Telkom Workshop with the Portfolio Committee on Communications in Parliament

06 – 07 October 2004 Terms of Reference

The Portfolio Committee on Communications has requested to present on the technical and regulatory aspects of its business

2 Introducing the Telkom Delegation

• Nkenke Kekana Group Executive – Regulatory & Public Policy

• Benitto Lekalakala Executive – Parliament, Policy & Legislation

• Wally Broeders Executive – Integrated Network Planning

• Jack Tlokana Senior Specialist – RC: Advanced Technology

• Graham Keet Senior Specialist – RC: Special Markets

• Josephine Mabotja Senior Specialist – Competition Law & Economics

• Izaak Coetzee Senior Specialist - Regulatory Economics

• Nozicelo Ngcobo Senior Specialist – Research and Strategy

• Keso Mbali Senior Specialist - Multi-media and Convergence

• Maphelo Mvunelwa Specialist – Parliamentary Liaison 3 Agenda items

• Overview of the Current • Interconnection Regulatory Environment • Carrier Pre-Selection • Overview of the Expected Regulatory Environment • Number Portability

• Telkom Licences • Network Planning and Management • Numbering Plans • (SKA) • COA/CAM • Convergence

4 Overview of the Current Regulatory Environment in International Reform

• Early 1990’s - end of telecommunications natural across the world as administered by governments

• Economic and technological developments necessitated a review of the treatment of telecommunications

• WTO, ITU, EU and other international bodies reassessed the increasing importance of telecoms and its expanded role in the market

• The above resulted in telecoms reform and the design of the so-called optimal institutional structure

6 The decentralised structure of telecom reform

Government (Policy Development)

Regulator

Market

(Customers and Operators)

Fixed Line Operators Mobile Operators Multimedia Other Players Telkom South Africa & Carrier of Carriers Service Second Network Operator MTN Sentech Provides (ISPs) Universal Service Licensees (USALs) Value Added Network 7 providers (VANs) Data Policy Reform Process – South Africa Response

The policy reform process in the telecom industry is being conducted in three phases:

Phase 1: 1996 - 2002/3 Sectoral Reform

Phase 2: 2002/3 – 2007 Managed Liberalisation

Phase 3: 2007 – beyond Full Liberalisation

8 SA Telecoms Market - Historical and Expected Developments

2007 - Full Liberalisation

2005 – Convergence Legislation expected

2004 – SNO Licence Granted

2003 – Telkom Listing

2002- End of Telkom’s Exclusivity

2001 – Telecommunications Amendment Act

2001 - 3rd Cellular Licence 1997 - Telkom Licence 1996 - Telecommunications Act 1993 - Cellular Licences

1991 - Creation of Telkom Ltd

9 Managed Liberalisation

• SA opted for managed liberalisation of the telecoms sector has gradually opened to competition while ensuring optimum utilisation of existing investment in the sector

• A big bang approach would have opened up the sector quickly and offer many services from different network operators, but this approach could potentially have eroded SA’s public and private investment

10 History of the Regulator in SA

1993 1997 Independent South African Broadcasting Telecommunications Authority Regulatory (IBA) Authority (SATRA)

2000 Independent Communications Authority of South Africa (ICASA)

11 Role of the Regulator – ICASA

• ICASA regulates the telecommunications and broadcasting industries in the public interest. Its key functions are to:

! make regulations and policies that govern broadcasting and telecommunications ! issue licenses to providers of services and broadcasters ! monitor the environment and enforce compliance with rules, regulations and policies ! hear and decide on disputes and complaints brought by industry or members of the public against licensees ! plan, control and manage the frequency spectrum and numbering resources ! protect consumers from unfair business practices, poor quality services and harmful or inferior products

12 The Independence of the Regulator

Conditions necessary Experiences in for an Independent South Africa Regulator

" Guiding principles on the " ICASA been challenged by Regulator mandates operators on flawed administrative procedures " Decision making process " Act provides for decisions made should be transparent by ICASA to be approved by the and independent Minister " ICASA is funded by the " Funding Government and not through license fees " Adequate resources and " ICASA plagued by limited capacity resources e.g. HR on key ICT 13 competencies Regulatory Challenges facing the Sector

• Funding of the Regulator

• Convergence

• Globalisation ‐ Regional Regulator? ‐ Continental Regulator?

• Adequacy of ICT Skills

14 Overview of the Expected Regulatory Environment Ministerial Determinations 3 September 2004 Notice 1924 of 2004, Gov Gazette 26763

Implementation date: 1 February 2005

16 Policy Announcements by the Minister

Current Situation Situation as from 1 Feb 2005 Self provision and greater choice for mobile operators Mobile operators are may utilise any fixed lines that Mobile operators are not allowed to provide their own fixed may be required for the provision of the service lines or acquire them from any provider other than Telkom including fixed lines made available by Telkom or any and/or a public switched telecommunications service provider other person providing a PSTS Provision of Public Pay Phones Persons may apply for a licence to provide public pay Public payphones are services whereby providers, be they phone services in any area of the Republic. The individuals or entities, purchase pay phones from manufacturers, Department is considering the removal of licensing lease lines or purchase airtime to resell to the public on their own. requirements to provide these services

Provision of voice by VANS Value added networks may carry voice using any Current legislation allows only PSTS licensees to transmit protocol voice. Provision of voice by VANs is prohibited VANs may also be provided by means of telecoms Choice in the provision of Value Added Network Services facilities other than those provided by Telkom and the Value added networks can only be provided through Telkom SNO or any of them

A person who provides a value added network service Cession of telecommunications services by VANs shall be entitled to cede or assign the right to use, or to VANs are restricted from trading their telecommunications sublet or part with control or otherwise dispose of the facilities in any way telecommunications facilities used for the provision of the value added network service

