Last week the Independent Communications Authority of South Africa (Icasa) held hearings on the proposed terms and conditions for a 15-year licence to be issued to Sentech by May 7. Jubie Matlou reviews some of the submissions relating to what is considered to be a unique licence.
The Telecommunications Act of 1996 as amended provides, among other things, for Sentech, the public signal distributor for broadcasting, to use its facilities to provide additional services of multimedia, multimedia networking and an inter- national telephony gateway referred to as the carrier of the carrier.
Proposed terms and condition for such a licence were gazetted last December and Icasa invited comment from stakeholders and the public.
According to the gazetted notice “multimedia services refers to the provision of interactive telecommunication services comprising representation, transmission and distribution of various types of media in a synchronised and integrated manner over multiple infrastructure platforms or a telecommunications service that integrates and synchronises various forms of media to communicate information or content in an interactive format that includes internet through television, pay-per-view, video on demand, electronic transactions, text, data, graphics, animation, audio and visual content but excludes mobile cellular telecommunication services and public switched telecommunication services.”
The proposed multimedia and carrier of the carrier licence as developed by Icasa calls for Sentech to pay a fixed licence fee of R250-million (secured by means of a guarantee) in respect of the initial term of the licence; pay fees stipulated in its frequency spectrum licence and an annual variable licence fee of 1% of the audited licence fee income to Icasa and an annual contribution of 0,01% of its licence fee income to the universal service fund as part of community service obligations.
This proposed multimedia services licence comes at a time when several telecommunications operators, including Telkom, are already providing such services to a variety of clients.
Sentech itself has a multimedia division that operates its satellite transmission network. When established, the division was primarily for linking service for Sentech’s vast terrestrial network of television and radio transmitting stations.
With regard to the proposed carrier of a carrier licence for the international telephony gateway, Sentech could provide an international link for several telecommunications operators, including Telkom, save for the last point of direct connection to the end-user. Put simply, a consumer who requires an international telephone may get it either from Telkom or the Second National Operator (SNO), who in turn will access the line from Sentech at a fee.
The Cape Telecommunications User’s Forum objects in its submission to Icasa that the issuing of a multimedia licence to Sentech “will create a precedent for the regulation of services that have previously been unregulated, including Internet content provision, online banking and commerce services”. The forum argues that the impact of Sentech’s proposed multimedia licence will also affect the providers of content and media services negatively.
Orbicom on the other hand raises constitutional problems with regard to the proposed licence for multimedia services. It argues that it is beyond Icasa’s powers to provide for a wider definition of multimedia service that is broader than the one contained in the amendments to the Act. “The multimedia licence should adopt the definition as provided in the Amendment Act, while imposing necessary restrictions to maintain the distinction between a telecommunications service and a broadcasting service and the inclusion of multimedia services [properly construed as broadcasting services] in the Act gives rise to legal problems as it blurs the line between broadcasting and telecommunications regulations in constitutional and statutory provisions [it] would be unconstitutional if the multimedia licence awarded to Sentech authorises it to deliver a telecommunications service, for as long as the Constitution requires separate regulation of broadcasting regulation in South Africa.”
Secondly, Orbicom argues that “a limitation must be placed on what constitutes Sentech’s multimedia service network, specifically identifying which forward and return paths will constitute the network and excluding any forward and return paths constituting broadcasting infrastructure and facilities.”
Telkom submits that e-commerce, text, data and graphics do not constitute integrated content and therefore should be removed from the multimedia licence proposal to be awarded to Sentech. “Emphasis should be placed on the integration and synchronisation of more than one single service as a function within the Multimedia Network, rather than on the pure conveyance of signals (data), which, it is submitted, is a PSTS [public telephony] function.”
With regard to Sentech carrying international telephony traffic, Telkom argues that the carrier of the carriers licence should be “limited to the carrying of traffic on behalf of licensed operators in the Republic. This will more accurately reflect a carrier of the carrier service as opposed to an international service.”
Despite the prospect of expanding its signal distribution mandate and using its existing facilities to optimum use, Sentech has raised some reservations about some of the provisions of the proposed licences.
Sentech argues that the proposed R250-million licence fee is exhorbitant and stands as a “barrier of entry”. The licence fee should ensure that “all barriers to market entry and service delivery are eliminated and that the many economic and social benefits to be derived from the licence are enhanced”.
It says that the determination for the fee should be informed by an analysis of the telecommunications sector of issues of competition and the barriers of entry, “which will be present in respect of the take-up of any new service” such as multimedia.
On these grounds, Sentech argues that the R250-million proposed fixed licence fee together with the 1% annual variable licence fee from its licence fee income is punitive and discriminatory in that the expected market take-up of multimedia services would not be as high as the mobile cellular telecommunications services or the public switched telecommunications services.
Telecommunications service providers such as Vodacom and MTN and Cell C for example, are required to pay a fixed licence fee of R100-million together with an annual amount of 5% of their audited annual operational income with the exception of Cell C which is required to pay only 1% of its operational income. On the other hand, Sentech notes that Telkom has no fixed licence fee for its public switched telecommunications services licence, and it pays only 0,1% of its annual income (R15000). Such discrepancies, argues Sentech, are discriminatory and would have a negative impact on the viability of providing multimedia services.
It is only the demand for voice services, says Sentech, which might generate revenue for a multimedia service or network provider, as opposed to the more specialised multimedia telecommunication services and value added network services.
Another debilitating factor cited by Sentech is the financial investment required to roll out infrastructure and new technologies and the number of frequencies it would use for multimedia. This would require Sentech to “migrate its present digital terrestrial broadcasting activities to interactive and enhanced broadcasting services in order to provide mulitimedia services. As multimedia service subscribers will be fewer [in South Africa as a result of income levels and geographic makeup] it will be difficult for Sentech to achieve profitable economies of scale”.