SUBMISSION ON CONVERGENCE BILL (Bill No 9 of 2005) Prepared for: Parliamentary Portfolio Committee on Communications 27 May 2005

Team Zubair Munshi Linden Petzer

Opening Remarks Orbicom welcomes the introduction of Convergence in South Africa Convergence represents significant opportunities for the country in general Orbicom is very keen and eager to participate in the convergence opportunities Orbicom commends the DoC on the initiatives that have been taken in the process as evidenced in the Convergence Bill Purpose of this presentation is not to repeat our written submission, but to emphasise certain aspects of principle and to clarify certain important matters We refer the committee to our written submission wherein we have made specific recommendations to the Bill

Orbicom’s View of Convergence Before we begin we deemed it appropriate to first begin by defining what we believe Convergence actually is CONVERGENCE IS THE CONVEYANCE OF ANY CONTENT OVER ANY NETWORK By implication it would therefore require a separation of Content from Carriage Reflected in the EU directive on Convergence “It is necessary to separate the regulation of transmission from the regulation of content…”

SA Constitutional Considerations S192 of the Constitution provides for the separate and independent regulation of broadcasting In a truly converged scenario, it is difficult to separate broadcasting from other forms of content Consequently - All content, including broadcasting services, should be regulated in accordance with the principles of s16 and s192 of the Constitution

Objects of Act Orbicom supports the objects of the act (Section 2 of the Bill) in general, but in particular would like to draw attention to the following: Encourage investment and innovation on the communications sector Promote competition within the sector Promote an environment of open, fair and non-discriminatory access to communications networks Promote a clear allocation of roles and assignment of tasks between policy formulation and regulation within the communications sector Ensure the provision of a variety of quality communications services at reasonable prices

ITU Principles on Convergence Balanced, clear, consistent, predictable, comprehensive and transparent; Consistent regulatory treatment of similar issues; Be pro-competition; Flexible to adopt new developments; Promote multimedia delivery; Ensure reliability and interoperability of networks; Promote efficient infrastructure development; Promote open and efficient use of spectrum; Prevent abuse of market power; Clarify and allocate content liability; Protect consumer interests

EU Regulatory Framework Common regulatory framework for electronic communication networks and services Directive on the authorisation of electronic communications networks and services Directive on access to, and interconnection of, electronic communications networks and associated facilities Directive on universal service and users rights relating to electronic communications networks and services Directive on the processing of personal data and the protection of privacy in the telecommunication sector

Principles to Achieve Objectives We believe that in order to achieve the objects the following principles need to be applied to the bill: Balanced, clear, consistent, predictable, comprehensive and transparent Pro-competition Promote efficient infrastructure development Prevent abuse of market power Clear distinction between the powers of the minister and the powers of the regulator Definitions need to be clear and unambiguous Transitional procedures must be fair and equitable particularly i.t.o timing

Licensing Model Applications Content Service Communications Service/ Broadcasting Service Communications Network Service/Spectrum Licence Increasing Level of Regulation

Digital Broadcasting Value Chain Communication Network Service Content Services Application Service Content Programming Supply Channel “Supplier” Needs Authorisation ONLY Very Light Touch enabling regulation Content Publisher Equivalent to a Broadcaster as defined in the Broadcasting Act Content / Broadcasting License Required Multiplex Operator UNREGULATED ACTIVITIES NO LICENSE REQUIRED CA & STB EPG SMS API Equivalent to a Signal Distributor in terms of the Acts Communicatio n Network Service License Required Spectrum user Must be licensed Network Operator Consumer Cannot and should not be regulated Has the right to freedom of choice Subscriber

Convergence Licensing Matrix ACTIVITY EXTENT OF REGULATION LICENSE REQUIRED OBLIGATIONS Examples APPLICATIONS Minimal No None Multiplex Operator i.e CA, SMS, EPG CONTENT Low Yes - Class License Yes Broadcaster, Content Producer COMMUNICATIONS SERVICE Medium Yes - Individual License Sales Agent, Installer COMMUNICATIONS NETWORK SERVICE / SPECTRUM LICENSE High Signal Distribution Services

Technology Neutrality Object of Act: Encourage investment and innovation in the communications sector Bill is not technology neutral. Section 10(c) If the licenses are technology neutral in the first instance there would be no need for amendments due to technological change Technology neutrality is a fundamental principle that ought to be observed Moreover innovation and investment in the sector is likely to be higher if service licensing were not linked to Technology The Nigerian NCC has shown that technology neutral licensing can work and does work

Essential Facilities Object of Act: Promote an environment of open, fair and non-discriminatory access to communications networks Distinction between “communications facilities” and “essential communications facilities”. Orbicom submits that a distinction be made between competitive markets and monopoly markets. Communications facilities - facilities required to provide a communications network service or a communications service. Essential communications facilities are facilities that cannot be duplicated for economic, technical or environmental reasons I.e submarine cables, radio and broadcasting high sites, etc. Communication facilities regulated in terms of competitive, commercially-based market principles. Essential facilities require a duty to provide access at cost.

Radio Spectrum Object of Act: Promoting investment and innovation within the sector and provision of a variety of services Orbicom would prefer that the committee refers to our written submission for a detailed position on the Spectrum Issues in the Bill Numerous drafting changes have been suggested in our written submission We strongly urge the committee and the drafters to please take due consideration of these recommendations Orbicom is willing and hereby offers our assistance to the department in this matter if so required

Procedural Clarity Object of Act: Promote and Facilitate the convergence of Telecommunications and Broadcasting Signal Distribution Orbicom would like to urge the committee to ensure that adequate care and consideration is taken to ensure that the necessary procedural provisions in the current legislation are carried over In addition the amendment to the ICASA Act has not yet been made public These amendments may have a substantial impact on the provisions contained in the convergence bill Orbicom would kindly urge the committee to consider allowing operators to make written comment to the Convergence Bill once the ICASA Act amendments have been published.

Transitional Provisions Object of Act: Promoting investment and innovation within the sector and provision of a variety of services Prejudice could be caused if different dates apply in respect of the issuing of new licences to the various licence holders. a single effective conversion date should apply to the conversion date of all existing licences into the new categories of licence single effective conversion date no later than 12 months from the date of commencement of the Act,

Transitional Provisions Object of Act: Promoting investment and innovation within the sector and provision of a variety of services No provision in the Bill for amendment of existing licences during the transitional period between commencement date of the Act and the effective conversion date. This has the effect of freezing the existing licence terms and conditions and is likely to inhibit convergence and the innovation of new services and facilities leading up to the effective conversion date.

Transitional Provisions Object of Act: Promoting investment and innovation within the sector and provision of a variety of services ICASA should give priority to pending applications in an analogue broadcasting environment, frequencies are assigned to a particular broadcaster, In a digital environment, spectrum will have to be licensed to the network service licensee

Convergence Critical Success Factors Clear, unambiguous definitions Appropriate Licensing Framework Technology Neutrality Access to Essential Facilities Efficient Spectrum Management Procedural Certainty Transitional Provisions

Conclusion Convergence implies the conveyance of any content over any network In Convergence, there needs to be a separation of Carriage from Content There are some challenges in the current Bill that need to be addressed - however these are not insurmountable The Bill is a critical milestone in the telecommunications and broadcasting legislation Orbicom looks forward to the expeditious enactment of the Bill