Optimising the use of Private Telecoms Network Facilities Private telecommunications network operators shall be There are many entities in South Africa that have private entitled to resell spare capacity and facilities or to cede telecommunications facilities. Such facilities cannot be sublet or assign his or her rights to use such facilities or to or re-sold and are therefore under-utilised. sublet or otherwise part with control thereof Mobile Cellular Operators (MCOs)

• Self-provision and greater choice for MCOs

• Obtain fixed links from Telkom or SNO

• Self provide fixed links

18 Provision of Public Pay phones

• Telkom, SNO, USALs & MCOs

• Any person licenced

19 Value Added Network Service Providers (VANS)

• Provision of voice: VANS may carry voice using any protocol

• Choice in provision of VANS: May use facilities other than those provided by PSTS

• Cession of Telecoms Services by VANS: Entitled to cede, assign rights to use, sublet or depart telecoms facilities

20 Private Telecommunication Networks (PTN) • Optimising use of PTN facilities

• May not self-provide, obtain facilities from PSTS providers

• Entitled to resell spare capacity and facilities, or cede, assign rights to use, sublet or depart facilities

21 Preparing youth for Knowledge Economy

• Public schools & public further education institutions entitled to 50% discount on telecoms calls to ISPs & access fees to internet

• Implementation - 18 January 2005

• Telkom working with DoC and Dept of Education on implementation

22 Impact on ICT Sector

• Further policy announcements in October 2004 • Viability of SNO and USALs • Consultation process • Interpretation of carrying of voice by VANs: may result in 300 potential public switched telephone service providers • Convergence legislation • Third National Operator and/or other serviced based licencees • Unclear how 2nd economy will benefit

23 Service Obligations

• Rights come with obligations • Access to emergency / lifeline / SOLAS services • Compliance to national security objectives as prescribed by the Interception of Communications and Provision of Communication-Related Information Act • Compliance to environmental legislation • Licence fees and contribution to Universal Service Fund and Skills Levy • Universal Service objectives • Regulated tariff regime

24 Service Obligations Cont.

• Service continuity and quality

• Consumer protection

• Carrier Preselection

• Number Portability

• Directory Services Database

• Continued investment in infrastructure 25 Risks for Telkom

• 2 Billion Rand market capitalisation destroyed • Over regulation of Telkom • Revenue loss and knock-on effect – Increased cost reduction and efficiency improvements pressures – Reduced sponsorship and social responsibility activity • Cannot sustain cross subsidization • Adverse impact on job creation • Higher labour costs • Unintended consequences downstream – Lower BEE Spend – Fewer SMME opportunities – Erosion of jobs

26 Macro-economic impact on South Africa

• Change in Government Policy to accelerated process of liberalisation • Big bang approach shakes investor confidence • Creates conducive environment for foreign operators and illegal operators • Cherry-picking weakens poverty alleviation initiatives • Marginalised universal access • Compromised service continuity and quality • Hampered investment in infrastructure • Retarded NEPAD ICT Initiatives

27 Clear Regulatory Framework

• Competition rules must be clear and transparent

• Minimise regulatory uncertainty and litigation

• Empower the Regulator

• Re-define mandate of the Universal Service Agency and Universal Service Fund

• ICASA to develop regulatory framework

• Stability of telecoms industry 28 Next Steps

• The Minister will make further policy announcements in October 2004:

– Service-based licences to be operational by May 2005 – The remaining Under-serviced Area Licences – The Second National Operator – The Convergence Bill – The ICT BEE Charter

29 Question and Answer Session Telkom Licences TELKOM’S PSTS LICENCE

• Licensed rights (Condition 2) – construct, maintain and use the public switched telecommunication network (PSTN) – connect any national or international telecommunication system to the PSTN – convey any signal to and from those systems – install, maintain, lease or sell customer premises equipment (CPE)

32 TELKOM’S PSTS LICENCE

• Exclusivity for 5 years (Condition 3) – National Long-distance – International – Local access – Public Pay-telephones – Facilities leased to: • Value added network services (VANS) • Private telecommunication networks (PTNs) • Cellular networks

33 TELKOM’S PSTS LICENCE

• Universal Service (Condition 4) – Provide to anybody who requests it (subject to credit referencing): • A basic telephone service • A basic telephone instrument – Public Pay-telephones – Free access to emergency services

34 TELKOM’S PSTS LICENCE

• Directory Services (Condition 5) – Printed directories – Directory enquiries – Listing of Governmental authorities

35 TELKOM’S PSTS LICENCE

• Consumer protection (Condition 6) – Price cap (Condition 7) – Publication of charges – Customer confidentiality – Itemised billing – Customer assistance procedures – Code of practice

36 TELKOM’S PSTS LICENCE

• Fair trading (Condition 9) – no undue preference or discrimination – no unfair favouring of own business – no exclusivity of supply – no linked sales – no unfair cross-subsidisation

37 TELKOM’S PSTS LICENCE

• General conditions: – Licence fees: 0.1% of annual revenues from PSTS – Release from obligations to provide service (Condition 13.4.3) • Force majeure • Breach of contract • Default of liability • Illegal usage

38 TELKOM’S OTHER LICENCES

• Radio spectrum and station licence – Licence to possess, establish, maintain and use radio stations – Annual spectrum fees amount to about R30 million

• Value Added Network Services licence – Includes services such as Internet service provision, electronic mail, electronic data interchange, database access, network management

39 THE PSTN – Act Section 36B

Local Access Network

PSTN includes: National Long - optic fibres Distance Network -copper cables -Wireless systems -Microwave links -Satellite systems International Network -Switches

40 THE PSTN – Act Section 36B

Public Switched Telecommunications Network

To another network Access Network TCP

NCP Core Network TCP Voice and Data NCP services

TCP = Terminal Connection Point NCP = Network Connection Point International Link 41 LONG-DISTANCE CALL BETWEEN TWO PRIMARY AREAS

