Convergence Bill

1
Convergence Bill

• Internet Service
• Providers Association
• Masedi Molosiwa Ant Brooks
• Joint Chairperson
  Regulatory Chair
• (masedi_at_ispa.org.za)
  (ant_at_ispa.org.za)

2
About ISPA

• History
• Commercial Internet access was first offered in
  South Africa in December 1993
• During 1994 and 1995, four informal industry
  workshops were held to discuss common ISP
  interests
• Telecommunications Green Paper
• Domain names interconnection between ISPs
• In June 1996, the Internet Service Providers
  Association (ISPA) was founded by nine ISPs
• Two key motivations for ISPAs formation
• 1. ISPs shared concerns about Telkoms entry into
  the ISP market.
• 2. To establish the Johannesburg Internet
  exchange

3
About ISPA

• Membership
• ISPA currently has 93 members
• Currently an average of 2-3 new members join each
  month
• Members are primarily Internet access providers
  (including resellers or virtual ISPs)
• Resellers/VISPs do not operate networks but
  resell access to another ISPs infrastructure
• Since 2001, affiliate membership has been
  available for ISPs who do not sell access (e.g.
  content hosting services)
• Most ISPA members are commercial enterprises, but
  members also include non-profit organisations,
  individuals and trusts

4
About ISPA

• Membership by category
• Large access providers 13
• Medium access providers 6
• Small access providers 67
• The majority of ISPAs small members (and also a
  majority of all members) are classified as SMMEs
• Affiliate members 4
• Honorary members 4
• Honorary members
• By invitation only
• Enjoy all membership benefits but do not pay fees
• e-Schools Network, NetDay, SchoolNet SA, TENET

5
About ISPA

• Partnerships and events
• International partners
• EuroISPA Umbrella body of EU ISP associations,
  MoU on co-operation on regulatory issues,
  including spam and interception
• AfrISPA Umbrella body of African ISP
  associations ISPA was a founder member and
  remains an active participant
• CABASE South American umbrella body of ISPs
  agreement to co-operate in the fight against spam
• Local
• UniForum SA Registry for CO.ZA several joint
  projects
• ISOC-ZA Collaboration with Internet Society of
  South Africa
• Events
• iWeek Annual Internet industry conference open
  to all
• Workshops on key issues (eg. spam) some closed,
  some open

6
About ISPA

• Johannesburg Internet exchange
• History
• Established in 1996 has now been operational for
  8½ years
• JINX was the first Internet exchange in Africa,
  and remains one of the largest, in terms of
  traffic
• Function
• Purpose of a national exchange is to keep local
  traffic inside the country, and save on expensive
  international link costs
• Other important services are hosted at JINX,
  include mirrors of the global root name server,
  and the CO.ZA name server
• Regulatory oversight
• JINX is not regulated by ICASA, and it is a good
  indication that self-regulation in an industry
  sector can be successful

7
About ISPA

• Code of Conduct
• Chapter XI of the ECT Act limits the liability of
  ISPs for third-party content, provided that
• They are bound by an appropriate Code of Conduct
• They are members of an industry body recognised
  by the Minister
• ISPA launched a Code of Conduct in 2002
• Provisions of the Code include
• Consumer protection and privacy clauses
• Prohibitions on spam
• Protection of minors
• ISPA applied for recognition as an industry body
  in 2002
• Unfortunately, the Minister has not yet
  recognised any industry representative bodies
• Thus chapter XI of the ECT Act is currently
  ineffective

8
About ISPA

• Social development program
• In 2001, ISPA launched a Train the Teachers
  project
• Research showed that often, after computers were
  installed at schools, they were not used because
  teachers were not familiar with the tech.
• The objective of theproject is to bridgethis
  gap by providingbasic computer skillsto
  teachers in schoolswith new computercentres.

9
About ISPA

• Train the Teachers program
• Rural schools with new computer centres are
  targeted
• Each course last for a week, and covers basic PC
  skills
• To date, 633 weeks of training have been
  conducted
• 526 teachers have completed the basic course
• 107 teachers have gone on to complete an advanced
  course
• Training has been undertaken in six provinces
• Since 2003, all training has been approved by the
  SETA and gives the teachers National
  Qualification Framework credits
• The project is entirely funded by ISPAs members
• Approximately R700k has been invested in the
  project so far
• Key partners UniForum SA, NetDay Association

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Current policy framework

• General overview
• Most ISPs (particularly small ones) feel that the
  regulatory environment is hostile, rather than
  supportive
• Prohibits them from using promising technology
• Places significant and costly administrative
  burdens on ISPs
• ISPs are governed by many different pieces of
  legislation
• Telecommunications Act (as amended)
• Electronic Communications and Transactions Act
• Interception Act (RICPCI Act)
• Film and Publications Amendment Act
• Legislation generally does not take account of
  the size of the ISP -- one size fits all
• e.g. VANS licence fee requires audited
  financials, even from Closed Corporations, that
  do not otherwise require an audit

