Carla Raffinetti

23 November 2004

THE IMPACT OF THE MINISTERIAL DETERMINATIONS ON MARKET LIBERALISATION

Background to telecoms regulation in SA (1)

Premise of telecoms regulation in SA:

Managed liberalisation

Introduction of competition on a phased-in basis

Background to telecoms regulation in SA (2)

Main consequences of managed liberalisation policy:

Restrictions on facilities-based competition

Self-provisioning of facilities

Leasing of facilities / resale of spare capacity to third parties

Restrictions on the carriage of voice

Background to telecoms regulation in SA (3)

Original intended timeline for market liberalisation:

Monopoly (Telkom only) – 1997-2002

Duopoly (Telkom & SNO) – 2002-2005

Triopoly / open market? – 2005 onwards?

Ministerial determination is out of synch with these timelines – effectively introduces market liberalisation initiatives before the duopoly period

Restrictions on facilities-based competition – before the ministerial determination

Telkom granted statutory exclusivity over facilities-provisioning from 7 May 2002 to 7 May 2005

Telkom monopoly has been partly eroded since then:

SNO (national fixed line operator – not yet licensed)

USALs (regional network operators – not yet up and running)

Sentech (multi-media, carrier of carriers – allowed to self-provide its own network)

Telkom remains the de facto sole facilities provider until the SNO / USALs get up and running

Restrictions on the carriage of voice – before the ministerial determination

The only entities that are permitted to carry voice are as follows:

PSTS licensees – Telkom, SNO

MCTS licensees – Cell C, MTN, Vodacom

USALs

PTNs

Sentech – restricted to the carriage of wholesale international voice over its carrier of carrier’s network

The following entities are barred from carrying voice:

VANS

Multimedia licensees – essentially Sentech

Mechanisms in the Telecommunications Act for the Minister to liberalise the market (1)

Mobile network operators

Have to lease their fixed links from Telkom until a date fixed by the Minister in the Gazette

PTN providers

Currently have to lease their facilities from Telkom/SNO

There is no mechanism in the legislation for the Minister to allow PTNs to lease their facilities from a third party / self-provide their own facilities – the legislation would need to be amended to allow for this

Are prohibited from reselling spare capacity until a date fixed by the Minister in the Gazette

Mechanisms in the Telecommunications Act for the Minister to liberalise the market (2)

VANS

Required to lease their facilities from Telkom/SNO until a date fixed by the Minister in the Gazette

Prohibited from leasing their facilities / reselling spare capacity to third parties (“cede”, “assign”, “sublet”, “part with control”, “dispose”) until a date fixed by the Minister in the Gazette

Prohibited from carrying VoIP until a date fixed by the Minister in the Gazette

Multimedia (Sentech)

Prohibited from carrying voice until a date fixed by the Minister in the Gazette

Overview of the ministerial determination (1)

Lifting of restrictions on facilities-based competition from 1 February 2005

Mobile network operators and VANS will be entitled to self provide their facilities / lease their facilities from a third party other than Telkom or the SNO

VANS, PTNs may lease their facilities / resell spare capacity to third parties

PTNs will still need to lease their facilities from Telkom / SNO

ICASA has stated that it will revise PTN and VANS licences

Overview of the ministerial determination (2)

Lifting of restrictions on voice from 1 February 2005

VANS may carry voice over their networks using any protocol, including VoIP

The restriction on Sentech carrying voice over its multimedia network has not been removed

Overview of the ministerial determination (3)

Other aspects of the ministerial determination that have assumed less of a centre stage:

Liberalisation of public payphone market from 1 February 2005

From 18 January 2005 onwards, public schools and further education and training institutions will be entitled to a 50% discount on all calls to an ISP and on ISP access fees.

Some practical implementation issues (1)

IP numbering

IP numbers are not catered for in the draft numbering plan

ICASA has stated that it will align the numbering regulations to accommodate VANS licensees

Interconnection

In theory, there is nothing to stop a VANS from seeking interconnection with an operator

ICASA has stated that it will revise the interconnection guidelines / develop an interconnection framework for all licensees

Some practical implementation issues (2)

Spectrum access

In theory, there is nothing to stop a wireless VANS provider from applying to ICASA for spectrum

However, ICASA will need to amend the existing regulations to govern access to the spectrum

Environmental issues, municipal by-laws

There may be environmental and municipal restrictions on the rolling out of infrastructure that will hamper network roll-out

ICASA way forward

VANS

The amended VANS regulatory framework will be expedited

Aim to have all applicants licensed by 1 February 2005

Interconnection and facilities leasing

Draft amendments to the regulations will be gazetted by 29 November 2004

Submissions from the public are due by 7 January 2005

Final regulations to be forwarded to the Minister by 21 January

New framework to be finalised by 28 February 2005

THE END

Carla Raffinetti

Edward Nathan & Friedland (Pty) Ltd

Tel: (011) 269-7933

Cell: 082-925-2070

Email: cgr@enf.co.za

CONVERGENCE BILL

cgr

2004-01-28T16:02:19