The Road to Convergence in South Africa

1
The Road to Convergence in South Africa

• Councillor Lumko Mtimde
• 2-4 February 2006
• Panos Institute West Africa (PIWA) Workshop
• Benin, Cotonou

2
Disclaimer
Any views expressed in this presentation are
those of the individual presenter, except where
the presenter specifically states them to be the
views of ICASA. This presentation may not be
reproduced without the prior written consent of
the author and ICASA.
3
Overview
4
1. INTRODUCTION

• The theme of this workshop is Dialogue between
  Telecoms and Media Regulation Stakeholders in
  times of Convergence Challenges and prospects
  for Africa.
• This theme is relevant to me because, in the
  famous words of our esteemed President Thabo
  Mbeki, I am an African and I live in South
  Africa.
• It is in this spirit that I would like to share
  with you our experiences as an African state in
  dealing with the forces of convergence and the
  impact that it has had on our regulatory
  environment in South Africa.

5
INTRODUCTION (2)

• The focus of this presentation is to provide you
  with understanding of what is ICASA, what is
  convergence and the new regulatory framework and
  future developments that will impact on the
  communications sector in South Africa.
• The Independent Communications Authority of South
  Africa ( the Authority) being a creature of
  statute operates within a regulatory space
  wherein statutory instruments set standards that
  govern the behaviour of all of those involved in
  broadcasting and telecommunications.
• These are framed around, the Constitution, Acts
  of Parliament, and the National Government Policy
  Directives. It is within this framework, that
  Position Papers (Policy) and Regulations are
  drafted by the Authority and license conditions
  are imposed on licensed operators.

6
INTRODUCTION (3)

• Policy and regulatory development by ICASA in the
  sector is informed by, amongst others,
• The Constitution, Act 108 of 1996 (as amended)
• Independent Broadcasting Authority Act, No. 153
  of 1993 (as amended)
• IBAs Triple Inquiry Report, 1995
• White Paper on Broadcasting Policy, 1998
• Broadcasting Act, No. 4 of 1999 (as amended)
• Independent Communications Authority of South
  Africa Act, No. 13 of 2000 (as amended)
• Broad-Based Black Economic Empowerment Act, No.
  53 of 2003
• Telecommunications Act, No. 103 of 1996 (as
  amended)
• Films and Publications Act, No 65 of 1996 (as
  amended)
• Draft ICT BBEE Charter, 2005
• Competition Act, No. 89 of 1998 (as amended)
• Promotion of Administrative Justice Act (as
  amended)

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2. Ten years of regulation
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2.1 Timeline

• Brief timeline of communications legislative
  environment
• Pre 1993 Regulated via the Apartheids
  Government Dept. of Posts and Telecommunications,
  and the Dept. of Home Affairs.
• 1993 Independent Broadcasting Authority (IBA)
  Act established a functionally independent and
  impartial regulator, the IBA, for regulating
  broadcasting and signal distribution, in the
  public interest.
• The Interim Constitution No. 200 of 1993
  guaranteed this independency.
• 1996 Telecommunications Act established the
  South African Telecommunications Regulatory
  Authority (SATRA) to regulate telecommunications
  in the public interest. Minister retained various
  policy-making powers, more importantly certain
  licensing functions and a veto power on all
  regulations.
• Constitution Act No. 108 of 1996 re-enforced the
  IBA.
• 1999, enactment of the Broadcasting Act proving a
  new broadcasting policy, after the White Paper
  (1998).
• 2000 Anticipating convergence of technologies
  the two regulators were merged into a single
  regulator in terms of the Independent
  Communications Authority of South Africa ICASA
  Act

9
Timeline (1)

• Prior to the merger / establishment of ICASA
• IBA and SATRA were mandated to form a Joint
  Technical Committee, as a standing committee to
  deal with matters relating to overlapping
  responsibilities.
• Cabinet decided to merge IBA and SATRA
• Convergence of technologies
• Draft Bill was discussed and presented to
  Parliament
• Merger process
• IBA and SATRA, together, formed established a
  process to merge the two institutions.
• ICASA Act was enacted in 2000.