DURBAN

Durban Primary Cape Town Exchange ‘031’ Primary Exchange ‘021’

PMB secondary Worcester Secondary exchange ‘033’ Exchange ‘023’

Local Exchange ‘784’

Local Exchange

Subscriber 023-784-1234 A B

42 Dials 023-784-1234 ROUTING OF AN INTERNATIONAL CALL

Dials 0944-20-XXXX

Telkom’s National Network

United Satellite earth International Kingdom station Exchange

Undersea cable station

43 Question and Answer Session Numbering Plans Stakeholders

• ITU-T

• POLICY MAKERS

• NRAS

• INCUMBENTS

• NEW ENTRANTS

• CUSTOMERS 46 Numbering Plan Requirements

• Customer requirements

• Industry requirements

• Competitive requirements

47 ITUITU---TT E. 164

The International Public Telecommunication Number Structure Recommendation E.164

48 International Telecommunication Number StructureStructure---E.E.164

CC NDC SN

1 TO 3 digits National Significant Number

Max 15 digits

Number for Geographic areas

CC - Country Code NDC - National Destination Code (ND code,Trunk Code or Area Code) SN - Subscriber Number

49 Number Formats

GEOGRAPHIC INTERNATIONAL :+ CC NDC SN + 44 28 256 42715

where ‘+’ is the International prefix 09/00

NATIONAL : ONN ABC XXXX 012 311 1892 (Telkom) 012 388 XXXX (SNO)

50 Closed/Open Numbering Schemes

• A closed scheme has a single dialling procedure for an entire country; it usually, though not necessarily, has a single uniform number length

• An open scheme has separate local and trunk dialling prefixes; the lengths of codes and subscriber numbers may vary

51 SA Numbering Plan

The South African Numbering Plan is planned and managed according to telecommunications law (i.e. Section 89 of Act 103 of 1996) and regulations

52 Existing Plan

• PSTN Format – 0 NN ABC XXXX

• Geographic Numbering – working: 01, 02, 03, 04, 05 – 06 spare

• Non-geographic numbering – Telkom’s enhanced voice services: 080, 086, 088, 089, 087 – spare – Mobile Cellular: 08x and 07x – 081 GMPCS – 085 reserved for new mobile operator

53 Level 1 Short Codes

• Type A – mandatory (e.g. 10111)

• Type B – For services across networks (e.g. TSA & SNO)

• Type C – For on-net services

54 Allocation of ND codes

55 Changing Environment

EXISTING PLAN FUTURE PLAN – Monopoly – Optimised for – Limited competition competition – Constant growth – Explosive growth – No real pressure on – Complex numbering resource environment except for GC – Persistent pressure

56 Major impact of the new numbering plan • Introduction of 00 as International Prefix.

• Introduction of code 112 as the new National Emergency Service code.

• Introduction of code 1020 for the public to access Government directory information services free of charge.

• Introduction of Carrier Selection/Pre-Selection

• Introduction of Number Portability

• Voice over Internet Protocol (VoIP)

57 Question and Answer Session COA/CAM USE OF FINANCIAL INFORMATION • Financial Accounting – Costs defined in terms of financial statements – Historical investments / recent revenue, expenses, assets & liabilities – For external decision makers: investors, creditors, suppliers • Management Accounting – Include forward-looking costs for decision making and cost management (e.g how to optimise revenue, which products or services, at what price?) – For internal decision makers: management • COA/CAM – Chart of Accounts / Cost Allocation Manual 60 PURPOSE OF COA/CAM

To ensure that: • Operators do not price below cost to exclude competition (predatory pricing) • Operators do not engage in anti-competitive cross-subsidisation • Operators do not price on unduly discriminatory basis • Charges are cost oriented and sufficiently unbundled

61 REGULATORY ACCOUNTS

• COA – Chart of Accounts – list of accounts (account definitions) • CAM – Cost Allocation Manual – framework / broad rules for allocating costs (separations methodologies) • Procedures Manual – ‘book of implementation’ • RFS – Financial statements

62 FINANCIAL STATEMENTS

Revenue Costs GENERAL LEDGER

GAAP/IAS Rules Procedure Manual

ANNUAL Reconciliation REGULATORY FINANCIAL FINANCIAL STATEMENTS STATEMENTS

GAAP/IAS Procedure Rules Manual

Capex Depreciation ASSETS REGISTER

63 DISAGGREGATION OF SEGMENTS

Unregulated Segment

Regulated Segment

Other Network Retail Operators Business Business

64 DISAGGREGATION OF SEGMENTS

Residential Access Access Network Business Access Business Retail Business Local Calls Other Core National Calls Operators Network Business etc.

Regulated Segment

65 NO DISCRIMINATION BY NETWORK

Other Operators Customers

Interconnect Normal calls calls

Network Business Retail Business

66 Question and Answer Session INTERCONNECTION INTERCONNECTION

The logical and physical linkage of two networks

so that customers of one network can

communicate with customers of the other

network or access services provided by such

network

69 INTERCONNECTION

Telkom MTN

POI

Call originates on Telkom network Call terminates on MTN network MTN provides call termination 70 INTERCONNECTION

Telkom MTN

POI A B

Telkom – call origination charge (A) MTN – call termination charge (B) Retail charge to customer = A + B

71 CALL TERMINATION RELATIONSHIPS

The Money Collects ICX Fee Telkom Telkom Telkom -

MTN TelkomMTN Telkom

Telkom MTN Telkom MTN

72 CONTENTS OF AGREEMENTS

• scope and specification of interconnection • service levels and the maintenance of quality of service • charges for interconnection • billing and settlement procedures • ordering, forecasting, provisioning and testing procedures • the provision of POI and Interconnection Capacity • the transmission of CLI • technical specifications and standards • traffic and system management, maintenance and measurement

