frequency spectrum access when this fell within ICASA’s jurisdiction, as prescribed by its Act. She questioned the process prescribed by the proposed section 30A of granting the frequency spectrum licence. Section 30A(2)(a) provides that Telkom and the SNO shall "be deemed" to be a holder, subsection 2(b) states they "may apply", yet subsection 2(c) provides that the authority "shall issue" the licence. She continued that the direction in each of these three subsections seemed to contradict the other. She stated that section 30A(3)(b) is not necessary and should be deleted as the subsection describes a function granted to ICASA by its own Act, and is therefore not a parliamentary function.

The Chair responded that the SLA has to reconsider this section.

Mr Gore stated that this section is not technologically neutral, and called for clarity on whether the SNO and Telkom are consequently granted exclusive access to the spectrum.

The Chair replied that Parliament has stipulated that every person has the right to access to this frequency spectrum.

Ms Smuts suggested that the phrase "the mobile operators" in the proposed section 30B(1)(a) should be replaced with "any person" so that everyone would be able to apply for the third generation (3G) licence. She acknowledged that in practice it is the providers of the mobile service that offer this licence, but maintained that it is neither appropriate nor desirable for this subsection to limit the granting of the licence to existing mobile operators. She reiterated her earlier comment that ICASA should be the only body with the power to grant such licences.

The Chair replied that the Committee needs to exercise caution in prescribing the exact nature and functions of the regulatory body here, and hoped that the Constitutional Court could provide some clarity on this matter.

Ms Vos stated that section 30B(2)(b) and (c) needs clarity, as these subsections seem to allow Telkom the first bite of the cherry once the SNO has been granted the 3G licence. She suggested that practice could be seen as anti-competitive.

The Chair disagreed, saying that section 30A(2)(a) seems to "cushion the entry of the incumbent" into the telecommunications market.

The DG stated that both section 30B(2)(a) and (b) grant the 3G licence to Telkom and the SNO, yet (a) deems Telkom to be a holder whereas (b) requires it to "apply" for the licence. He inquired whether these two were applied for simultaneously.

The Chair replied that on the very day the SNO is granted the 3G licence, Telkom has a six month period within which it can apply for the same licence and the regulatory body goes through the process of licencing Telkom. This in fact grants Telkom a "second bite of the cherry" as it is not granted the licence automatically at the same time it is granted to the SNO, and this allows the incumbent a window of opportunity to apply for the 3G licence.

Mr Gore questioned whether Telkom and the SNO are granted a mobile service licence, or whether the phrase "…and such other services…" in section 30B(1)(a) provides them with alternate services within that spectrum.

The DG replied that the purpose of this phrase was to allow the operator access to any new technology that might burst onto the scene, but that has not been covered by the Bill. He stated that to deny them would negate years of investment in such future technology.

Ms Smuts stated that the simple fact is that PSTSs are not mobile licence holders, yet section 30B(2)(a) of the Bill clearly suggests that Telkom and the SNO can be granted mobile licences. She firmly disagreed with this position and stated that a feasibility study has to be done first by Telkom and the SNO, they cannot be granted mobile licences automatically. She called for the amendment of "fixed-mobile services", as it is not a true service but facility.

The DG replied that the current formulation is in accordance with foreign jurisprudence. Those European jurisdictions that chose a route different to the Bill have now, in hindsight, preferred the Bill’s formulation.

The Chair stated that the Bill’s section 1 definition of "mobile operators" has to be re-evaluated in order to resolve the problem with fixed line and fixed mobile operators.

The DG replied that the actual 3G environment is not device specific, and does therefore not generate from a mobile phone alone.

Mr Gore reiterated the concerns raised earlier regarding the granting of a mobile service licence to Telkom and the SNO by section 30A, and called for reform in this regard.

The DG accepted this proposal and informed the Committee that the department will report back on this matter.

Clause 6
Ms M Smuts (DP) argued that two years was too short for the Second National Operator (SNO) to have access to Telkom's facilities.

Mr A Ngcaba, the Director-General, stated that if one takes into account modern technology, it is reasonable to expect the SNO to be able to roll out in two years. There had been an article in a newspaper pointing out that the period of two years was reasonable given the type of fixed mobile that will be used. If the SNO had to roll out cable they would obviously have needed more time. In addition, Esi-tel and Transtel already have infrastructure and this makes it different to the case of Cell C. Thus the fact that they already have Private Telecommunications Networks (PTNs) means that they will be able to present Telkom with a reasonable amount of competition.