10
Timeline (2)

• The ICASA Act dealt only with the merger of the
  organisational structure of the previous
  regulators.
• The result was that although merged, ICASA was
  not converged and managed two separate licensing
  regimes one in terms of the IBA Act and
  Broadcasting Act and the other in terms of the
  Telecommunications Act.
• In respect of broadcasting matters, ICASA
  remained functionally independent, in respect of
  its licensing and regulatory powers, whereas in
  telecommunications matters the Minister retained
  some licensing powers and veto powers on
  regulations developed by the Authority.

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2.2 ICASA Licensing Achievements

• Telecommunications Division
• 36 Private Telecommunication Network PTN
  licences (Duration - 10 years)
• 283 Value Added Network Service VANS licences
  (Duration - 10 years)
• 7 Universal Service Area Licences USALS
  (Duration - 25 years)
• 3 Mobile Cellular Telecommunication Service
  MCTS licences (Vodacom, MTN and Cell C)
  (Duration - 15 years)
• 1 International Gateway and Multimedia licence
  (Sentech) (Duration - 15 years)
• 1 National Wireless Data Telecommunication
  Service licence (Swiftnet) (Duration - 10 years)
• 1 National Mobile Data Telecommunication Service
  licence (WBS) (Duration - 10 years)
• 2 National Public Switched Telecommunication
  Service PSTS licenses (Telkom and SNO)
  (Duration 25 years)

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ICASA Licensing Achievements (2)

• Broadcasting Division (Licensees)
• Television
• 3 Public National Free-to-air Broadcasting
  Services (SABC)
• 1 Commercial National Free-to-air Broadcasting
  Service (e-tv)
• 1 Terrestrial Subscription Broadcasting Service
  (M-net)
• 1 Community Television Broadcasting Service (TBN,
  which was grand-fathered) and (a few others from
  time to time on special events licenses, Soweto,
  Grahamstown, Cape Town, Durban)
• 2 Public Regional Television Broadcasting
  Services (SABC not operational yet)
• In addition to these licenced services there are
  2 satellite based television broadcasting
  services (Vivid and DsTV) which are not licensed
  yet, but which do have permission to continue
  broadcasting until their applications have been
  dealt with by the Authority.

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ICASA Licensing Achievements (3)

• Broadcasting Division (Licensees)
• Sound Broadcasting (Radio)
• 18 Public Sound Broadcasting Services
• 13 Commercial Free-to-air Sound Broadcasting
  Services
• 100 (82 are currently on air) Community Sound
  Broadcasting Services
• In addition there is 1 satellite based commercial
  sound broadcasting service (WorldSpace) which has
  permission to continue broadcasting until its
  application has been dealt with by the Authority.
• Broadcasting Signal Distribution
• 1 Category One Licence Common Carrier (Sentech)
• 1 Category Two Licence Commercial (Orbicom)
• Some Community Sound Broadcasters are licensed to
  self provide their own signal distribution as
  Category Three Broadcasting Signal Distribution
  licences.

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ICASA Licensing Achievements (4)

• Engineering and Technology Division
• 5,507 Aeronautical Station Licences
• 6,359 Amateur station Licences
• 19,847 Examinations and certificates
• 68 Fixed Station Licences
• 45,195 Land Mobile station Licences
• 4,268 Maritime Licences
• 5,667 Radio Dealer Registration Certificates
• 24 Satellite Licences

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2.3 Changing Regulatory Framework

• In 2005, the Minister of Communications tabled
  two Bills in the National Assembly aimed at
  changing the regulatory framework to meet the
  needs of convergence.
• The Convergence Bill B09-2005 set out a
  converged licensing framework and proposed the
  repeal of the existing broadcasting and
  telecommunications legislation. This Bill was
  later renamed the Electronic Communications Bill.
• The ICASA Amendment Bill B32-2005 deals with
  amending the functions and organisation of the
  regulator, as well as introducing enforcement and
  compliance structures to reflect convergence
  between networks.

