CUASA presentation at Convergence Bill Hearings - 11 August 2005 Communications Users Association of South Africa (CUASA) presentation at Convergence Bill Hearings 11 August 2005 by Mike van den Bergh, CUASA Chairperson and Ray Webber, CUASA Executive Committee CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 Outline CUASA - background Key points from our written submission A few additional points Conclusion CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 CUASA - who are we? CUASA, the Communication Users Association of South Africa, is the body representing the interests and needs of users of communications in South Africa - to government, to regulatory bodies, and to operators. The use of "Communications" in the name, rather than "Telecommunications", highlights the convergence that is taking place between telecommunications, broadcasting and other communications media. CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA - who are we? (continued) Background Formed to represent interests of users of communications services Active support of other industry bodies and stakeholders Rich heritage of active participation in fora such as NTF Membership today Unique – users and providers Major users of telecommunications services Leading companies in all key sectors of South Africa’s economy Includes banking, retail, brewing, manufacturing, health care, minerals and mining industries Also includes licensed service providers - VANS and ISPs Active and constructive involvement in key industry activities Support for liberalisation of the sector as a means to ensure greater choice for users / consumers CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 “Promoting Users' interests and ensuring that the voice of the User is always clearly heard whenever communications issues are decided” CUASA presentation at Convergence Bill Hearings - 11 August 2005

Examples of CUASA Activities Advocacy and representation Telecommunications Policy Input (since NTF) ICASA Colloquium and Hearings ICASA investigation into mobile charges ADSL costs Recent DoC Colloquium on Telecoms Tariffs CUASA presentation at Convergence Bill Hearings - 11 August 2005

Competition, Liberalization and Convergence Effective and cost effective communication services are the very substance of successful business undertakings anywhere. CUASA believes that such services are more likely to come about under a fully competitive telecommunications market in which market entry is subject to as few barriers and restrictions as possible. To that end we have fully supported telecommunication liberalization attempts and anxiously await the introduction of the Convergence Act. CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 Important points made during the recent DoC Colloquium on the Pricing of Telecommunications Services in SA CUASA presentation at Convergence Bill Hearings - 11 August 2005

Dr. Tracy Cohen - Councillor, ICASA “We believe that the unacceptable situation in which some of our fixed line rates are 10 times those of developed (OECD) countries will soon become a thing of the past.” - President Thabo Mbeki, February 2005 CUASA presentation at Convergence Bill Hearings - 11 August 2005

Deputy Minister of Communications Mr. Roy Padayachie “The pricing structure of telecommunications is vital, especially as it affects the poor, specifically in the take up of phone services and, of course, the Internet. The high cost of telecommunications, as well as the inability to extend fixed line services to the overwhelming majority of the people, are major barriers to achieving the necessary critical mass that would impact positively on our economic growth path” CUASA presentation at Convergence Bill Hearings - 11 August 2005

Dr Taylor Reynolds, OECD Effective competition in the market leads to lower prices, faster speeds improved quality of service and innovative new services Competition flourishes when there is an independent regulator with sufficient power Local loop unbundling and open access are effective tools to increase competition However, having a very strong competitor to the incumbent operator has been very successful (e.g. Korea) Access to broadband is a key component to reducing prices in other telecommunication market segments (e.g. VoIP) New wireless technologies may allow for competition in the market Governments must ensure there is adequate competition CUASA presentation at Convergence Bill Hearings - 11 August 2005

Key points from our written submission CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 ICASA Act CUASA points out that there are references in the Bill to sections of the ICASA Act that do not currently exist. Apparently, the ICASA Act is meant to be amended in conjunction with the Convergence Bill. However, the draft ICASA Amendment Bill has not been made available. In the circumstances, it is impossible to comment on some of the provisions set out in the Bill. CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 ICASA Act (continued) References to sections of the ICASA Act that do not currently exist include the definitions of “Complaints and Compliance Committee” and “investigation unit”, and sections 3(2)(a),10(d),13(4)(b), 14(b), 52(2), and 60(6) of the Bill. CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA has asked itself a series of questions in reviewing the Bill: Does it promote effective competition in network, services and content? Does it encourage investment? Does it require transparent regulation? Is it technology neutral? Does it promote universal access to network, services and content? CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 Market Structure Under the proposed converged regime, there will be the following types of services providers: Communications network service licensees Communications service licensees (including resellers) Application service licensees Broadcasting service licensees Content service provider (not licensed) CUASA presentation at Convergence Bill Hearings - 11 August 2005

Market Structure Recommendations In line with the suggestion that the category of application services be deleted, CUASA suggests that the market structure under the Bill should be as follows: Communications network service licensees Communications service licensees (including resellers) Broadcasting service licensees Content service providers (not licensed) CUASA presentation at Convergence Bill Hearings - 11 August 2005

