7 March 2007
INTRODUCTION TO APC
The Association for Progressive Communications (APC) is a global network of 49 civil society organisations working to – amongst other aims – advance affordable access to information and communications technologies for social justice and development. Network members are primarily based in developing countries in Latin America and the Caribbean, Africa, South and East Asia, and South and Eastern Europe, including four in South Africa: Community Education Computer Society (CECS), SANGONeT, Women’sNet and Ugana-Afrika.
THE PURPOSE OF ESSENTIAL FACILITIES REGULATIONS AND THE OBLIGATIONS OF ICASA TO SOUTH AFRICAN CONSUMERS
APC thanks the Independent Communications Authority of South Africa (“the Authority”) for the opportunity to make comment on the oral presentations on the draft regulations prescribing a list of essential facilities and matters related thereto, pursuant to Section 42(8) of the Electronic Communications Act No. 36 of 2005 (“the Act”).
We fully support the introduction of these Essential Facilities Regulations because they will create conditions of open access on a non-discriminatory basis to undersea-based submarine cables. The South African government is a signatory to the Protocol on Policy and Regulatory Framework for NEPAD ICT Broadband Infrastructure for Eastern and Southern Africa, which prescribes regulatory conditions of open access to undersea-based submarine cables. All signatories commit themselves to the Open Access principle in Article 11 of the Protocol and to harmonise their national regulatory frameworks in terms of this principle in accordance with Article 12. These open access principles should be applied to the regulation of the SAT3/WASC/SAFE undersea cable as a matter of urgency.
We consider the mandate and role of ICASA to include the application of measures and processes to facilitate South African telecommunications networks and service suppliers’ compliance with both national legislation and regulation as well as regional and international protocols to which the South African government is a signatory.
THE CONTEXT AND NEED FOR ESSENTIAL FACILITIES REGULATION IN SOUTH AFRICA
In addition to helping create the conditions for effective competition within the sector, it is also the Regulator’s obligation to provide consumer protection and address consumer rights vis-a-vis suppliers of telecommunications networks and services. These rights include, among others: (i) the right to be informed; (ii) the right to safety; (iii) the right to choice; and (iv) the right to be heard.
With respect to the right to choice regarding telecommunications networks and services at an affordable cost – or the current lack thereof – we call on ICASA to take immediate action to counter anti-competitive behaviour of Telkom. Its sole control of submarine fibre-optic cables, the landing station at Melkbosstrand, as well as the land-based fibre optic cables, have resulted in anti-competitive practices in South Africa, where telecommunications costs are among the highest globally.
The South African consumer, and economy, is bearing the brunt of the costs of Telkom’s prize squeeze for access to fibre-optic network capacity. The cost of international bandwidth in South Africa was four to five times that in comparable telecommunications markets in Malaysia and Brazil. International internet bandwidth access in South Africa is 29 bits per person while Malaysia has 127 and Brazil 154 bits per person (
World Bank: 2006 Information and Communication for
Development – Global Trends and Policies, 2006).
The purpose of Essential Facilities Regulations is to unlock bottle-necks that create the conditions for: (i) charging high prices for access to essential facilities (that are then passed onto private and corporate consumers of telecommunications services) and (ii) a prize squeeze by which Telkom reduces any potential for effective competition in the telecommunication services retail market. In this sense, a prize squeeze has a similar effect to an outright refusal of access to the essential facilities: it makes it near impossible for a fully competitive telecommunications market to emerge.
MARKET REVIEW, SIGNIFICANT MARKET POWER (SMP) AND ESSENTIAL FACILITIES LISTING
There are segments of the telecommunications market that are operated by telecommunications network and service suppliers with SMP. The essential facilities market is one such area where the ownership and control by Telkom – as the sole provider – disproportionately shapes the availability, variety, quality and prices of telecommunications services.
We submit that Telkom’s call for a market review – when it has clear SMP in the essential facilities market – is a red herring, and a clear delay tactic. With the planned Seacom submarine cable coming online in only eighteen months, the Telkom call for a forward-looking market review before any declaration of an EF list will effectively delay the reduction of communications costs for at least two years. A market review is in any case not required before the list of essential facilities is made. The Act only requires the Authority to review the list of essential facilities once every 36 months.
We strongly urge ICASA to disregard this call by Telkom.
The high price of telecommunications is a drag on South Africa’s economy, and like the energy crisis is a national economic emergency. We need an immediate reduction in costs. Declaring the submarine fibre-optic cables, the Melkbosstrand landing station, and the land-based fibre-optic cables essential facilities will bring that cost reduction.
APC PROPOSAL: STAGGERED APPROACH TO DECLARING LIST OF ESSENTIAL FACILITIES
APC believes it is in consumers’ and the national economic interest to take a phased approach to the declaration of the Essential Facilities list.
Specifically, we propose that the undersea-based fibre optic cables, the cable landing station, co-location space, land-based fibre optic cables, main distribution frame and backhaul circuits, as well as access to toilets and parking facilities, are listed as essential facilities with immediate effect. As an electronic communications network supplier (ECNS) with SMP in control of essential facilities, Telkom must then carry the obligations imposed on it by the regulations.
With respect to facilities in markets and market segments where SMP is not so evident – such as masts and towers, local loops and sub local loops, testing stations and testing equipment – we propose that these are subjected to a market review for determination of SMP and the expansion of the Essential Facilities list.
CONNECTION WITH FACILITIES LEASING REGULATIONS AND PRICING REGULATIONS
The terms and conditions affecting access to essential facilities should be dealt with under the proposed regulations on facilities leasing that are being considered by the Authority in terms of section 44(1) of the Act. We request the Authority to include a reference electronic facilities leasing offer containing model terms and conditions for electronic communications facilities listed as essential facilities in terms of section 43(8) of the Act.
The regulations prescribing the list of essential facilities need to be urgently complemented by regulations establishing a framework for the establishment and implementation of wholesale rates in terms of section 47 of the Act, otherwise merely listing the essential facilities will have no impact on high prices for international bandwidth in South Africa. Wholesale rates for access to submarine cables should be determined as a matter of urgency.