Transtel

1
Transtel

• Prepared for the Parliamentary
• Portfolio Committee on Communications

2
Outline

• Introduction to Transtel
• Transtel present and future
• Progress towards the SNO
• Convergence in communications
• Towards the Information Society

3
Transtel overview

• Largest private telecommunications network
  operator (PTN) in the Southern hemisphere
• Annual revenue of more than R 700m
  (70 internal to Transnet, 30 external)
• Country-wide digital transmission network
  (8000 km optical fibre 14000 km microwave)
• Existing customer base
• Voice 132 exchanges 65 000 ports 140m calls
  per annum
• Data 67 nodes 3420 ports 3700 point-to-point
  services
• 12 000 mobile radio terminals (230 high sites)
• Project management / installation experience
• Installed 3000 sites for MTN, 900 for National
  Lottery
• Satellite customers in 17 African countries
• Over 1 400 employees in 140 places

Transtel depots South Africa
4
Transtel customers

• Transnet All divisions and subsidiaries
• Other customers in South Africa including
• SITA (State Information Telecommunications
  Authority)
• SITA Inc
• arivia.kom
• SA Post Office
• DTI
• MTN
• ACSA (Airports Company of South Africa)
• Eskom
• International Customers, predominantly in Africa
• Include banks, retail stores, educational
  institutions and other public
  telecommunications companies

5
Transtels position

• Transtel exists as the result of a Private
  Telecommunications Network licence that allows
  Transnet to have its own networks
• In a de-regulated market, a PTN can no longer
  compete in generic telecoms services
• Transtels Enterprise Voice/Data, and
  International services will migrate out of
  Transnet into a public operator (SNO)
• Transtels safety-critical Transport Telecoms
  will remain within Transnet

6
Transport telecoms services

• Basic transmission/access copper
• Dedicated rail fibre transmission
• Train radio systems Various
• Common bearer infrastructure
• Other mission critical
• Shared use of trunked radio
• Port control/operations, containers

7
Enterprise telecoms services

• PABXs and voice services
• Audio and video conferencing
• Leased lines (Transmission)
• Frame relay supporting IP services
• Ethernet/IP Virtual Private Networks
• Internet access provision
• Broadband wireless access
• Broadband copper access (xDSL)

8
Enterprise telecoms Future
Customers
Transtel Data
Transtel Voice
Converged Voice, Data, Internet
Telkom
SNO
Transtel services are delivered on dedicated
Voice and Data networks
The SNO will give customers access to a range of
new, converged services
The SNO will provide a resilient new backbone,
and be an alternative to Telkom for public
telecoms traffic
9
Transtel International (Satellite)
10
Transtel satellite in Africa
Active
Opportunities
Unexploited
11
Project Services - Achievements

• Full Services Network Transtel and Eskom
• Joint deployment of national optical fibre
  network and equipment
• Digital transmission networks for railways
• Ore line 800 km digital microwave from Saldanha
  to Sishen
• Coal line 500 km optical fibre cable installed
  at 4 km per day
• Installation of Radio Base Stations for MTN
• 2142 sites out of 3200 built up in MTNs first
  five years
• Have won new contracts for deployment in specific
  regions
• Installation of LANs for SAA/Galileo
• 900 LANs installed in 24 months
• SA National Lottery
• 500 VSATs installed in the first 20 days

12
New opportunities

• Provision of basic PTN services to VANS
• Provision of VoIP through VANS licence
• Expansion of international services
• Provisos
• Spare PTN capacity available to the market is
  currently very limited scaled for Transnet
• Capital-intensive nature of telecoms limits
  opportunities whilst within Transnet

13
The reasons for an SNO remain

• Essential large scale facilities competition
• Telecoms value chain is dependent on basic
  facilities
• A choice of wholesale supplier and price is
  critical
• A player to challenge Telkom on equal footing
• Licence, regulatory, tackle anti-competitive
  practice
• A large, viable infrastructure investment plan
• Access to the only other national backbone
• Cheaper facilities over existing rights-of-way
• Brings the alternative infrastructure to the
  market
• A new competitive provider in the market
• An environment for partnership and sharing

14
Progress made towards the SNO

• Eight years of legislative and regulatory
  preparation for a second operator
• Telecommunications Act and Amendments
• Drafting of multiple regulations by ICASA
• Three years of network implementation by Transtel
  and Eskom Enterprises
• Alignment of business plans between identified
  shareholders
• Preparation of draft licence conditions
• Work with market, partners and customers

15
Convergence and legislation

• Convergence probably a misnomer real issue is
  market structure.
• Convergence need not be legislated it is
  happening despite legislation.
• The creation of universal, fixed mobile
  licences is good, but radical
• Any new legislation must
• Have a sound basis in the principles of
  telecommunications regulation
• Control players with Significant Market Power,
  and essential facilities
• Not remove, but replace regulations with
  appropriate new regulations
• Encourage and promote the deployment of
  telecommunications facilities
• Deal with issue of Local Loop Unbundling of the
  incumbents copper lines
• Deal effectively with transition of existing
  licences, to ensure continuity
• Apply light touch regulation to services and
  application (class) licences
• Direct funding of the regulator by licence fees
  remains the ideal.
• Some concerns about the policy framework, which
  has not been fully articulated to guide the
  legislature in finalising new legislation.
• Without broadband, there is no convergence.
  However, there is no published broadband policy
  for South Africa, or any mechanism proposed for
  the setting of targets broadband access rollout.

