Cell C: Oral Representation: April 3, 2001 Sheet 1 Portfolio Committee on Communications Hearings on…

Cell C: Oral Representation: April 3, 2001 Sheet 1

Portfolio Committee on Communications

Hearings on Telecommunications Policy Directions

(April 3, 2001)



Presentation by

Cell C (Pty) Ltd.

Intended Telecommunications Policy Directions

(published by DOC, March 20, 2001)



• Dr.Paul Doany, Chief Adviser, Cell C (Pty) Limited.• BEng. (Electrical/Electronics Eng’g), American University of

Beirut, 1977

• MSc (Digital Electronics & Communications Eng’g), UMIST/Bradford Univ., UK., 1978

• PhD (Communications Eng’g), UMIST, UK, 1981.

• Representatives in Attendance:

• Ret. Lt. Gen. Lambert Moloi

• Zwelakhe Mankazana, Director and

• Norman Ober (Verizon/USA), Advisor to CEO.

Cell C Representatives


Market Structure Issues in Intended Policy

• Licences cited in intended policy:• PSTS: Second National Operator (SNO), Telkom,

Sentech• MCTS: Vodacom, MTN, Cell C

• New definition: ‘fixed-mobile service’?• Under-Serviced Areas• Value-Added Network Services (VANS)• Assignment of 1800MHz Frequency Spectrum• Third Generation (3G)


Fundamental Principles

• Fair competition & Level Playing Field:• Clearly mandated in the Act, and must be

considered at least for the following:• Fixed Services: denoted as PSTS (Public

Switched Telecommunications Service), which strictly excludes mobile cellular

• Mobile Services: denoted as MCTS (Mobile Cellular Telecommunications Service)


Fundamental Principles: MCTS

• MCTS - Fair competition & Level Playing Field:

1. VODACOM

3. CELL C2. MTN 4. Fourth ?

Time1993/4 2001 2003?


Fundamental Principles: PSTS

• PSTS - Fair competition & Level Playing Field:

2b. SNO (FS)1. Telkom (FS) 3. TNO? (FS)

Time…1996… 2002 2007?

2a. Sentech (IS)

FS: Full Service: international, long-distance, local access, etc.I: International Services only


Convergence? What Convergence?

• ‘Convergence’ is one of the most misused term in telecommunications today.

• It means different things to different persons, and cannot be cited in policy, without clear unambiguous definition.

• This lacking in the current draft.


‘Fixed-Mobile Service’

• Definition is not clear:‘Fixed-mobile service means a service that uses the same communication device in a static or mobile environment, using fixed or mobile infrastructure or a combination thereof, or any technology that enables such service to be provided’


GSM1800 Allocations?

• The intended policy states:ICASA shall develop regulations of 1800 MHz radio frequency to Cell C, MTN, the SNO, Telkom and Vodacom.

Regulations must provide for new conditions of licence and a new interconnection regime and must take into account the needs of existing and future licensees. ICASA shall complete the licensing process for 1800MHz within six months of publication of this Policy Direction.


Cell C needs GSM1800 yesterday?

• Cell C should be given an allocation in the GSM1800 band without further delay, in line with its licence application submitted June 14, 1999, as this is the core technology to be used from the outset. However, and in accordance with the licence application, additional allocations in other bands are required, to compensate for the inferior propagation characteristics in 1800MHz as opposed to 900MHz (mentioned for completeness: not subject of this discussion).


Spectrum Pricing for GSM1800?

• While GSM1800 has very high value to MTN and Vodacom, the opposite applies to Cell C, where GSM1800 is a liability in the lower density areas, with network roll out costs increasing by around 50% for equivalent overall coverage using GSM900.

• Such differentiation in pricing has been in place in other countries (e.g. UK). This should be considered by ICASA.


Third Generation (3G)

• The intended policy states:ICASA shall issue third generation service licences to Cell C, MTN, the SNO, Telkom and Vodacom.

• Clearly, the South African market is not large enough for five 3G licences. It is probably not even viable for three ???



• MCTS licensees are better able to provide 3G services, because they have base station sites.