73 Question and Answer Session CARRIER PRE-SELECTION CARRIER SELECTION What is CPS & CS?

• Carrier Pre-selection – Automatic choice to use another Operator’s network for national long distance and/or international calls – No Prefix code required – Can choose to override choice on call-by-call basis

• Carrier selection – Manual choice to use another Operator’s network for national long distance and/or international calls on a call-by-call basis 76 CARRIER PRE-SELECTION

CT SNO

JHB CT Telkom

77 CALL TERMINATION RELATIONSHIPS

The Money SNO Collects Orig Fee ICX Fee

SNO Telkom - Telkom

SNO

SNO Telkom Telkom Telkom

78 COST OF CARRIER PRE-SELECTION

• Initial set-up costs – Conditioning of the networks – Customers’ support systems • Per Operator Set-up costs – Technical and commercial arrangements to accommodate each new alternative operator • Customer Set-up costs – Service set-up, management, change, discontinuation for each individual customer

79 RECOVERY OF COSTS

• Initial set-up costs – Each providing operator bears own costs

• Per Operator Set-up costs – From CPS operator concerned

• Customer Set-up costs – From CPS operator concerned

80 Question and Answer Session NUMBER PORTABILITY NUMBER PORTABILITY

• The ability of a customer to retain his / her telephone number when: – changes from one operator to another – moves location – changes service

83 DIFFERENT TYPES OF NP

• Service Provider / Operator NP – customer changes service providers and keeps the same telephone number • Geographic / location NP – customer changes location and keeps the same telephone number • Service NP – customer changes service and keeps the same telephone number

84 NP IN TELECOMS ACT

NP is defined in the Act as a capability whereby a subscriber to a telecommunication service who so requests can retain his or her telephone number when changing service from one PSTS licensee to another PSTS licensee or one mobile cellular telecommunication service licensee to another mobile cellular telecommunication service licensee

85 OPERATOR PORTABILITY IN SA

• Fixed to Fixed – Block Portability – Individual NP

• Mobile to Mobile

86 CALL ON OWN NETWORK

Dials 082 123 4567

Vodacom

# 082 123 4567

87 CUSTOMER HAS PORTED

Dials 082 123 4567

Vodacom Cell C

X # 082 123 4567 # 082 123 4567 88 CUSTOMER HAS PORTED

- Customer moved from Vodacom Dials 082 123 4567 to Cell C - Customer retains telephone number

DonorVodacom Operator RecipientCell C Operator

X # 082 123 4567 # 082 123 4567 89 COST OF IMPLEMENTATION

• Initial set-up costs – Conditioning of the networks – Procedures / systems for interworking between operators • Customer porting costs – Cancellation/creation of accounts – Co-ordinated switch over • Additional conveyance costs – Re-routing from Donor network to recipient network

90 RECOVERY OF COSTS • Set-up costs – Each operator bears own costs – Subject to relevant price controls

• Porting transaction cost – Recipient Operator

• Additional conveyance costs – Each operator bears its own additional conveyance costs 91 Question and Answer Session Network Planning and Management CONTENTS

• Overview of the Network

• Network Statistics

• Network Planning

• Network Management

• Conclusion

94 TRANSFORMATION OF TELKOM’S VOICE NETWORK

Manual (1930) Electromech Magneto (crank handle) signalling Loop disconnect (rotary dial) signalling

Electromech (1980) TDM Digital Multi-frequency (push button) signalling

TDM Digital (TODAY) Packet IP (“mouse” click) signalling

Increased operating efficiency and effectiveness Increased range of services and applications

95 VOICE NETWORK

SS7 NETWORK SCP

INTERNATIONAL Rest ITE of the 2 switches world

Mobile Operators Long Distance 18 Switches DPSU DPSU

Regional Regional DSSU DSSU 103 switches To To To DSSUs DSSUs

Access > 2500 exchange areas MB DEC DEC WLL

OFDC DLC MB- Manual Board DEC – Digital exchange concentrator OFDC – Optical Fibre Distributed concentrator WLL – Wireless Local Loop

96 TRANSMISSION NETWORK

y on DWDM) (Mesh Topology

) (Ring Topology)

National Layer Hub- Local layer Hub-node Customer node Telkom Access layer node

97 PORTUGAL

ALTA VISTA (SPAIN) SENEGAL

BENIN NIGERIA

COTE D’IVORE GHANA CAMEROON

GABON

SAT - 3 WASC

ANGOLA

SAT - 2

NAMIBIA

SOUTH AFRICA FAR EAST CABLE

SOUTH AFRICA DURBAN (MTUNZINI) CAPE TOWN (MELKBOS)

Operator - owned cable Submarine cable Landings of SAT - 3 / WASC 98 African Countries that can access SAT - 3 / WASC via terrestrial and satellite links DATA NETWORK - SERVICES

• Constant Bit Rate Services • Voice Grade Leased Line • Diginet • Diginet Plus

• Frame Relay • Frame Express • Managed Frame Relay Express

• Asynchronous Transfer mode • data services • 2 Mbps to 149 Mbps

• Internet Protocol • Dial-up internet access • Corporate Internet access • Virtual Private Networks • International 99 Access network deployed

• Access network Future direction of access network VDSL consists of – Mainly copper ADSL 2 - 26 Mbps – Radio technologies SHDSL 1.5 - 8 Mbps deployed in rural ISDN areas Modem 2 - 26 Mbps 64 kbps 128 0.3 / 2 Mbps – Fibre deployed in kbps

high-end of the 1-1 300 m

market 1 - 4 000 m

– Access network > 5 000 m supports basic voice to broadband

100 Statistics

• Voice network (99.9% digital) – > 4,800,000 telephone access lines – 120 Digital switching units – Access points of presence (wireline and wireless) covering 2500 exchange areas – > 10,000,000 access lines (wireline and wireless) – 658,798 ISDN channels • IP network – 290,000 dial-up and 297 leased line Internet services, VPNs, VoIP. • ATM network with 189 points of presences • ADSL Footprint 62%

