Comments on the Telecommunications Act

Amendment Bill 2001

Oral Representation by

Cell C (Pty) Ltd.26 September 2001

Comments on the Telecommunications Act Amendment Bill, 26 September 2001 2

Cell C Representatives

Mr. Zwelakhe Mankazana Director

Dr. Paul Doany Chief Advisor to Cell C

Dr. Jonathan Fiske Regulatory Affairs Manager

Ms. Kathleen Rice Licensing Manager

Comments on the Telecommunications Act Amendment Bill, 26 September 2001 3

Introduction

Cell C (Pty) Ltd., the third mobile cellular operator in South Africa, welcomes this opportunity to comment on the proposed Telecommunications Act Amendment Bill.

This submission mainly focuses on key mobile sector issues (due to limited presentation time), although industry-wide issues may also be discussed in brief, if time alllows.Please refer to attached supplementary written submission for details on full commentary

Cell C appreciates the challenge of preparing such a Bill, at a time of changing technology and market sentiment.

Cell C’s aim in these submissions is to seek clarity in the Bill within the fundamental objectives set out in the Act and the Policy Directives.

Comments on the Telecommunications Act Amendment Bill, 26 September 2001 4

Fixed-Mobile

Definition in the Bill

“fixed-mobile service” means a connection to the public switched telephone network that will be provided by the holder of a public switched telecommunication service licence by means of a wireless–access connection between such licensee’s end-office and the end-user’s premises, whereby access is restricted to one base station specifically designated for the connection of the end-user’s terminal equipment, provided that nothing in this definition shall exempt the provider of a fixed mobile service from requiring a licence under section 30 or section 37

Comments on the Telecommunications Act Amendment Bill, 26 September 2001 5

Fixed-Mobile

Use of Term

“fixed-mobile” is an infrastructure component and not an additional service to what the “fixed-line” operators provide (e.g. unlike with the case of mobile cellular operators, where unlimited mobility is offered).

Recommended term is “fixed-mobile connection”, or “fixed-mobile facility,” which better describes the intended meaning of the term. It is thus proposed use of the term ‘connection’ replace the term “fixed-mobile services” as used in the Bill.

Comments on the Telecommunications Act Amendment Bill, 26 September 2001 6

Section 30A, paragraph 5, page 6

Examples of proposed amendments to use of term “fixed-mobile services” are given below, in addition to a proposed clarification concerning the spectrum licensing of Telkom & SNO

2) (a) The second national operator and Telkom shall each be deemed to be a holder of a radio frequency spectrum licence in the 1800 MHz frequency band to provide public switched telecommunication services, fixed-mobile services and such other services as the second national operator, from time-to-time, is licensed to provide.

(b) Within six months after the date the second national operator is granted issued a public switched telecommunication service licence, or such longer period as the Minister may determine, Telkom may apply to the Authority for a radio frequency spectrum licence in the 1800 MHz frequency band to provide public switched telecommunication services, fixed-mobile services and such other services as Telkom, from time-to time, is licensed to provide.

Fixed-Mobile (on 1800 MHz licensing)

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Fixed-Mobile (content of PSTN)

Section 36A, paragraph 11, page 12

The term “fixed-mobile services” is open to misinterprepation as highlighted below.

(1)(h)(viii) telecommunication facilities to provide fixed-mobile services as a means of local access in the 1800MHz frequency band; ….

(1)(i) any other service reasonably complementary to the provision of those services (whether provided on a fixed or fixed-mobile basis, or acombination thereof) such as the provision, repair and maintenance of equipment located on a customer’s premises and any other telecommunications apparatus of any kind.

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Fixed-Mobile (content of PSTN)

(2) Nothing in this section shall exempt the holder of a public switched telecommunication service licence from any requirement to holding a licence under section 30 or 37.

Section 36A, paragraph 11, page 12

It is proposed that the reference to Section 37 (as used in the definition) be removed because it refers to mobile cellular licences

Under current legislation and within the context of this Bill, holding both fixed and mobile cellular licences is not permitted

(Government Gazette, no. 300, 5 March 1999‚ Limitations on Ownership and Control in Respect of Mobile Cellular Telecommunications Services, Regulations of Section 52 of the Act, Subsection 2)

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PSTN + Mobile Communications (CPE)

Section 36B, paragraph 11, page 12

Clarity needed with regard to the use of term “mobile telecommunications” in relation to equipment located on the premises of the customer ?

36B(2) The systems contemplated in subsection (1) shall not include telecommunication equipment located on the premises of a customer, unless it is meant for public pay-telephones or mobile

telecommunications on the premises of a customer.

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MCTS Exclusivity Period

Section 37, paragraph 12, page 12 The Invitation to Apply for the 3rd Cellular Licence was issued on

the basis of a 2 year exclusivity period to apply from the date of licence issue, after which a fourth MCTS may be issued, following due process.

There is no reason not to have this explicitly specified in the Bill, given that it is proposed for inclusion in case of the SNO. It is therefore suggested to include following addition to Section 37:

“(3)(a) From 25 June 2001 until 25 June 2003, Cell C, Vodacom and MTN shall be the only holders of mobile cellular licences.

(b) Subject to a feasibility study ….. , a fourth mobile cellular licence may be issued from 23 June 2003.”