• But, what is the rationale behind such a policy: are five operators to have base stations installed every 150m to 200m in urban areas?

• Is there enough spectrum for that many licensees?



• Why would PSTS licensees need 3G? • For example, SNO can use FWA/

broadband technologies (including, LMDS), offering fixed broadband services at much lower costs than 3G. Such solutions also enable flexible service offerings, in excess of 2Mb/s.

• Even 2Mb/s would not be cost-effective or spectrum efficient with 3G, especially in high density areas.



• We believe that it is not viable for Telkom to use 3G, from both technical and financial viability perspective. If the intention is to enhance service offerings to their customers, there are cheaper solutions.

• Furthermore, Telkom can offer DSL services over its twisted pair access network, at small marginal costs, throughout the areas where businesses are located. Why would they need to have 3G?



• It is suggested to limit the licences to three, and allow roaming (although roaming will have to be mandated, and this has its own difficulties?).


Other Considerations

Cell C Oral Representation: October 18, 2000


• The policy for GSM1800 also refers to new interconnection regime?

• Until such a new regime is mandated, what should a new entrant, as Cell C be entitled to?- Uniform interconnection terms should apply,

in strict conformance with non-discriminatory licence obligations in place (common carrier obligations).

New Interconnection Regime?


- Third cellular operator should enter the market on identical terms to the incumbent operators, until such time as these all change simultaneously.

- Third cellular operator should not fall victim of current negotiations between a

monopoly/PSTS licenseeand

duopoly/MCTS licensees.

New Interconnection Regime?


Other Critical Issues

for Consideration in the

Intended Policy



• Currently not included. It is advisable to have specific guidelines in that regard.

• Clearly, the third cellular licence application process allowed for roaming, and it would be helpful to include provisions in respective licences where roaming is allowed (or prohibited).

Domestic Roaming


• Infrastructure Sharing will become more prevalent, with new operators entering the market, including both fixed and mobile segments.

• Current provisions are probably sufficient, but could benefit from tailored update

• Environmental impact factors become more critical with increased radio sites…

Infrastructure Sharing


• Interconnection and facilities leasing are crucial to any new entrant.

• Currently, only Telkom have such rights, exclusively. What will happen after SNO licence is issued?

• The industry is crying out for clarity and stability on such basic parameters, as they have material impact on our business plans

Interconnection/Leasing (Telkom)


• Number portability was cited as a policy objective before, however no progress in this matter has been realised since the failed attempt to introduce effective amendments to the Act in early 1999.

• While this is known to be a complex matter, delaying it any further is not in the public interest.

Number Portability


• Are self-provision rights to be considered for the mobile cellular operators?

• This is vital to the MCTS operators, especially for targeting under-serviced areas.

• This is in the public interest, and should not be unduly delayed.

Right of Tx Self-Provision


• In a duopoly situation (MCTS), certain practices are sometimes tolerated. However, with a new entrant coming into the market, it is absolutely crucial that effective restrictions on such practices be introduced by ICASA, as applicable to the telecommunications sector at large: Down-stream distribution of cellular services (so called service ‘distributors’ as opposed to ‘service providers’); content providers; application providers; web portals; others

Regulatory Restrictions on AntiCompetitive Practices


Summary & Conclusion



- Do not delay third cellular spectrum licensing any further, to enable commencement

- Plan out ‘Amendment’ licences for all operators in line with policy in a reasonable time frame (6 months?)

- Number portability to be introduced in the policy directives



- Fair and non-discriminatory interconnection/leasing (initially with Telkom, and later with the SNO)

- Right of transmission (self-provision) for mobile cellular operators in the shortest time frame possible

- Explicit and mandatory restrictions on anti-competitive practices with particular attention to emerging technologies



Cell C thanks the Portfolio Committee on Communications for being given this opportunity to make this oral representation, and is happy to answer any questions.

Thank You ….


C you

soon !!!Cell C (Pty) Ltd.

April 3, 2001

Cell C: Oral Representation: April 3, 2001 Sheet 1 Portfolio Committee on Communications Hearings on…

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