SA demographics • 1 127 sq/km divided into • GDP around R800 million nine geographic and in last quarter of 2000 with South African Case Study political regions. • 3% growth rate in 2000 • population 40.5million • broadcasting has grown speaking 11 official from 0.27% in 1990 to languages 0.6% of GDP in 1997 • • highest Gini co-efficient in grown dramatically to 4% the world - poorest 20% of of GDP households less than 3% of Regulatory Implications of Broadband • SA spends more on Workshop total income, richest 20% telecommunications as a account for 65% o total percentage of GDP than ITU, Geneva income most developed European 2 -4 May 2001 • per capita income of R3500 nations.

Teledensity Telecommunications structure Universal Service and Access* figures for * Access measured as 30 minutes walk from a telephone Minister of M inister of Public Telecommunications Percentage of households with ALL AFRICA WHITE Enterprises service and access (fixed and Parliam entary Department of N P ortfolio C om mittee on Communications cellular combined) Telecommunications Universal 42 18 82 Independent Communications Authority of South ALL service Africa (ICA SA ) Universal access 80 74 93

Fixed Wire VANS Public Broadcasting 1 Operator: Telkom Dominant Operators: SABC TV 1,2,3 Universal 64 32 82 Technology: range of Telkom, Debis, IBM Omnilink, SABC Radio 18 technologies FirstN et, EDS A frica stations Technology: Range of technologies URBAN service and communication Cellular p ro to co ls Private Broadcasting 2 Operators: MTN, -E-TV Universal access 94 93 94 T ech n o lo gy : G S M -M N et 18 Radio stations approx. 100 Community Switched M obile Data Radio stations W ire less B u s in ess So lu tio n s NON- Universal 9 5 84 Radio Trunking Signal Distribution URBAN service 3 O p erato rs Dominant Operators: Dominant Operators: Q-Trunk, SENTECH, Orbicom F leetca ll, O n e to O n e Universal access 59 56 98 T ech nology: M P T 1 3 2 P u b lic E n terp ris e Pag in g 2 O perators 23 O p erato rs Source Peter Benjamin on basis of South African Census October Household Survey 1999. Transtel, Esko m Dominant Operators: Autopage, Technology: Range of At CommUnity Projects .http://link.wits.ac.za Projects Radiospoor Technology: GOLA Y, POCSA technologies

TOTAL BROADCASTING Fixed vs. MARKET

18 10000000 16 8000000 14 Television 6000000 Fixed Line 12 Free-to-air Subscription 4000000 Ce llular Subscribers 10 M- 2000000 8 DStv REVENUE 6 0 Radio 4 1995 1996 1997 1998 1999 2000 2001 TOTAL 2

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 YEARS

Source IBA 1999

1 Timeline of the key events in New policy directives Telecommunications sector TEC Parliament of South Africa • Duopoly in PSTN in 2002 SATRA

• Set aside for electricity and transport Universal Broadcast Act Service GMPCS parastals Agency policy IBA directive

Telkom 3rd Cellular Licence • Prohibition on VOIP extended licence Telecom 2nd Act WTO ICASA Network Services - IBA based • Third Generation (3G) and 1800 MHz Basic ICASAAct Operator Act Telecom- Licence licence unications application Radio Frequency Spectrum for PSTNs, Agreement

Mobile operators. 1993 1994 1996 1997 1998 1999 2000 2001 2002 2003 2005 • Universal access extended by .5% levy on all licensees and exemptions for teledensity areas below 1%.

Current status What is broadband? – Only existing fixed broadband infrastructure fibre optic backbone of the national telecommunications network • Differing views among respondents from – Telkom intends to extend this broadband network speed to to different through regional and primary access rings technologies carrying data from any platform. – Other parastatals such as Transnet and Eskom have installed fibre across the power grid and rail network in South Africa. • SA Government’s view: broadband is the – ADSL is being piloted on the copper based access ability to provide a multiplicity of services, network of the incumbent whether data, voice or video, at any speed, – Digital DTH satellite network operating across Africa, Middle East and Europe. – Undersea cable

DSL dilemma Public policy on broadband • Capital outlays high for public entity • Recognition of the importance of a high-speed • ISDN investment not yet recovered and slow take broadband technology to advance the communications infrastructure. up due to high cost • Can realise government objectives of providing high • Replacing or reconditioning the copper access to all people for voice, data and infrastructure video services. • Broad based access and ICT usage culture • Overtaken by alternative technologies - or among the populace are prerequisites for widespread e- satellite. commerce adoption. • On line nature of DSL threatens revenues from • Consideration of a broadband satellite network international, national and local calls. connecting all schools, colleges, technikons and universities in the country.