Ms Smuts stated that the clause touches on facility sharing, resale and interconnection. She asked the legal advisor what he would label the clause in order to encapsulate its essence. The current heading does not sum up what the clause is about.

Mr H Smuts, the legal advisor, replied that they had decided on a neutral name for the clause as the clause deals with many different issues. In addition, the Bill had been presented to them in that form. They had therefore retained the form so that it would slot in with the Act.

The Chair said that there are advantages to retaining the headings and form of the Act. It allows for easy reading if one wishes to read the two documents together. One should bear in mind that the heading is not really a legal requirement, as its purpose is merely to make reading the clause more convenient and understandable.

The DG suggested that in order to find a heading, one should look at the common theme of the clause. He pointed out that the clause deals with what will be happening between now and 2005. This could provide some guidance as to a heading for the clause.

Ms S Vos (IFP) referred to the Vodacom submission, which stated that paragraphs 1(c) and 6(a) do not fit together very well. In paragraph 1 (c) the word 'shall' is used whereas paragraph 6(a) uses the word 'may'. She asked the legal advisor to provide clarity as to which word was intended.

Mr Smuts noted the contradiction and said that this would be rectified.

Ms Smuts said that the SNO licence was service-based and not facilities- based. She therefore asked why access would be limited to two years only.

The Chair agreed, saying that the clause seems to be referring to both service-based and facilities- based competition. The clause is therefore trying to achieve both. The Department would have to clear this up.

Mr V Gore (DP) said that the limitation of the facility sharing to two years could lead to the situation where cables have to be lifted if one wishes to change operators. It could also lead to the duplication of infrastructure. He therefore asked if the Department was considering the introduction of commercial agreements between operators.

The DG replied that carrier pre-selection could solve part of the problem (with regard to the duplication of infrastructure). In addition, the fact that facility sharing was limited to two years did not mean that the commercial relationships could not continue beyond this period. There could be co-operation in some areas and competition in others. This should be encouraged just as long as it does not give rise to anti-competitive practices.

The Chair said that the intention of resale was to cushion the entry of the SNO by simultaneously taking into account the need for facilities-based competition. If facility sharing were to be allowed for four years one can clearly forget about facilities-based competition. The focus of facility sharing should therefore remain on cushioning the new entrant, as this is in line with international best practice.

Ms Smuts asked why the SNO should put in local loops where they already exist. Instead of giving rise to duplication the SNO should rather focus on putting them in areas where none exist.

The DG pointed out that this was done for commercial reasons. It is difficult to say that there should be only one type of local loop in an area. There will unavoidably be duplication in some areas. Should operators avoid duplication it should be done in such a way so as to avoid collusion between operators.

The Chair added that the primary objective is universal service. This does not mean that they should only attempt to provide services to those areas that do not have services. This interpretation would be too narrow. Instead they should focus on rolling out the best technology available. One should take into account the situation where a person wishes to change operators more than once. Does this mean that the operator's cables would have to be dug up each time? As this is clearly not desirable it is necessary to introduce facilities-based competition after the two years has elapsed. It is therefore in the interest of the consumer that a second infrastructure is built. This infrastructure should aim to provide services faster and should be more modern than that of Telkom's.

Ms Smuts suggested that subsection 5 be changed from 2004 to 2003. The feasibility study should take place before 2003 so that the Third National Operator (TNO) is able to switch on in 2005.

The Chair replied that although Telkom's monopoly ends in 2003 (when switch on occurs), in effect it terminates in 2002 (with the introduction of the SNO). They are therefore moving beyond their WTO commitments.

Ms Smuts insisted that the date should be changed to 2003. One cannot conclude the feasibility study in 2004 and expect the TNO to switch on in 2005.

The Chair stated that 2004 was the date that had been suggested in the policy directions.
Although it would have been necessary to licence the SNO this year in order for them to switch on next year, they are still moving beyond their WTO commitments.

Ms Smuts reiterated the fact that it is necessary for the feasibility study to be completed by 2003 in order for switch-on to occur in 2005.

The DG said that there was nothing to prevent them from completing the study in 2003. In order for switch-on to occur in 2005 they would have to license the TNO eight months to a year before such switch-on. They will have to start in 2003 anyway, irrespective of whether it is stated in the clause or not.

