South Africas ICT Regulatory Framework bridge or barrier Prepared for Lex Informatica Conference by

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South Africas ICT Regulatory Framework bridge
or barrier?Prepared for Lex Informatica
Conference by Carmen Cupido
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Whats the fuss about?

• ICT for Development WSIS, Presidential
  International Advisory Committee on Information
  Society and Development (PIAC on ISAD)
• New technologies
• Undersea cables ?Broadband for all
• Web 2.0 ?social and business networking, blogging
• Digital migration ? Digital broadcasting
• Convergence makes old services new
• Number portability Carrier pre-selection
• Voice over IP
• Broadcasting to IP/mobile devices
• Mobile and internet banking
• Knowledge and networked economy
• Bridge, not barrier

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Welcome to SA - Introduction

• Where are we now?
• Electronic Communications Act July 2006
• Altech Autopage v Minister of Communication
  August 2008
• Licence conversion completed January 2009
• What are the issues?
• High prices
• Uncompetitive and monopolistic practices
• Why?
• Historic
• Regulatory Framework
• Scarcity of resources
• Whereto?

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Overview

• Electronic Communications Act, 2005
• Who has what?
• Licence fees
• Spectrum allocation
• Interception and monitoring of communications
• E-rate
• Consumer protection
• Universal Service Obligations

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Electronic Communications Act

• ICASA Act Amendment Act passed simultaneously
• Repealed in Telecommunications Act and the
  Independent Broadcasting Authority Act
• Established converged regulator including
  broadcasting and postal services Independent
  Communications Authority of South Africa (ICASA)
• Licensing, competition, interconnection,
  universal service, rights of way, consumer issues
• Functions through council, highest decision
  making body
• Makes and enforces regulations, establishes
  committees (CCC), litigates
• Converted existing licences to ECA licences

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Who has What?
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Licence Fees

• General Licence Fee Regulations published on 1
  April 2009
• Application or registration
• Amendment
• Transfer
• Renewal
• Annual Licence Fees
• Exemptions
• Class licences for community broadcasting
• Individual licences for public broadcasting
• Small enterprises
• Applies to
• Class and individual ecs and ecns
• Broadcasters except SABC
• Licence exempt entities no licence fees,
  notification required

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Render unto Caesar

• Schedule 2 calculation
• 1.5 of Gross Profit (GP) Gross Revenue (GR)
  Total Costs (TC)
• GP defined as total revenue derived from licensed
  services less total costs directly incurred in
  the provision of such services
• GR not defined
• No indication of what will be regarded as Totals
  Costs e.g. cost of regulation
• Service providers justified to calculate in
  reasonable and justifiable manner
• Audited financial statements or sworn statement
  submitted with payment
• Stiff interest penalties and fines for
  non-compliance
• Some uncertainty re licensed services

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Spectrum Regulation

• 2.6 and 3.5 GHz so-called WiMAX bands
• Finite, national resource to be regulated in the
  public interest
• Section of ECA use it or lose it provision
• Current allocation 3400 3600 MHz (3.5 GHz)
• 2 x 28 MHz Telkom
• 2 x 28 MHz Neotel
• 2 x 14 MHz Sentech
• 60 MHz unassigned
• 2.6 GHz 126 MHz unassigned
• 50 MHz Sentech
• 14 MHz Wireless Business Solutions (WBS)
• Permanently assigned spectrum hoarding?

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WiMAX Allocation

• Proposed allocation
• 2.6 GHz six national licensees in 20 MHz blocks
• 3.5 GHz two regional operators in 2 x 15 MHz
• Preceded by two-step process i.e. beauty contest
  and auction
• Minimum 51 black-owned - BBBEE Act, 53 of 2003
• Level of participation of HDIs in management and
  control EE Act 55 of 1998
• Affirmative procurement Preferential
  Procurement Policy Framework Act 5 of 2000
• Commitment to skills development of HDIs in line
  with Skills Development Act 97 of 1998