2 Regulatory implications (1) Current law and regulation • Regulatory approach and institutions • Broadband subject of current policy – New regulatory frameworks needed but content investigation and carriage require different regulatory • Currently telecom and broadcasting approaches. legislation silent on broadband specifically. – Equivalent treatment of equivalent services, • GMPS new policy directive instructing regardless of the delivery medium and as far as possible technological neutrality regulator to licence effectively as class – In multimedia environment whole new and more licence. flexible regulatory approach required • New Broadcasting Act - “multimedia – Merged regulator likely to be more effective delivery” and establishes Digital Advisory Body to the Minister.

(3) Regulatory implications cont. (2) •Old Paradigm • New paradigm

– challenging to development new all-encompassing • Tracing and combating of • Infrastructure regulation based on cyber-crime in all its forms regulatory approach premise of scarce resources • Commercial issues around – greater flexibility and imagination needed to ensure • Content regulation on protection of e-commerce, such as non- certain values - difficult to apply in equity in service provision, yet not stifle innovation repudiation of a transaction, practice in Internet context and investment. dispute resolution, • Cross-media ownership regulation jurisdiction rules, taxation, – vital to ensure that a sufficient body of operational to avoid concentration tends to be authentication, electronic taken over by anti-trust regulation. expertise for all relevant service types and should signatures, etc • Service regulation targeted at • Facilitating self regulation not be seen to favour one service type above universal access remains an eg. ISP content another. important issue in ensuring that no infrastructure owner is able to exclude access by the customer to other service providers.

Regulatory implications cont. (5) Regulatory implications (4)

• Effective Competition • Infrastructure sharing, standardisation, – Traditional key areas of competition not yet dealt spectrum with will stifle broadband development – Infrastructure sharing needed where abuse of • Cross ownership monopoly position occurring but incumbents – more information than ever before for those with largely argued in favour of commercial means to access it YET global trend toward greater concentration through merger and arrangements. acquisitions needed to capitalise broadband – Telecom operators argue for standardisation as it companies. provides economies of scale needed in smaller – best placed are those who can leverage existing markets and in consumer interest however, business across new platforms incumbent broadcasters want open standards and – anti-trust law proprietary conditional access (or self-regulated).

3 Regulatory implications (6) • Unbundling local loop Regulatory implications cont. (7) – Despite low levels of access, unbundling pertinent to developing countries • Domestic regulation of global network – new economy and information society dependent – As long as global networks dependent on national on access to bandwidth telecom networks domestic regulation possible – wireless may be better option because of quality of – Content regulation other than for ensuring social copper infrastructure justice, would be injudicious use of state • Universal access requirements resources – USOs should fcus on support national delivery – domestic regulation should create enabling – Traditional costing need to change to make environment for local operators to become services more affordable. globally competitive. – Requires more ‘converged’ approach to UA

(9) Regulatory implications cont. (8) Conclusions • Technical, institutional and financial • Broadband intrinsic to development of information barriers society and new economy – Technically overdue but financial barriers due to • Requires sound infrastructure planning and innovative regulation to provide equitable access size of SA economy • Policy framework to encourage investment with – Government not played a sufficiently enabling role transparent regulatory regime ensuring fair competition but minimising institutional barriers and and consumer protection maximising use of broadband by government. • Basic elements which are currently absent include fair – Human capital shortage interconnection and facilities regime, tariff regulation – Affordability and anti-predatory and discriminatory pricing mechanisms. – Lack of content • Integrated and co-ordinated policies and implementation strategies that include government usage.

4