101 Data Networks

Network National Regional Access Nodes Nodes Nodes Constant Bit Rate 75 197 3715 (CBR) Asynchronous Transfer Mode (ATM) 12 37 140

Frame Relay 7 25 Uses CBR

Internet Protocol (IP) 6 16 63

102 Network Planning

• Evolutionary Network Approach • Embedded Based Network • Building Broadband Capacity In Support Of Fast Internet Services • Fully Integrated Network • Fully Protected Network

103 IMPACT ON NETWORK INFRASTRUCTURE Today Future Single-service networks Multi-service networks/client- server Services

ContentServers Content

Communcation Control

Backbone Network PLMN PSTN/ISDN Access Data/IP Networks Data/IP Access AccessAccess AccessAccess

Clients Access Transport & Switching Networks 104 Planning for modern day telecommunications networks • Complex concatenation of elements to provide a service • Myriad of technologies to choose from • Intricate standards and interconnection • Customer requirements changes constantly

105 Network planning steps

• Forecasted demand translated into equipment and interconnecting requirements • Combined with available technology and equipment dimensioning rules • Optimisation models utilised to decide on the placement and density of node placement

106 FORECASTING

• Dedicated Demand Forecast section. • Uses Municipalities, Developers, Demographic information, etc. as input. • Generates Forecast figures per service category per Exchange Area for 5 years.

ALPHACODE EXCHNAME RCON_2005 RCON_2006 RCON_2007 RCON_2008 RCON_2009 RPPP_2005 RPPP_2006 RPPP_2007 RPPP_2008 RPPP_2009 CAGG AGGENEYS 157 147 138 130 123 148 160 170 178 184 CAHSAUGRABIES1151039590873541454850 CAKH ASKHAM 43 42 42 41 40 24 27 30 32 34 CALA AMALIA 68 66 64 62 60 16 17 18 19 20

107 TRAFFIC MATRIX

• Networking Design Tools are used to dimension the network switches and inter switch trunks.

108 TRAFFIC MATRIX Continued

A typical example of an imported point to point traffic matrix. NETWORK DIMENSIONING

Software tools for the design, optimization and evaluation of networks are utilized.

REPORTING DESIGNING Network capability to deliver enhanced Products and Services – and many more

VPN Supreme Web IP Desktop SMS fixed- conferencing telephony to-mobile conferencing Video surveillance Carrier pre- select Content Network Number services IVR Intelligent portability villages xDSL

Local loop Telkom Internet Compressed facilities leasing IP Centrex powered by Diginet satellite WiFi

… with a focus on broadband, data and packet based network enablement … 111 The challenge of Network Management • Network Manageability – All network elements must be manageable – Enables optimal network utilisation – Enables rapid service activation and restoration • Managed Data Networks – Constant Bit Rate – Frame Relay – ATM – IP – Customer Network Care (WAN) • Functions of the Centre (What we do) – Centralised Network Management ( All switches, transport elements, traffic WAN) – Surveillance 24 x 7 x 365 – Configuration 112 – Workforce management and Traffic management National Network Operations Center NNOC

113 114 NNOC COVERAGE AREA

SXD n x STM16 / STM64SXD

National Layer DWDM SXD SXD n x STM16 / STM64 SMA SL Regional/ Metropolitan SXA SXA SXD STM-4 STM-16 Layer SMA SL

SMA SMA SMA SMA Urban/ STM-1/4 Access SMA SMA STM-1/4 STM-4 Layer SMA SMA MANAGED DATA NETWORKS (CNC) SMA

NNOC CNC Public Switched Telephone Network ManagementCNC MANAGEMENTROUTER SS7 NETWORK S C ATM/Frame Relay International Network Satellite P CLIENTSite C B CLIENT A I T Radio E D D ITE1ISTP1 Equipment CLIENT B CLIENTCLIENT A A DP DP To To S SS D DS ITE2ISTP2 SU SU SM E D D W SU O U UD SB M E E L s F L U C C L D C s C

115 Special Projects (Completed)

• Elections 1994, 1999, 2004 • World Summit on Sustainable Development • Rugby World cup • Cricket World Cup • Business Against Crime Project • All Africa Games

116 Conclusion

• Telkom network infrastructure can handle any major international events. • The successfully hosting of major international events is proof of this • Examples include the recent national elections, cricket and rugby world- cups.

117 Question and Answer Session Square Kilometre Array (SKA) Index

• Purpose • Background • System Description • SKA Sites • Requirements • Timelines • Pros/Cons

120 Purpose

• Scientists use the radio telescopes to study various phenomena’s including: – The Dark ages and the dawn of galaxies – Large-scale structure of Universe – Galaxy evolution and star formation – Evolution of the heavy elements – Dark matter – The micro-arc second Universe – Gamma-ray burst sources – Gravitational waves – Extra solar planets – Search for Extraterrestrial Intelligence

121 SKA BACKGROUND

• The SKA is a $1 billion international project to create a receiving surface of a million square meters • This huge surface will be composed of many small antennas, divided into a dense inner core array which becomes more diffuse with increasing radius • The peripheral antennas could be 1 000 km from the core, or 5 000 km, or even 10 000 km, making the SKA an intercontinental system • The signals received by each and all of these antennas will be combined to form a single, big, picture • This will require complex computing and information processing systems. The result will be an instrument capable of probing the secrets of the very early

122 universe Background (1)