Definition : “communications service” The term “communications service” is used as a descriptive term. However, there is also a specific category identified with that term. Furthermore, in some instances of the use of the term in the Bill, it seems to be used descriptively to apply to all service categories and in others to specifically to refer to the named category of license. CUASA suggest that the term should only be used to refer to the specific category and that its descriptive use in the Bill, referring to all categories of licenses, be deleted. CUASA presentation at Convergence Bill Hearings - 11 August 2005

Definitions are not precise The result is a blurring of the lines between the service categories. This is likely to result in disputes and litigation, which in turn, will have a negative effect on investment in the industry. CUASA suggests the deletion of the definition (and therefore the category) of “application services” and suggests amended definitions with regard to communications services and resellers. CUASA presentation at Convergence Bill Hearings - 11 August 2005

Ministerial Powers and ICASA’s Independence Under current law, the Minister must consult the regulator before making policy directions. In terms of the draft Bill, the Minister does not have to. CUASA believes that the Minister should have to consult the regulator prior to making policy directions. Accordingly, the word “may” in section 3(4)(g) should be replaced with the word “must”. CUASA presentation at Convergence Bill Hearings - 11 August 2005

Ministerial Powers and ICASA’s Independence (continued) CUASA also believes that policy directions may not impose on the independence of the regulator in a converged telecommunications and broadcasting environment. This flows from chapter 9 of the Constitution, which requires, inter alia, an independent authority to regulate broadcasting. CUASA therefore suggests that the safeguards that appear in the IBA Act regarding policy directions be included in the Bill, in particular with regard to the granting, amendment, transfer, change of ownership, renewal, suspension or revocation of a licence; or if a policy direction interferes with the independence of the regulator. CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 Number Portability Section 65 (1) states that the Authority must prescribe measures to ensure that number portability is introduced in 2005. This is date is clearly not going to be met and CUASA therefore suggests that 2005 be changed to 2006. In fact, only Mobile Number Portability is likely to be implemented by 2006 CUASA presentation at Convergence Bill Hearings - 11 August 2005

Transitional Provisions In terms of the transitional provisions in the Bill, it will be important to determine with certainty which licenses will be issued to existing licensees E.g. It appears that VANS and multimedia services providers will be licensed as communications services providers but many will also probably also require an application service provider license. CUASA presentation at Convergence Bill Hearings - 11 August 2005

Transitional Provisions (continued) Section 5 (10) indicates that until the transition all existing license will be considered “individual licences”, which is not appropriate for VANS and PTN, for example. CUASA believes that the provision should simply state that existing licences remain subject to all terms and conditions in the licences until they are converted. CUASA presentation at Convergence Bill Hearings - 11 August 2005

Transitional Provisions (continued) Section 84 (5) The holder of an existing licence must, within 90 days of the commencement date of this Act, submit a written notice to the Authority offering to surrender its licence upon conversion and to be granted one or more new licences in terms of section 85. Section 84 (6) Where the holder of an existing licence does not submit the notice within the time frame provided in subsection (5), such existing licence expires upon the 180th day from the expiration of the period of 90 days. CUASA submits that this is an unreasonable requirement. Licensees should be invited to reapply once license conditions are known, and existing licenses to continue to be applicable until new licenses are issued. CUASA presentation at Convergence Bill Hearings - 11 August 2005

Transitional Provisions (continued) In terms of present provisions of the Telecommunications Act pertaining to VANS: Section 40(2) – facilities to be provided by Telkom and / or the SNO “until a date fixed by the Minister by notice in the Gazette” Ministerial Determinations published September 2005: Value added network services may also be provided by means of telecommunications facilities other than those provided by Telkom and the Second National Operator or any of them Therefore it bears consideration that VANS be given the option of being issued with a Communication Network Services license should they so desire CUASA presentation at Convergence Bill Hearings - 11 August 2005

Proposed Interconnection In the existing regime, VANS providers have a right to interconnect with PSTS licensees. In the new regime, what were VANS providers (now communications services providers) do not have a right to interconnect with PSTS providers (now communications network services providers). This CUASA believes is not appropriate nor is it constitutional. CUASA suggests the addition of the right of all communications services licensees to interconnect with any other communications network services licensees or communications services licensees. CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 Conclusion Key outcomes from this process Clarity on future market structure Opening the market to create a competitive environment for the greater good Enabling rather than constraining legislation Certainty in terms of legislative intent Eliminate the litigation of the past caused by unclear legislation CUASA is committed to working with legislators and regulators to bring about positive and constructive change You have our unqualified support!! CUASA presentation at Convergence Bill Hearings - 11 August 2005

CUASA presentation at Convergence Bill Hearings - 11 August 2005 Questions? Mike van den Bergh Ray Webber CUASA Chairperson CUASA Exco +27 11 797-3301 (office) +27 11 371-5454 (office) +27 11 797-3363 (fax) +27 11 336-3286 (fax) +27 83 461-0793 (mobile) +27 82 491-8758 (mobile) mike.vandenbergh@gatewaycomms.com rwebber@fnb.co.za www,cuasa.org.za www,cuasa.org.za CUASA presentation at Convergence Bill Hearings - 11 August 2005