11
Current policy framework

• Licensing of Internet service providers
• Before 2004
• Between 1997 and 2004, ICASA issued interim
  VANS licences to many ISPs
• In July 2004, all existing licensees had to
  reapply for licences.
• New licensing process has been extremely
  problematic.
• At the time of writing no ISPA members have been
  awarded licences by ICASA, more than 12 months
  after applying.
• The rights enjoyed by VANS have been subject to
  sudden change, for example self-provision
• September 2004 Ministerial determinations
• October 2004 ICASA Colloquium
• December 2004 ICASA states that VANS are
  entitled to obtain their own facilities from any
  registered equipment provider
• January 2005 Minister states that VANS may not
  self-provide

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Current policy framework

• Licensing of Internet service providers
• Problems with the existing licensing process
• Despite making five separate written requests to
  ICASA, there is still no clarity on which
  Internet services ICASA considers to be VANS and
  which do not require a licence
• Internet Cafés? Virtual ISPs? Email services? Web
  hosting services?
• ISPA understands that it is difficult for ICASA
  to resolve this issue (particularly in the
  evolving regulatory environment)
• But, the lack of information means that ISPs
• Do not know if they need to have a licence
• Cannot calculate their licence fees
• Cannot calculate their Universal Service Fund
  contributions
• Other supporting regulations not in place
• Numbering, facilities leasing, interconnection...

13
Current policy framework

• Wireless service providers
• There are currently several dozens ISPs providing
  wireless services directly to end-users using
  Wi-Fi technology.
• Customers include schools, hospitals and...
  Knysna
• Very important bit ISPA believes that this
  technology has enormous potential and should be
  actively supported by the policy framework.
• But According to ICASA, it is currently illegal
  to provide services in this way.
• Yet these service providers are permitted to
  continue operating, and they continue to take
  business away from ISPs who are operating
  legally.
• This form of de facto deregulation makes a
  mockery of the policy process.

14
Current policy framework

• Anti-competitive practices difficult to deal with
• For example Telkom offers customers special
  deals on basic services if they also buy Internet
  services from Telkom
• Complaints take months or years to be dealt with
• Telkom has a well-funded legal and regulatory
  departments
• Example
• SAVA/ISPA lodged a complaint with the Competition
  Commission in 2003
• In 2004, the Commission found in ISPAs favour on
  four of the five issues and referred the matter
  to the Competition Tribunal
• Telkom immediately took the CC on review to the
  High Court...

15
Current policy framework

• Lessons to be learned from all this
• Definitions must be completely clear Current
  VANS definition is not clear and this has greatly
  impeded ICASAs ability to meaningfully licence
  VANS providers.
• The framework for issuing licences must be as
  simple as possible, or ICASA will just not cope.
• Alternatively, ICASA will need significantly more
  resources than it currently has, in order to
  manage the licensing process
• The licensing framework must be implemented
  fairly and policed fairly, or there will be de
  facto deregulation of some services, such as
  wireless Internet access.
• Strong protection is needed against
  anti-competitive practices, and the
  jurisdictional overlap between ICASA and the
  Competition Commission must be absolutely clear.

16
The Convergence Bill

• Application services
• Problems
• Current definition of application includes web
  browsers, email clients, database, etc.
• Therefore application service could include,
  for example, instant messaging software.
• Even if application services are left in the
  Bill, ISPA does not believe that ICASA will be
  able to meaningfully licence these services
• Recommendation
• Application services should be removed from the
  Bill

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The Convergence Bill

• Application services (cont.)
• Section 7 is very problematic
• no person may provide any service except
  under an in accordance with the terms and
  conditions of an individual or class licence
• What this could mean
• A new Internet application is developed Touch
  over the Internet
• It is rapidly adopted elsewhere in the world
• Nobody in South Africa may provide this service,
  because ICASA has not developed licence
  conditions for the service
• i.e. Unless ICASA can develop licence conditions
  and regulations fast enough to keep up with every
  new application, South Africa will rapidly fall
  behind!

18
The Convergence Bill

• Application services (cont.)
• Alternative recommendation
• Renumber 7 to 7(1), and add 7(2)
• 7(2) Notwithstanding (1), any person may provide
  an application service unless the Authority has
  published terms and conditions for obtaining a
  licence for that particular application service.
• This means that application services are by
  default unlicensed, but gives ICASA the option of
  licensing certain application services, if
  necessary.

19
The Convergence Bill

• Content
• ISPAs understanding is that content and
  content services are defined in the Bill only
  for the purposes of excluding those terms from
  other definitions.
• We agree that content should not be regulated by
  the Bill
• However, there is widespread concern on this
  issue.
• Recommendation
• 6. (1) The Authority may prescribe the type of
  communications service that may be provided
  without a licence.(2) No licence shall be
  required to provide a content service.