Brain

Light Electric Impulses

Eyes

Light > Electric Impulses

Brain interprets Impulses: Recognise Shape Judge Distance Judge Speed

123 Background (2)

Computer

Radio Waves Electric Impulses

Radiowave Pickup

Radio waves > Electric Impulses

Computer interprets Impulses: Recognise Shape Judge Distance Judge Speed

124 Background (3)

Air Traffic Control Radio Reflection Electric Impulses

• Air Traffic Control (Radar) • Weather watch • Astronomy

125 Background (4)

• Bigger lens = Bigger Picture

126 System Description (1)

1 Large Antenna vs an Array of multiple small antennas

127 System Description (2)

Central Cluster

Central Cluster

128 System Description (3)

129 S#

S#

SKA Array

S#

BEI TBRIDGE

MESSINA

TSIHOWDEWI MUSWODI ALLDAYS MASISI TSHIPI SE

STRAITHARDT MUTALE TSHAULU S# MAKONDE S# PUNCH BOWL MUTHATHI NZHELELE DZANANI SIBASA RADITSHABA THOHOYANDOU TOLWE LWAMONDO VIVO MALAMULELE INDERM ARK SINTHUMULE LEVUBU EDNA ELIM HOSPITAL VUWANI MASIA MUNZHEDZI S# BOCHUM LOUIS TRICHARDT VONGANI SELEKA MULIMA

PAULUSWEG VUYANI REBONE DENDRON MOLOTOTSI GI Y ANI DWARSRIVI ER BAHLALERWA RA M OKG OP A LAPARI SA JUNOLONSDALE SOEKMEKAAR MARKEN MOOKETSI NWAMITWA GAK G APAN E Ska-sites-04-05-27 LIMBURG ELLISRAS KOLOTI DOORNBULT DUI WELSKLOOF BAKONE STEENBOKPAN POLITSI TARENTAALRAND BAKE NBERG SEPANAPUDI ANNADALE SOVENGA TZANEEN LETSITELE SETOTOLWANEGATEWAY LULEKANI %U SUSWE MASHASHANE DALMADA NKOWAKOWA S# SUP ERBI A NAMAKGALE Karoo 2D1 site BO Y N E GRAVELOTTE MAPELA PHALABORWA PIETERSBURG HAENERTSBURG TINMYNE EERST EG OUD THOLONGWE LENYENYE VAALWATER MAHWELERENG SHILUVANE BU L GE RI VE R S# SENTRUM VAALTUIN MAJA Spiral A STERKRI VIER MOGODUMO MMAFEFE ZEBEDIELA TRICHARDTSDAL MPHAHLEL E ATOK POTGIETERSRUS HOEDSPRUIT CHUENESPOORT S# MOLETLANE APEL GR OVE DA LE SKUKUZA GAMAROTA Spiral B GOMPIES ALMA DRI EKOP THABAZIMBI NABOOM SPRUIT MASEMOLA KGAUTSWANE OHRIGSTAD KOKANJE ROEDTAN JANE FURSE HOSPITAL ACORNHOEK HLUVUKANI DWAALBOOM DI ENJE S# S# ROOI BERG MARISHANE SEKHUKHUNE Spiral C NY L S TR O OM 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• Control centre in Cape Town • Main/Core Site (correlator) – Karoo 2D1 • Remote Sites – South Africa – 51 – Namibia – 6 – Botswana – 6 – Swaziland – 1 – Mozambique – 1 – Mauritius – 1 – Madagascar - 1

131 SKA Bandwidth and connections

• The capacity requirement are as follows:

• Main site (correlator) and Control site (Cape Town) – 3.8 Tbps

• Main site (correlator) and each Remote site – 152 Gbps

• The control centre in Cape Town needs to be connected to SKA users in other parts of the world

132 SKA Timelines

• 2000 International SKA Steering Committee formed • 2002 International SKA Management Plan established • 2005 International agreement on sites • 2007 International agreement on technical implementation • 2009 SKA scientific and technical proposal • 2012-2020 SKA construction

133 Pros/Cons

Pros • Boost SA’s status in scientific arena • $1B budget for SKA project • Foreigners investing in SA • Tourist attraction

Cons • Most of the $1B investment will be spent on R&D and manufacturing (which will be done by mostly international companies) • Severe limitations on future radio developments (including radar, wireless-telecommunications, Cell phone coverage, Television and radio broadcasting)

134 close to SKA sites and its remote sites (spirals) Question and Answer Session Convergence and its impact on SA Telecoms What is Convergence?

• There is no universal definition of Convergence.

• Convergence can mean:- – “Provision of various communication services like text, data, – image and video over the existing infrastructure”

– “Development of new infrastructure for handling multimedia transmission”

– “Managing of technologically and commercially distinct markets such as Broadcasting, Publishing, Cable TV, Fixed Voice, Cellular Mobile Services and Internet 137 Services” Types of Convergence ?

• Convergence of Technologies : – A common platform to deliver Voice, Data and Video services

• Convergence of Services: – Delivery of multiple services to the end users over the same medium/ network

• Regulatory Convergence: – Establishing a single Regulatory Authority by blurring the regulatory boundaries for telecommunication, information technology and broadcasting 138 Drivers of Convergence…1

1. Technology – Digitisation of transmission and switching networks – Global networks based on and open standards (IP) – Increase in Processing power of Computers – Emergence of new applications (ICT) leveraging enhanced software capabilities – Evolution of Broadband technologies(xDSL, CMTS, HFC, Broadband wireless- Fixed/ Mobile, Satellite)

2. Market – New markets and services such as Multimedia services,Video on demand, Interactive TV, Pay TV,Cable telephony,Unified Messaging services, Internet Telephony etc. – Integration of content service providers with access providers – Emergence of new Market players based on Potential of ICT 139 Drivers of Convergence…2

3. Customers – Option for new value added services in a modular fashion – Cheaper access to communication – Single Information Socket (for phone, data, video)

4. Regulation – Reduction in cost of regulation by optimum utilisation of regulatory resources – Ease of Regulation and Interconnection

140 Challenges to Convergence…1

• Migration to converged license regime

• Technical Standards

• Fair and non-discriminatory access

• Competition Issues

• Frequency Spectrum

• USO and Digital Divide

141 Challenges to Convergence…2

1. Migration to converged licensing regime:

– Maintenance of Level Playing Filed between existing and new players – Service based licenses with heterogenous terms and conditions of licenses – The existing service provider may need multiple licenses to provide services – Licence mapping for all current licenses from old to new licence categories – License transitions process – Licence structure design and drafting

142 Challenges to Convergence…3

2. Technical standards: – Standards supporting convergence still evolving

– Availability of multiple standards by different agencies (ITU, IETF, ETSI, ANSI, IEEE etc)

– Problems of inter-working between various standards

– Standards for Quality of Service not yet matured

– Need for Technology Neutral Regulations

143 Challenges to Convergence…4

3. Fair and non-discriminatory access :

– Complex Regulations governing access to bottleneck facilities

– Transparent , Non- discriminatory &Cost based access.