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3. What is Convergence?
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3.1 Convergence Defined

• Convergence means different things to different
  people and there is no one accepted definition.
• One of the main drivers for convergence appears
  to be digital technology which is being utilised
  for the reproduction, storage, and transmission
  of information in all media
• Essentially this means that any form of content,
  whether it be still or moving pictures, sound,
  text or data, can potentially be made available
  over any communications platform. For example,
  currently it is possible to receive radio and
  television over the Internet, while digital
  television that is currently being developed will
  have some of the capabilities normally associated
  with personal computers.

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Convergence Defined (2)

• Of course there are other drivers, amongst
  others, the increased storage capacity of variety
  of consumer access devices, increased usage of
  internet protocol (IP) to facilitate seamless
  interaction across a number of different
  networks, new applications and the evolution of
  broadband technologies.
• Although there is no one universally accepted
  definition, the International Telecommunications
  Union (ITU) indicates that convergence can be
  described as the provision of new services over
  existing infrastructure, development of new types
  of infrastructure, and the enhancement of
  existing services and technologies to provide new
  capabilities (ITU1996).

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Convergence Defined (3)

• The ITU also mention that it can also be defined
  as technological, market or legal/regulatory
  capability to integrate across previously
  separated technologies, markets or politically
  defined industry structures (ITU1996).
• It was also raised by the ITU that convergence
  involves a critical international component, as
  many services and information sources that were
  traditionally controlled on a domestic level are
  being provided on a global basis (ITU1996).

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Convergence Defined (4)

• Mr. Leong Keng Thai, of the Infocomm Development
  Authority (IDA) of Singapore, has suggested that
  it is perhaps best to describe convergence as a
  paradigm shift in the way we think about products
  and services.
• The traditional boundaries between industry
  sectors such as film, music, publishing,
  broadcast television and radio,
  telecommunications, computing and service
  industries such as education and health are being
  redefined or reorganised and new industry
  boundaries are emerging. This means that products
  are no longer distinct as belonging to a specific
  industry or platform alone.

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Convergence Defined (5)

• It is better then in terms of convergence to view
  products and services as part of a single value
  chain that consists of
• content
• delivery mechanisms or conduits such as
  Asymmetric Digital Subscriber Line (ADSL),
  satellite, cable and
• end user appliances or platforms such as
  television sets, cellular phones, personal
  digital assistants, home computers, etc.

Content
Delivery
Consumer Access Device
End User
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3.2 Convergence in practice

• It is critical to note that change is not uniform
  across the information, communication and
  technology sector (ICT), there are some areas
  that have hardly been affected by convergence and
  others which are in the process of rapid
  evolution to converged media.
• This has prompted some to describe convergence as
  a collection of separate trends which have the
  ongoing effect of integrating technologies,
  networks, content, gateways and markets both
  individually and collectively (Henderson
  Wijewardena).

23
Convergence in practice (2)

• In practice, the following trends have been
  identified
• Network level technology convergence changes in
  underlying networks used to deliver services,
  e.g. Internet Protocol (IP) networks providing
  services which previously were delivered by
  circuit switched networks
• Bundled convergence collection of separate
  services into a single retail bundle, e.g.
  bundling local, long distance and internet
  services at cheaper rates
• Gateway convergence evolution of new gateway or
  access devices allowing consumers to access
  different services through a single device, e.g.
  new mobile phones that allow internet and voice
  services
• Service convergence delivery of diverse
  services through the same delivery medium or
  conduit, e.g. single pipe for voice, data, text
  and pictures

24
Convergence in practice (3)

• Substitutable service convergence demand side
  substitution between services, e.g. substitution
  of fixed telephony services by mobile telephony
• New converged services application of new
  technology to invent completely new services
  capable of being accessed by any access
  technology and
• Regulatory convergence merging of industry
  regulators into a single regulator and the
  liberalisation, harmonisation or merging of
  communications legislation.
• In South Africa, these trends are being observed,
  but they are at different levels of evolution
  towards convergence.