Ms Smuts argued that if this was the case they might as well say so in legislation.

The DG responded that they are giving themselves space for budgetary reasons (inter alia).

The Chair suggested that it was perhaps best to state the date clearly in legislation. Since switch-on is in 2005, it is advisable to work backwards from that date in order to calculate the date to be included in legislation (taking into account issues such as licencing).

Mr E Magashule (ANC) asked if these are not issues to be dealt with in regulations instead. If it is included in legislation, one has to consider what will happen if the research has not been completed by that particular date.

The DG said that this matter would have to be discussed with the State Law Advisor. The date is not really material, just as long as switch-on occurs in 2005.

Ms Smuts referred to the liberalisation of resale in 2000 and 2003 as set out in GATS. She asked how one accommodates the liberalisation of resale on voice.

The Chair asked where 'voice' is specified. Resale is being liberalised. It does not specify 'voice' anywhere. If 'voice' is specified then the process is being excluded from the Public Switched Telecommunications Services (PSTSs). The important thing is that resale is being liberalised now.

The DG explained that the word 'resale' is used more broadly in the WTO document than in the Act.

Ms Vos referred to one of the submissions, which stated that the phrase 'may use Telkom's facilities on a resale basis' should be replaced by 'may resell PSTSs.' She asked the Department to comment.

The DG stated that it refers to Telkom's facilities.

Ms Vos asked what the Department thought of the suggestion that it should refer to services.

The DG reiterated that it was intended to refer to facilities.

The Chair referred to S32 A (2) a and asked to which PSTS licence this subsection refers.

The DG said that this has to be read together with subsection (1). It refers to the licence mentioned in subsection (1).

The Chair asked the mobile operators present to explain how they deal with the issue of resale of facilities.

The first mobile operator stated that they do not resell facilities. They use all their available capacity. No Value Added Network Services (VANS) providers obtain facilities from them, as they themselves are using Telkom's links.

The second mobile operator also said that they do not resell facilities. They would not want someone to get the facilities from them and then sell it to someone else.

The Chair said that it makes sense to leave the definition of 'resale' as is.

The Chair asked if the Committee felt that SA was in line with its WTO commitments.

Ms Smuts said that SA seemed to be on track generally. However, if subsection 5 is not changed to 2003 then SA would not be on track with regard to this issue. Also there are definitional issues, which if not sorted out, will cause SA to default on their commitments.

The Chair was of the opinion that SA had moved way beyond its WTO commitments.

Sections 32 B and C and Clauses 7 to 14
The Chair stated that these would be dealt with the following day when Esi-tel, Eskom and Transtel could all be present.

Clause 15
The Chair explained that this clause removed the reference to VANS and replaced it with 'electronic networks'.

Ms Smuts argued that 'electronic network' cannot replace 'VANS' in the clause. The clause has to stay the way it was, as a VANS cannot be equated with a PTN. If this clause were to be changed, would banks now need a VANS licence? One also has to consider what would happen to companies that are already providing VANS services.

Ms Mtsweni (ANC) stated that the problem could be dealt with if one includes a definition of VANS.

The DG argued that it is important to protect VANS. One therefore has to create a balance between responsibilities and obligations. This would be more helpful than focusing on the definition of VANS.

Ms Smuts argued that one should allow VANS to provide Voice over the Internet Protocol. (VOIP). In the interest of the SA economy, this right should not just be given to two parastatals.

Ms Smuts asked if the DG was referring to the responsibilities and obligations of operators.

The DG answered in the affirmative, saying that this would ensure universal access and services.

Ms Smuts said that Sentech also has a VANS licence. She asked if they could carry Voice over IP.

The Chair suggested that the Committee use the White Paper as a basis for its discussion. It is important to see how VANS fits in with the White Paper. Members should go back to the White Paper and examine this issue. One must ensure that VANS will not damage Telkom or the SNO and vice versa. VANS is potentially damaging to Telkom. Just as VANS have rights, they also have responsibilities. With regard to the clause, it is possible that 'electronic network' can be replaced by 'VANS'.

Ms Smuts cautioned that the White Paper cannot be the basis for everything that happens in the sector. Too much has changed and too many developments have taken place.

The Chair argued that the White Paper remains relevant. Despite technological changes certain principles remain unchanged. Although one could look at the policy directives, even these have to be in line with the White Paper.

The meeting was concluded.