– Access to contents: Program access regime

144 Challenges to Convergence…5

4. Competition Issues

– Removal of industry specific regulations and its replacement with general competition law applied equally to all industries.

– Legal framework aiming at promoting competition and prohibiting a range of anti-competitive practices including: – Anti-competitive Agreements; – Anti-competitive mergers ;and – Misuse of market power

– Cross-boarder mergers and cross- media ownership restrictions in certain parts of the media

– Foreclosure of markets by anti- competitive conduct 145 Challenges to Convergence…6

5. Frequency Spectrum:

– Possible reallocation of frequency spectrum.

– Optimum allocation of spectrum to the new licensees.

– No precedence for allocation of the spectrum in the new regime.

– De-licensing of bands for certain applications.

146 Challenges to Convergence…7

6. Universal Service Obligations and bridging the Digital Divide

– Redefining the scope of Universal Service

– Identifying contributors for USO

– Formulation of regulatory policy to bridge the Digital Divide

147 Licensing under Convergence

• Purpose

– Authorise market players to do business

– Prescribe the rights and obligations of market players

• Forms

– Concessions – contractual arrangement between governments and operators

– Licences – unilateral act on the part of the licensing authority (preferred method in SA)

148 Types of Licenses

• Individual licences

• Class licences

• Licence exemptions

149 Individual licenses

• Often limited competition licences – used where market entry is restricted for policy reasons (eg because a limit has been placed on facilities-based competition) or for technical reasons (eg spectrum scarcity)

• Even in countries where competition is not restricted, individual licences may be used to impose special licence conditions on particular operators to ensure that they behave in a particular manner (eg where an operator has significant market power)

• Usually granted pursuant to some form of comparative selection process

• Preferred licensing method in South Africa

150 Class licenses

• Issued without any selection process

• Useful tool for simplifying the authorisation regime where there is no limit on the number of market entrants

• Class licences are generally employed where individual licences are not justified, but where there are significant regulatory objectives that can be achieved by establishing general conditions (eg consumer protection requirements

• Mainly used in countries that have fairly deregulated telecom sectors

• Not used in South Africa (yet)

151 Class licences

• Issued without any selection process

• Useful tool for simplifying the authorisation regime where there is no limit on the number of market entrants

• Class licences are generally employed where individual licences are not justified, but where there are significant regulatory objectives that can be achieved by establishing general conditions (eg consumer protection requirements

• Mainly used in countries that have fairly deregulated telecom sectors

• Not used in South Africa (yet) 152 Licence exemptions

• Generally granted in respect of service categories that are fully liberalised

• Useful tool in highly deregulated markets where an activity is technically caught within the definition of activities subject to regulation (eg offering a telecom service to the public), but where no justification exists for imposing any licensing requirements

• General requirements (eg registration with the regulator) tend to be imposed via general regulations and orders

• In South Africa, all telecom service providers are required to hold a licence, but ICASA is empowered to grant exemptions in respect certain service categories

153 Methods for choosing new entrants

• Competitive selection – Based on a single objective quantitative criterion – Usually used to allocate spectrum, not for service licences – Transparent, but can be costly

• Comparative selection – Based on a quasi-subjective assessment of one or more quantitative selection criteria – Not transparent – prone to accusations of bias and corruption from losing bidders – Currently the preferred method in SA for limited competition licences 154 Licensing trends

• General shift away from individual / comparative selection processes to class-based licensing systems for facilities-based competition (EU)

• Removal of all restrictions on the number of service- based and facilities-based competitors (most developed markets)

• Adoption of class licensing regime / granting of licence exemptions for service providers and content providers (Australia / Far East)

155 Convergence and licensing

• Convergence is usually coupled with deregulation and liberalisation of the licensing regime

• Usually, more stringent licensing requirements apply to network services / facilities

• Application services / content services are often subject to comparatively light touch regulation, and sometimes exempted from the requirement to hold a licence altogether

156 Licensing in Malaysia (1)

• Four-tiered regulatory regime for telecoms

– Network facilities providers – owners of communications networks

– Network service providers – provide the basic connectivity and bandwidth. Network service providers are typically also the owners of network facilities

– Applications service providers – provide particular functions to end users (such as voice services, data services, content-services, and e-commerce services)

– Content applications service providers – are a special subset of application services. Content services include traditional broadcast services and new services such as online publishing and information

157 services Licensing in Malaysia (2)

Category Individual licence Class licence Exempt Network facility Earth stations, fixed links & cables, Niche or limited purpose Broadcasting & production providers public payphone facilities, network facilities studios, incidental network radiocommunications transmitters facilities, private network and links, satellites, submarine facilities cables, switching centres Network service Bandwidth services, broadcasting Niche customer access Incidental network services, providers distribution services, cellular mobile services, niche connection LAN services, private network services, access applications services services, routers, services internetworking

Applications PSTN services, public cellular Audiotext hosting Electronic transaction service services, IP telephony, public services,provided on an services, interactive providers payphone services, public switched opt-in basis, directory transaction services, web data services services, internet access hosting and client servers services, messaging services

Content Satellite broadcasting subscription Not issued Internet content applications applications services, broadcasting, terrestrial free services service to air TV, terrestrial radio providers broadcasting

158 Licensing in Australia

• Open telecommunications market

• Three-tiered regulatory regime for telecoms:

– Carrier licences – subject to individual licensing, but no restriction on the number of facilities-based competitors

– Carrier service providers – exempt from the requirement to be licensed

– Content service providers – exempt from the requirement to be licensed

159 Comparison: Australia / Malaysia

• Australia applies uniform licensing rules to each tier (networking / services / content)

– Less intensive and complex to administer

– Only appropriate in a highly deregulated market (?)