25
Convergence in practice (4)

• These global trends would appear to justify new
  regulatory systems being formulated in order to
  reduce obstacles to competitiveness.
• In the context of South Africa a number of
  questions were asked before proceeding to change
  the regulatory system. For example, have markets
  converged sufficiently to justify regulatory
  change?
• There is also the fact to consider that even
  though technologies are converging, this does not
  mean that the markets that utilise these
  technologies have become indistinguishable.
  Practically all broadcast entertainment and
  information services still fall into the realm of
  television and radio in South Africa. It will
  also take some time before computers or personal
  mobile devices will be capable of receiving high
  quality audio-visual material via the Internet.

26
Convergence in practice (5)

• However, it is also clear that convergence is
  blurring distinctions and raising questions as to
  what is the best regulatory framework to address
  the new environment that is coming into being.
• When services were distinct (telephony,
  broadcasting and online computing) and they
  operated on different networks with different
  platforms (telephones, TV sets and computers)
  each was regulated by a different regulatory
  framework (Illustrative diagram on next slide).
• Convergence places pressure on existing
  regulatory regimes by highlighting the
  differences in regulatory requirements between
  converging sectors.

27
Traditional Structure now Converging
Source Lotus Development (an IBM Company)
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Convergence in practice (6)

• Recent developments in Broadband (e.g. WiMax with
  speeds of up to 25 Mbps) which has the ability to
  provide a multiplicity of services, whether data,
  voice or video, at any speed, which is likely to
  be a major determinant of cost is an example of
  converged services, or what the communications
  industry calls Triple Play, or the delivery of
  voice, video and data to residences over a single
  line.
• The illustrative diagram on the next page
  demonstrates why converged services do not fit
  within the traditional distinct structures
  indicated in the previous diagram.

29
Example of a Triple Play ADSL or Fibre Broadband
Network delivering voice, data and video to the
home
30
4. NEW REGULATORY FRAMEWORK
31
4.1 Electronic Communications Bill

• The most fundamental impacts of the Electronic
  Communications Act (ECA) once it commences will
  be the
• repeal of the Telecommunications Act and the
  Independent Broadcasting Authority Act and the
  substantial amendment of the Broadcasting Act
• Convergence of Telecommunication and Broadcasting
  regulation making processes into one process, in
  terms of the ECA
• Replacement of the existing telecommunications
  and broadcasting licensing frameworks with a
  single licensing regime
• Enhancement of the Authority's competition powers
  in terms of dispute settlement and significant
  market power determinations and
• Setting of specific timelines for transition
  which the Authority must comply with.

32
4.2 ICASA Amendment Bill

• The most fundamental impacts of the ICASA
  Amendment Act once it commences will be that the
• Functions and staff of the postal regulator are
  incorporated into ICASA
• The structure and functioning of the ICASA
  Council is reviewed, for example,
• the number of Councillors to be increases from 7
  to 9
• Inquiry processes for telecommunications and
  broadcasting are converged into one process
• Council appointment and performance management
  process now are the responsibility of the
  Minister
• Telecommunications and broadcasting complaints
  hearing and enforcement functions and processes
  now reside within a single body, namely the
  Complaints and Compliance Committee (CCC) and
• Powers and functions of inspectors are increased
  and functions clarified.
• ICASA has objected to some possible
  unconstitutional provisions of this Bill but
  Parliament approved it, we await the Presidents
  guidance.

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4.3 What guidance is provided?

• The new and amended legislation provided guidance
  in relation to
• Strategic Policy
• Market Analysis
• Competition
• Content (Triple-Play)
• Technology
• Operational Policy
• Regulations
• Licensing
• Numbering
• Compliance and Enforcement
• Frequency
• Type Approval and Standards

34
4.4 New Approach to licensing

• All licences are now divided into Individual,
  Class or Exempt.
• An Individual licence is a licence which is
  customised in terms of its licence conditions to
  be specific to the applicant being licensed.
• A Class licence can be described as an out of
  the box licence, it involves no more than a
  registration process of 60 days.
• Exempt means exempt from having to apply for a
  licence or register, but does not necessarily
  exclude such an operator from the general
  provisions of the Act once it commences.

