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Telephones for all South Africa leads the way in policy development Alison Gillwald, Research Director at the Link Centre, Wits University, describes the background research to create regulations for:
PROJECT: INTEGRATED UNIVERSAL ACCESS FRAMEWORK FOR ICASA LINK Centre, Wits University, South Africa. The project was motivated by statutory requirements on ICASA in three areas relating to universal service. Estimates on the basis of October household survey of 1999 suggested that universal access in South Africa stood at around 90%. With strategic and co-ordinated location of the CSO obligations of mobile cellular operators, together with the ceiling lifted off the Universal Service Fund and the licensing of small business in underserviced areas complete universal access, the first in a developing country, could be achieved. This was the rationale for the IDRC agreeing to co-sponsor with the Independent Communications Authority of South Africa (ICASA) the research to inform the regulatory decisions that had to be made. Phase 1 – Community Service ObligationsThe undertaking by Cell C in it’s licence to provide over 50 000 telephones over seven years to underserviced areas as part of their community serviced obligations provided a basis for a review of MTN and Vodacom’s CSO which has been underestimated against anticipated subscriber figures by orders of magnitude. Historically because the delivery of CSOs was not pre-determined by the regulator, community service obligations were fulfilled largely in areas that were profitable to the operators, which often meant that all the areas targeted for CSO and Telkom lines overlapped. Calculations suggested that spreading the outstanding areas requiring coverage among the operators and so avoiding duplication could cover the entire country. Incentives for going into the most remote areas were proposed, with double or treble counting in remote areas. Overlaying the objective of achieve 100% telephone access, the CSO proposed for Sentech for its international gateway licences was providing computer labs and Internet access points at 500 schools. Together with a proposal to introduce a virtual (voicemail) network through obligations on fixed line operators it was proposed that every household in South Africa could be contacted through a dedicated telephone number that could be accessed from any network. There was lack of clarity on whether such obligations could be placed on the fixed line operators and this aspect of the proposal did not proceed to regulation. Phase 2 – Universal Service Fund reviewThe Telecommunications Amendment Act required that the regulator review the universal service levy on operators, following the removal of the ceiling which had been set during the period of the exclusivity at R20million. The legislation proposed that the levy, which stood at around 0.1% of total turnover, could be raised up to a maximum of 0.5%. In other countries where Universal Service Funds have been established, the percentage contributions have been set at different levels, usually ranging from 1% - 4% of annual turnover. Following discussions with operators and some costing studies, it was proposed to the regulator that there be different levels of contribution to the Universal Service Fund, based upon the class of license. It was proposed that telecommunication licensees who do not have Community Service Obligations stipulated in their licence pay a levy of 0.5% of annual turnover contribution. Telecommunication licensees who do have Community Service Obligations stipulated in their licence, such as mobile cellular and multimedia, pay a levy of 0.4% and that a fixed fee be set for a range of different service ranging for R30,000 for international mobile linking through to R1000 for special event licensees. No contribution was expected from companies operating telecommunications network and services as purely to service their non-telecommunications core business eg. PTNs. Due to the absence of a definition on universal service by the Minister of Communications and of a business plan on the part of the Universal Service Agency on how the monies in the fund where to be spent, the regulator introduced a far more conservative across the board .2% levy. This was reviewable in a year’s time, by which time it was anticipated that the Minister’s had defined universal service and a business plan had been made known by the USA. Phase 3 – Underserviced area licences The Telecommunications Amendment Act also required the regulator to issue underserviced area licences to small business in areas designated by the Minister. The Minister identified 29 areas as underserviced and proposed that 10 areas be licensed in the first round. The purpose of the LINK research was to develop an enabling licensing environment that would increase the potential viability of these licences in areas which other operators had not rolled out services on the ground of being financial unviable. LINK proposed that a highly innovative model be used which would turn these licences into Telecommunications Enterprise Zones. These would be characterised by regulatory flexibility, allowing the deployment of shared low-cost technology solutions and underpinned by a asymmetrical interconnection regime in acknowledgement of the higher cost of terminating calls in low density remote areas. The model further proposed that the USF be dedicated to supporting a reverse bid that would provide financial support and incentives to those bidders that demonstrated that they would require the least in order to meet threshold requirements in terms of tariffs, quality of service and network coverage. The actual licence also proposed that the process be quantified and simplified so that determination of the successful applicants was as unsubjective as possible and decisions as incontestable as possible. The final ITA has not yet been issued by ICASA.
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