20
The Convergence Bill

• Resellers
• Current approach
• 5(3) The Authority may grant class licences
  for the following (a) Communications services,
  which must include resellers
• Problems
• Internet Cafés and Virtual ISPs might be
  considered to be resellers on Internet access
• ICASA would need to undertake a licensing process
  for all of these entities, possibly with
  different terms and conditions for each category.
• ISPA believes that this will create a significant
  and unnecessary administrative burden for ICASA.

21
The Convergence Bill

• Resellers (cont.)
• Alternative approach
• Include resellers in the section on the terms and
  conditions applicable to other licences.
• This would allow ICASA to effectively regulate
  the resale market through the licences of
  communications service providers.
• Recommendation
• 8(1) The Authority may prescribe standard terms
  and conditions applicable to each category of
  individual and class licence.(2) Such standard
  terms and conditions may take into
  account(p) any conditions governing the
  appointment of resellers

22
The Convergence Bill

• Class licence process
• Section 19 requires that class licence holders
  must inform the Authority of any material
  changes to the communications service to be
  provided
• What is a material change? Price increase?
  Improved speed?
• This is unworkable -- Internet service providers
  make daily changes to their services, some
  trivial and some less trivial.
• Provided that the service continues to fall
  within the scope of the relevant class licence,
  there should be no additional reporting
  requirement.
• Cancellation of class licences
• Already covered by section 14 (despite the
  heading)
• Recommendation
• Delete section 19 entirely

23
The Convergence Bill

• Competition and dominant operators
• ICASA should be able to include fair competition
  clauses in individual licences.
• Recommendation
• 9(6) Whenever the Authority grants an individual
  licence, the Authority (b) may impose such
  additional terms and conditions that the
  Authority considers (iv) necessary in order
  to promote fair competition.
• ICASA also needs to be able to apply these
  conditions to converted licences.
• 85(9) As part of the conversion process, the
  Authority may apply any or all of the terms and
  conditions described in section 8 of this Act to
  a new licence.

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The Convergence Bill

• Competition and dominant operators (cont.)
• Interconnect rights must also apply to
  communications service licensees.
• Why? A simple example
• VoIP -- voice over the Internet
• Operators do not have a network they provide
  voice using software applications over other
  operators infrastructure.
• Therefore, they will not be communications
  network service providers
• If Telkom (for instance) is not required to
  interconnect with these operators, then voice
  traffic from a VoIP customer in Cape Town to a
  Telkom customer in Cape Town will travel via
  Europe, because that will be the only
  interconnection mechanism available to the VoIP
  operator
• Obviously, this does not promote efficient use of
  infrastructure

25
The Convergence Bill

• Competition and dominant operators (cont.)
• Recommendation
• 37(1) A communications network service licensee
  must, on request, interconnect to any--(a) other
  communications network service licensee(b)
  communications service licensee or(c) other
  person authorised to provide services in terms of
  this Act or the related legislation,in
  accordance with the terms and conditions of an
  interconnect agreement entered into between the
  parties for the purposes of delivery of any
  service authorised in terms of this Act or the
  related legislation, unless the Authority
  considers such request to be unreasonable.

26
The Convergence Bill

• Universal service fund contributions
• Current wording
• 81(2) The Authority must prescribe--(a) the
  basis and manner of determination of such
  contributions, which must not exceed 1 per cent
  of the licensees annual turnover
• Should not be linked to turnover, but to turnover
  derived from provision of licensed services
• Otherwise, ABSA might have to pay 1 of its total
  turnover to the fund just because it provides
  Internet access to some of its customers!
• E-rate
• Seems to have been dropped in the Convergence Bill

27
The Convergence Bill

• Conversion of licenses
• Sections 85(e) and (f) contain a list of services
  provided in terms of the current
  Telecommunications Act which will be considered
  to be CS and/or CNS under the new Act.
• But, according to the definitions in the
  Convergence Bill, most of the services listed
  consist of both communications network services
  and communications services
• Further, section 85(3)(a) clearly allows ICASA to
  convert current licences to
• (i) one or more licences relating to the
  communications services or application services
  and
• (ii) separate licences relating to the radio
  frequency spectrum and communications network
  services
• Recommendation Remove 85(3)(e) and (f)

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Key conclusions

• Two most critical issues?
• Licensing must be as simple as possible
• Categories (and definitions) need to be very
  clear
• Process needs to be as simple as possible
• Applications and content should not be licensed
• Reseller conditions should form part of other
  licences and not be licensed separately
• Interconnection rights are key for fair
  competition
• It is critical that communications service
  licensees be given the right to interconnect, and
  not just network services licensees
• Otherwise it isnt really a convergence bill

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Internet Service Providers Association27 11
314 7751info_at_ispa.org.za http//www.ispa.org.za
Masedi Molosiwa Ant Brooks
masedi_at_ispa.org.za ant_at_ispa.org.za
Thank you!