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MCTS – Payphones and Valued Added Services

Section 37, paragraph 12, page 12

The proposed deletion of Subsection (3) is cause for concern, which removal may be interpreted to say that mobile cellular operators are required to hold additional licenses for the following:

• GSM pay phone services (as outlined under payphone services in Section 39)

• Value added services (as outlined in Section 40)

These are clearly included in the current service licences. Cell C is particularly concerned that this will adversely affect its rights and obligations, least of all its community service telephone licence provisions, and right to offer value added services.

It is proposed that Subsection 3 be reinstated.

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MCTS: Special Rights to Fixed Line Provision

Section 37, paragraph 12, page 12 Cell C recommends adding the following amendment to Section 37(d)

(of the Telecommunications Act 1996) to this Bill:

GSM is more cost-effective for mobility and not static, high-traffic concentration

37(d) A licence contemplated in paragraph (a) shall contain a condition prohibiting the mobile cellular telecommunication service in question, until a date to be fixed by the Minister by notice in the Gazette, from utilising any fixed lines which may be required for the provision of the service other than fixed lines made available by Telkom or any other person providing a public switched telecommunication service, except for fixed lines for the exclusive provision of Community Service Telephones

Fixed-line

GSM

CST

CSTBTS/Mx

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MCTS: Data Communications Services

2) Without prejudice to any rights of mobile cellular operators prior to the commencement of this section, a licence to provide any [value-added network] electronic transaction service, including, but not limited to, electronic data interchange, [E-mail] electronic mail, protocol conversion, access to a database or a managed data network service, shall contain a condition that the service in question [shall] be provided by means of telecommunication facilities—

Section 40, paragraph 15, page 13

This amendment is subject to misinterpretation. It is necessary to ensure this does not hinder the development of mobile–commerce (m-commerce) and require existing licensees to acquire new licences. Following is suggested to protect MCTS rights (in line with the addition of 3b, included in the Amendment to protect Telkom rights !

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Number Portability

Section 89, paragraph 30, page 20

Introduction of number portability: Need to clarify that it is to apply separately to “fixed-to-fixed” and “mobile-to-mobile”.

Portability can be introduced well before 2005, especially in the mobile sector. Cell C recommends a phased approach as follows:

• Immediate interim measure, compelling provision of recorded voice message giving new customer number (for post-paid customers), at nominal charge, up to 12 months.

• Full number portability may be achievable by the end of 2003 in the mobile sector

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Concluding Comments

Realisation of a sound, coherent and consistent underlying legislation for all participants

Ensuring suitable applicability to market structure (fixed, mobile..), with a balance of fair rights & obligations for all participants (e.g., licensed operators, service providers, resellers, etc.)

Ensuring sustained sector fundamentals, including:

Protecting the public interest, particularly through expansion of services to the whole population at large, and maximizing consumer benefits and choice through effective competition.

Within the mandates of the Policy, the overriding aim is:

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Concluding Comments

Bridging the digital divide, with improved universal service and universal access through the most cost-effective technologies, and the appropriate licensee(s).

Ensuring minimisation of resource wastage and avoiding undue duplication of infrastructure in low traffic density areas.

Ensuring certainty and predictability of applicable legislation for all market participants, to protect current investment, and to encourage new investment for new licences.

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Concluding Comments

Achieving and sustaining fair competition and level-playing-field in both fixed and mobile sectors.

Ensuring that New Entrants (fixed, mobile, etc.) are given a reasonable balance of rights & obligations, with a sufficient ‘grace period’ as suited to type of licence. Reducing risk of ‘cherry picking’ on the one hand, and unduly ‘burdensome obligations’ on the other.

Importance of clarity and fairness in the proposed Bill, to ensure successful realisation of the key sector objectives, and reduce the risks of litigation as highlighted in other presentations.

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Concluding Comments

MCTS – Fair Competition and Level Playing Field

1. VODACOM

3. CELL C2. MTN 4. Fourth ?

Time1993/4 2001 2003?

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Concluding Comments

PSTS – Fair Competition and Level Playing Field

2b. SNO (FS)

1. Telkom (FS)

3. TNO? (FS)

Time…1996… 2002 200X?

2a. Sentech (IS)

FS: Full ‘fixed services’: international, long-distance, local access, etc.IS: International Services only (as ‘carrier-of-carriers’, as defined)

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Concluding Comments

Endorsement of the importance of GSM1800 spectrum licensing to the PSTS licensees, as this enables cost-effective provision of service as opposed to other wireless local loop technologies, due to global economies of scale.

We understand ‘fixed-mobile’ to be a ‘means of connection’, and our suggested changes to the Bill are made in that regard, to ensure certainty and clarity to all licensees, within the fundamental requirements of the Act, particularly ‘fair competition’ and ‘level-playing-field’ in each of the ‘fixed’ and ‘mobile’ sectors alike.

Cell C has consistently supported the objectives cited, and particularly in respect of the following:

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Concluding Comments

We have only been able to focus on the key issues, due to the limited presentation time.

We have attempted to present a fair mobile industry-wide view, rather than a myopic Cell C view, despite our need to make submissions as an ‘interested party’, within our rights.

The continuous successful development of the telecommunications sector is totally dependent on an Amendment that provides:

• Fair balance of the rights and obligations for all current participants

• Ensuring provisions for future interested players in the market to increase competition.

• Serving the public interest at large.

In conclusion:

Thank you