35
Authority may grant individual
class licences
Generic provisions of the Bill apply to all
relevant activities
Standard licence conditions common to Individual
and Class licenses
Standard Licence Conditions common to Individual
Licenses
Special conditions
Undertakings
Exempt
Individual
Class
36
New Approach to licensing (2)

• The Act, once it commences, creates four markets
  or licensable activities within the ambit of
  Individual and Class licenses.
• The licensable activities are
• Electronic Communication Network Services
• Electronic Communication Services
• Broadcasting Services
• Radio Frequency Spectrum.
• The diagrams which follow illustrate the four
  licences and their relationship to Individual,
  Class and Exempt, as well as providing some
  examples of their operation, as provided by the
  Act once it commences.

37
Authority may grant individual class
licences (2)
4 licensable activities or markets
Individual
Class
Exempt
Licensed
Unlicensed
38
(No Transcript)
39
New Approach to licensing (3)

• Terms and conditions
• The ECA provides that the Authority shall
  prescribe standard terms and conditions to be
  applied to individual and class licences
• A list is provided of standard terms and
  conditions which the Authority may take into
  account in Chapter 3, e.g. licence area,
  duration, public interest
• The Authority may impose additional obligations
  on any individual or class licence in accordance
  with Chapter 10 (Competition Matters) and
  universal service and universal access.

40
New Approach to Licensing (4)

• Licence periods
• Individual licences may be issued for a period of
  20 years, unless a shorter period is requested by
  the applicant or designated by the Authority
• Class licences may be issued for a period of 10
  years unless the Authority indicates to the
  contrary

41
New Approach to Licensing (5)

• Licensing Regulations
• The Bill provides that the Authority shall
  prescribe regulations for licences and may
  precribe different regulations for different
  types of individual and class licences.

42
5. Impacts of Change on the Regulator
43
5.1 Structural Impacts

• The commencement of the Electronic Communications
  Act and the ICASA Amendment Act will result in an
  increase in functions of the Authority, in the
  areas of investigation, inspection, complaints
  handling, dispute resolution, adjudication,
  regulation, and conduct of market review studies.
  
• This will require the Authority to restructure
  itself internally, to deliver on the new
  requirements, as well as introduce new
  regulations to support the ECA and ICASA
  Amendment Acts provisions.
• Restructuring will have a number of budgetary
  implications.

44
5.2 Transitional Provisions

• All current issued licences remain valid until
  converted and all services that did not
  previously require a licence have a deemed
  licence exemption until notified by the Authority
  that a licence is required.
• Existing licences must be converted within 24
  months of the ECA commencing, and any extension
  period to this may not exceed 6 months.
• Any current applications, process,
  recommendations pending before the ECA came into
  force will be considered as if submitted in
  accordance with the ECA.

45
Transitional Provisions (2)

• Within 30 days of the ECA commencing, the
  Authority must gazette a schedule in terms of
  which it intends undertaking the licence
  conversion process.
• The notice must
• Identify the holders of existing licences and
  nature of existing licence
• Set out a time frame for conversion including
  time frame for granting new licences
• Set out the form and content and information that
  must be provided to the Authority by existing
  licensees to assist the conversion process

46
Transitional Provisions (3)

• Set out the process the Authority plans to
  undertake in converting existing licences, and
• Confirm the rights of applicants to participate
  in such process.
• Separate licences will be issued where the
  existing licence spans categories set out in
  chapter 3 of ECA.
• The Authority may not grant or include in any
  licence converted any monopoly or exclusionary
  rights in any network or service and any such
  rights that exist by virtue of IBA Act, Sentech
  Act or Telecommunications Act are null and void.
  Radio Frequency spectrum assigned to licence
  holder is not viewed as being monopoly or
  exclusionary rights.

47
Transitional Provisions (4)

• Within 24 months of ECA coming into force current
  regulations must be repealed or amended, however
  they will remain in force until repealed or
  amended.

48

• Concluding Remarks
• ICASA will now oversee a new market structure
  under a converged environment.
• The organisational set up will change.
• I thank you
• Lumko Mtimde
• Councillor, ICASA
• www.icasa.org.za
• 03 February 2006