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Other frequencies

• In respect of other frequency bands
• Not much progress
• Draft Radio Frequency Spectrum Fees Regulations
  and draft Radio Frequency Spectrum Fee Discussion
  Document proposes -
• Administrative Incentive Pricing based on Ofcom
  regulations
• To cover administrative costs to plan and manage
  and for the amount of spectrum used
• Encourage effective utilization and reflect the
  economic value
• Should not be a barrier to entry
• Comments were due by 30 April 2009

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Interception and monitoring

• Regulation of Interception and Provision of
  Communication-related Information Act, 2002
  (RICA)
• Enacted to assisted law enforcement agencies
• Prohibits interception, with exceptions
• Interception directive
• Applies to direct and indirect communications
• Workplace and private sphere
• Problematic provisions suspended since 2005
• Relates to record and store exercise
• Cost issues
• RICA Amendment Act 1 July 2009 and 1 August
  2009
• RICA Regulations providing for compensation for
  interception, but not record and store

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Section 40

• Section 40
• Prohibits SIM card activation unless the service
  provider (SP) records and stores -
• SA residents full names, identity no. and one
  address
• Non-residents full names, id or passport no.,
  one address and country of origin
• Pre-paid market
• Juristic person or trust authorised
  representative
• SP must verify and keep info secure for 5 years
  after termination
• Any person who provides a SIM to non-family and
  recipient must register information to SP who
  must verify info and provide on request
• Suspicion of fraud must be reported within 24
  hours by SP employee

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RICA Amendment Penalties and Transition

• Section 51 1 August 2009
• SP non-compliance on conviction liable to a
  fine of R100 000 per day of non-compliance
• Person and employee non-compliance fine or
  imprisonment not exceeding 12 months
• Section 62 transitional provisions
• Eighteen months 1 January 2011 pre-paid
  customers
• Services will be suspended

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E-rate

• Reduced rate of internet services to certain
  educational institutions
• Public and designated private institutions
• Section 73 of the ECA minimum discounted rate
  of 50 of the total charge levied
• Regulations published on 3 March 2009
• ECS and ECNS licensees must discount
• Internet connectivity, charges for equipment and
  calls to ISP
• Public schools, public tertiary and designated
  private institutions
• 50 below total charge levied
• Non-compliance max. penalty R150 000

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E-rate unclear

• Unclear provisions
• Which price to be discounted?
• Lowest commercial rate retail rate not used
  in regulations
• SPs can levy discount on highest commercial rate
• Includes services such as IP broadcasting and
  video streaming SPs to subsidize data-heavy
  services

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Consumer Protection

• Chapter 12 of the ECA
• Code of Conduct for ecs and ecns licensees
• Applicable to all licensees
• Must form basis of individual codes
• Sets out general standards
• Consumer rights
• Contract terms and conditions
• Consumer confidentiality
• Charging, billing and credit practices
• Regulations setting out the minimum standards for
  end-user and subscriber service charters
• Under review
• Consumer Advisory Panel established in 2007 to
  advise ICASA on consumer issues

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Protection Disabled Consumers

• Section 70 of the ECA regulations applicable to
  all licensees
• Prescribe basic standards for accessibility and
  availability in respect of text telephones,
  public access devices and community service
  telephones
• Operator assistance and other services at call
  centres, telephone bills, contracts,
  advertisement and promotions must be offered in
  appropriate formats.
• Licensees must report on the progress of
  implementation of the above

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Universal Service Obligations

• Section 89 of the ECA
• Universal Service and Access Fund (USAF)
• Prescribed annual contributions for class and
  individual licensees
• .2 of annual turnover
• Included are private ecn reselling excess
  capacity
• Broadcasting licensees may off-set contributions
  to Media Development and Diversity Agency
• Hefty penalties and interest payments are
  prescribed

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Conclusion

• Why are our prices high
• Cost of regulation
• Regulation
• Historical factors
• Issues facing ICASA
• Skills shortage
• Independence appointments by minister/funding
  by National Assembly
• Litigious industry
• Consumer issues
• Outcomes
• Industry - cash cow milking consumers
• Less regulation?
• Tiered approach