• Malaysia applies different licensing rules to service categories within each tier, depending on their economic importance

– More complex and intensive to administer

– More appropriate in an environment of managed liberalisation such as South Africa (?)

160 Licensing regime in SA (1)

• Telecommunications – The Telecommunications Act does not take a tiered approach to licensing

– Facilities and application services are both treated as telecom services

– The Telecommunications Act does not deal with the transmission of content over telecom networks – this is self regulated between network operators and service providers

• Broadcasting – The broadcasting legislation distinguishes between broadcasting (content), signal distribution and multi-channel distribution – there is some attempt to tier the licensing regime 161 Licensing regime in SA (2)

• Broadcasting and telecoms are subject to different licensing requirements in SA

• In general, the licensing regime for broadcasting is far less restrictive and is subject to less executive interference than in the case of telecoms

• Eg: facilities-provisioning in the telecoms environment is restricted, whereas in broadcasting, anyone may self-provide, provided that a signal distribution licence is obtained

• Will the harmonisation of licensing regimes result in telecoms being deregulated to the broadcasting 162 standard? Convergence in South Africa

Telkom’s position Telkom’s Key Principles on Convergence • Managed liberalisation

• Clear Regulatory Environment

• Effective & Independent Regulator

• Self-regulation & Co-regulation

• Technology-neutral

• Fair & Balanced outcomes

• Consultative & Public process 164 Convergence Colloquium

• Telkom welcome convergence and has participated fully at the industry Colloquium on Convergence

• Draft 1 of the Convergence Bill was released to the industry for comment on 25 July 2003

• Thereafter industry was involved in an extensive process of effectively redrafting the Bill • The industry wants one piece of legislation that will replace the existing legislation governing ICASA and the telecoms and broadcasting industries – the DoC does not want to repeal the underlying legislation

• The redrafted Bill raised more questions than answers – effectively taking it back to the drawing board for further redrafting

• Redrafted Bill expected to be tabled in Parliament towards the end of 2004 165 Convergence Colloquium

• Convergence regulation in most countries post-dates the liberalisation of the market

• What is unusual about South Africa is that convergence regulation is taking place in a context of managed liberalisation – the market has not yet been fully opened up to competition

• Real purpose of the Bill is to pave the way for market liberalisation

166 Convergence Mapping: Pre-Convergence

ORIGINATION TRANSPORT DESTINATION

BROADCASTING (Broadcasting Act, IBA Act, ICASA Act, Sentech Act)

Broadcasters Broadcast Signal Distribution TV & Radio End Content (Sentech, Orbicom, etc.) Sets Users

ENHANCED DATA SERVICES (Telecommunications Act, ECT Act , ICASA Act)

VANS, Information Telecommunication Networks Computers & End ISP, etc. Services (Telkom, SNO, Sentech, USALs) Data Terminals Users

VOICE/DATA CONVEYANCE SERVICES (Telecommunications Act, ICASA Act)

End Users Voice Fixed Networks (Telkom, SNO, USALs) Voice/Data End Users Data Mobile Networks (MCOs, USALs) Terminals

167 Convergence Mapping: Post Convergence

ORIGINATION TRANSPORT DESTINATION

C0MMUNICATION SERVICES (Convergence Act)

SERVICE APPLICATION PROVIDERS SERVICES END (Broadcasters (Content Services) VANS, ISP, etc.) USERS (Information Services) CUSTOMER NETWORK PREMISES SERVICES EQUIPMENT

END VOICE END USERS DATA USERS

168 Convergence Mapping: Licencing

C0MMUNICATION SERVICES (Convergence Act)

CONTENT SERVICES

PROVIDERS

APPLICATION SERVICES PROVIDERS

NETWORK SERVICES PROVIDERS (OPERATORS)

169 The Bill so far… (1)

• Licensing regime

– 3 tier horizontal licensing regime • Network services • Application services • Content services

– 3 types of licensing methods • Individual • Class • exemptions

170 The Bill so far… (2)

• Transitional provisions

– All existing licences to remain valid for their full duration

– ICASA must convert current vertical licences to horizontal licences with the agreement of each licensee

– All existing network operators to be confined to their vertical markets for 2 years, after which they may compete across each others’ platforms (affects Cell C, MTN, Orbicom, Sentech, SNO, Telkom & Vodacom) 171 The Bill so far… (3)

• Clarification of the roles of the Minister and the regulator

– Gives ICASA full responsibility for regulatory processes

– Relegates the role of the Minister to policy- making only

– Main impact: gives ICASA independence in relation to licensing and regulation-making

172 The Bill so far… (4)

• Competition issues

– The Bill reinforces ICASA’s concurrent jurisdiction with the Competition Commission over general competition matters

– ICASA retains exclusive jurisdiction over sector specific competition matters (such as access, interconnection, facilities leasing, number portability, carrier pre-selection, etc)

173 Concluding remarks

• Technology changes quickly, regulations change slowly

• Legacy regulation is not relevant in the convergence era

• Prioritisation of regulatory challenges for optimum utilisation of regulatory resources

• Drawing the roadmap for implementation of convergence

• Need for efficient and timely dispute resolution mechanisms for converged licensing regime

• Capacity and expertise building in the regulatory bodies to meet the challenges of convergence 174 Question and Answer Session