16
Spectrum and facilities

• Giving extensive rights to a large number of
  facilities-based (network service) operators on
  application, has the potential to create
  environmental chaos. Other countries do not
  typically give many players such rights.
• Certain frequency bands may require a particular
  minimum allocation to build a viable business
  similarly, there may be an optimum number of
  players for a viable, competitive market (e.g.
  3G).
• Licence fees obviously need to be proportional to
  the value of spectrum allocated or facilities
  rights secured in a licence.
• The number of facilities-based (individual)
  licences needs to be limited
• To ensure a predictable environment for
  infrastructure investments
• To ensure efficient and appropriate use of the
  frequency spectrum
• To provide for control of rights of way and other
  environmental issues

17
Convergence Mobile and Fixed Wireless
18
CDMA2000 technology trial

• Transtel has assisted in putting together a trial
  of CDMA2000 (3G mobile) technology in South
  Africa.
• The trial is led by Qualcomm, the inventors of
  CDMA, in partnership with Ericsson (South
  Africa), MTN, Transtel, the CSIR, and Wits
  University.
• Trial supports an 800 MHz sharing study by ICASA.
• The trial will demonstrate the following
• Use of upper 800MHz band without impacting
  broadcasting
• Use of CDMA2000 for fixed-mobile and full mobile
  services
• Highest capacity, lowest cost per subcriber for
  voice services
• Very high speed data (EVDO), up to 2 Mbits/s
• Full roaming onto GSM infrastructure (dual-band
  phones)
• Applications including e-learning, telemedicine,
  Internet
• ICASA has issued the temporary frequency licence
• Trial will take place through February and March

19
SNO key success factors

• A clear, consistent policy timeline for the
  duration of the SNO business plan
• Proportional rights and obligations for
  facilities-based operators, now and under new
  legislation
• Regulatory controls on players with Significant
  Market Power (currently three)
• Carrier preselection (immediate) and number
  portability (during 2005) as required by the 2001
  Act
• Access to additional appropriate fixed-mobile
  frequency spectrum (e.g. 800 MHz, 450 MHz)
• Access to international optical fibre routes at
  cost (level playing field for competition)
• Community Service Obligations and rollout targets
  aligned to broadband convergent access needs
• Ideal Access to Telkom copper Local Loop (Shared)

20
The new digital divide

• Mobile teledensity has overtaken fixed
  teledensity as the measure of access to
  telephony, but this is no longer the real issue
• Only a tiny fraction of the worlds 100 million
  broadband connections are in Africa
• Digital divide is no longer about telephones, but
  about access to the Information Society
• World Summit on the Information Society 2003
  recognised the need for broadband

21
Broadband and convergence
Voice
Converged (IP) Network
Multi-service Connection!
Data
Internet
22
Broadband and Internet Global
700 -- 600 -- 500 -- 400 -- 300 -- 200 -- 100
-- 0 --
10.7
7.4
4.0
Broadband as of Internet users
1.4
0.3
0
0
0
1995 1996 1997 1998 1999 2000
2001 2002
Internet
Broadband
Source ITU Internet report Birth of Broadband
23
Broadband policy for South Africa

• South Africa needs broadband
• True broadband 1 Mbit/s or more
• Both for consumers and businesses
• Mobile (3G) has a role, but different
• Backbone and international bandwidth
• Need a proper wholesale market
• Bitstream (wholesale DSL)
• Shared access (proposed by ICASA)
• Local Loop Unbundling

24
The Information Society

• An enabling environment at national and
  international levels is essential for the
  Information Society The rule of law,
  accompanied by a supportive, transparent,
  pro-competitive, technologically neutral and
  predictable policy and regulatory framework
  reflecting national realities, is essential for
  building a people-centred Information Society.
  Governments should intervene, as appropriate, to
  correct market failures, to maintain fair
  competition, to attract investment, to enhance
  the development of the ICT infrastructure and
  applications, to maximize economic and social
  benefits, and to serve national priorities.
• The Declaration of Principles of the
  World Summit on the Information Society, Geneva,
  2003

25
A vision for telecoms

• Sustainable competition to drive down the cost of
  telecommunications in South Africa
• Facilities-based competition with appropriate
  individual licensing
• Regulation to control Significant Market Power
  and essential facilities
• An open, competitive telecommunication services
  market with class licensing