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Agenda

Presentation to the Communications Portfolio Committee on the Telecommunications Amendment Bill Brett Da w son Managing Director. Agenda. Objectives of the Bill Internet Solutions (IS) The ISP and VANS business model Can the Bill be improved to attain the Objectives ?

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Agenda

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  1. Presentation to the Communications Portfolio Committee on the Telecommunications Amendment BillBrett DawsonManaging Director

  2. Agenda • Objectives of the Bill • Internet Solutions (IS) • The ISP and VANS business model • Can the Bill be improved to attain the Objectives ? • Uncertain Definition of PSTS • VOIP • VANS Definition • Strong Independent Regulator • Multimedia Services • Conclusion

  3. Objectives of the Bill • Certain and stable Regulatory environment • Maximise value of Telkom and other State assets • Drive Competitiveness of Telecommunications Industry and South Africa in general • Enabling environment for SMME’s • Extend Universal Service and upliftment • Maximise opportunities that emerge from electronic activity.

  4. Internet Solutions • Successful SMME • Started in 1993 by 3 University students. • Today employ 340 people , 46% are PDI’s • Services we provide: • Internet Access - to 1800 Corporates and SMME’s • VPN - Under OmniLink Company to 3000 offices/branches. • VISP • Remote Access - To over 300 000 consumers (including ABSA) • Security • Hosting - Websites and Electronic applications • Both OmniLink and IS are VANS • Compete in a Vibrant, dynamic, compettitive Industry • Hundreds of ISP’s, VPN’s and VANS providers in SA.

  5. The ISP and VANS Business MODEL • Recognise policy to obtain Basic Telco. Facilities from PSTN Licencee • Then ISP’s & VANS provide extensive Value-added Services on-top of that. • Security, user authentication, e-mail, Pro-active Management, Traffic prioritisation, Service Levels, Performance Reporting etc • Bundle our Services together with the Basic Telco facilities into one package. • For the Business Model to work the Telco facility MUST be shared: • Affordibility - No SMME could afford a dedicated facility. • Quality of Service • So… let a dynamic industry continue to evolve above the basic Telco layer to ensure: • Greater Universal Service • Lower Cost to Consumers • Vibrant SMME sector - across Whole country • Service Innovation

  6. Achieving the Objectives of the Bill • Uncertainty of PSTS and PSTN defenitions • Not clear exactly what is included in the “exclusivity” • Ensure that we limit these to the Basic Telecommunications service • IF VOIP privelige is “part of” PSTS then Bill overturns ICASA ruling that IP is a VANS service. • Result - ISP and VANS Industry destroyed by HUGE Competitive advantage of PSTS Licencee.

  7. Achieving the Objectives of the Bill • VOIP • Why do the PSTS Licencees need exclusivity on VOIP ? • The ISP’s and VANS DON’T want to be PSTS’s, merely want to convey Voice signals with the Data signals. • Basic facilities (that carry the voice and data) are obtained from the PSTS’s anyway. • Why discriminate against the ISP’s and VANS and SMME’s (in higher teledensity areas) ? • Seeking to assist SMME’s in under serviced areas but destroying in rest of Country ? • Government White paper - Voice exclusivity over ! • Let a Vibrant Industry compete in this space for the benefit of all South Africans. • Let ISP’s and VANS transmit Voice

  8. Achieving the Objectives of the Bill • VANS Definition. • VANS is a VANS worldwide - ‘electronic transaction service” makes no sense. • ICASA has developed a defenition for VANS after extensive consultation - please use it • IP is a VANS Service not a PSTS…….ICASA Ruling • Allow Voice from May 2002. - Don’t destroy an emerging Vibrant Industry now ! Data only(VANS) versus Data + Voice is the Death knell of the Industry. • A VPN is NOT a PTN - Factually and ICASA Ruling.

  9. PSTS’s can compete with VANS The PSTS Licencees can compete here anyway - through VANS licence. They have the size, muscle, skills, Government support, These are & will be Massive businesses. Let them have exclusivity over Basic Services and encourage Competition above that. Why do they need protection from ISP’s and VANS ? (eg VOIP exclusivity) We are Tiny businesses compared to them, with little means

  10. Achieving the Objectives of the Bill • Strong Independent Regulator • There are three section 100 complaints currently affecting IS: • Telkom versus OmniLink 1 Aug 2000 : not resolved • Telkom versus Internet Solutions: 1 Feb 2001 : not resolved • SAVA versus Telkom Nov 1999 : • ruling in favour of SAVA 6 & 7 July 2000 • Telkom took ruling to high court on review • sent back to ICASA, not resolved • Since Telkom witholds new services pending resolution of complaints, IS has had to build three backbone networks, two of which are frozen • This clearly has enormous implications for service costs and operating efficiencies • This has already stifled the growth of e-business initiatives amongst IS customers • No section 100 complaint affecting IS has yet been resolved • Must Beef up powers NOT dilute !!

  11. Achieving the Objectives of the Bill • IS has been operating under a difficult regulatory environment for more than four years • Three networks, two frozen • Hundreds of thousands in direct legal costs • Man hours lost in legal disputes are critical for a small business • Telkom can and does withold services to IS unilaterally • No resolution of disputes by the regulator • A weak Regulator will: • Make it even more difficult for IS to continue its business • Result in endless legal disputes, with PSTN licensees witholding services • Put jobs in both IS itself and its 120-odd channel partners at risk • Slow down the growth of electronic business in South Africa and stifle innovation • Result in poor and overpriced service to SMME companies pursuing electronic business ventures

  12. Achieving the Objectives of the Bill • Strong, Independent Regulator required to maximise value of Telkom Listing. • Avoid Voiciferous litigation, WTO complaints, Constitutional Complaints.

  13. Achieving the Objectives of the Bill • Multi-media services ( Convergence with broadcasters) • Overlap with VANS without restrictions - Voice and leasing of basic facilities. • This will enable them to compete at unfair level of service and discriminatory pricing that will drive ISP’s and VANS out of business. RATHER: • Licence as a VANS • Allow VANS to carry Voice • Ensures same result.

  14. Conclusion • Objectives of Bill met if: • Clearly define boundaries of PSTS to Basic facilities • Allow ISP’s and VANS to compete for Value-added services with all other parties PSTS’s, SMME’s and Multi-media services. • Define VANS correctly and Let VANS carry voice. • Allow Basic Infrastructure to be shared. • Ensure we have a strong Independent Regulator. • IS appeals to you to make the necessary ammendments to ensure we have a Vibrant Industry, a more compettitive Country and greater Universal access to telecommunications services.

  15. Thank You

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