1. Document Overview

1. Underserviced Area LicenseesStatus ReportFor Parliament Portfolio Committee: Communications12 February 2007Cape Town

2. 1. Document Overview • It attempts not to dwell on background and a mandate of USALs, which is presumably known to the Committee. • Brief reference is made on the objective of Usals and to the 1996 White Paper on Telecommunications Policy that recognized Telkoms’ inability to provide telecommunications services to less profitable areas. • In 2001 the Minister issued Policy Directions to ICASA, section 5 of the telecommunications Act with respect to SMME and Universal access to clearly demarcated areas, section 40(A) was inserted in the amendment of telecommunications Act in 2001. And all these were an attempt to enhance Universal Access and broader participation of PDIs in the telecommunications arena.

3. 1. Document Overview…continues • A collective views of six (6) of the seven (7) licensed Usals; and • Input from both second and third phase USALs. • The presenting team has a mandate either explicit or so expressly to brief the committee on the status quo of USALs. • The document recoils from and does not purport to be presenting views of either of ICASA, USAASA nor DOC but will where inevitable make reference to either of the said bodies and the Submission is no way compiled to defame any of the parties that may from time to time be mention in the document.

4. 2. Executive Summary 2.1 Purpose of Submission • In November 2004, Seven (7) Underserved Area Licensees were issued with Licenses in terms of the Telecommunications Act (TA), Act No. 103 of 1996, as repealed by ECA, Act No. 36 of 2005. • a gallant step towards addressing digital divide especially for rural and/or underserved areas; • however that enthusiasm and vigor has turned into agony and despondency for Usals, summarized but not limited to: - • Licensing; Terms and Conditions; • Funding; • Regulatory; and • Market forces.

5. 2. Executive Summary…continues • The situation of five (5) has after exhausting all possible avenues, with the said Institutions, to sought means of redress but to in vain and staggering on from one bankruptcy to the other: • eminent embarrassment to the “objective” at no distant future; • face untenable liquidation and/or either nonfunctional-trade status; • past and present writings about Usals but the commentators either had no insight into Usals affairs or had underhand motives;

6. 2. Executive Summary…continues 2.1 Introduction • A more intense and aggressive “business plan”, jointly and independent interventions on specifics and several, by the DOC, ICASA, USAASA and USALs with regards to the following: - • Government to manage liberalization and level playing fields for market forces take shape within the communications industry and thereby assist USALs to setoff; • ICASA to review USAL licenses, refer ECA, especially conditions in relation to ownership and regulate market; • USAASA to assist to the developmental nature of Usals that requires either private equity and/or reasonable funding from government as well as in research and development; • USALs to recruit, develop, train and retain scares skill and resources;

7. 2. Executive Summary…continues 2.2 ICASA • Lack of intervention by ICASA on Community Services Telephones (CST) interconnection regime; • Delays in Implementing Asymmetrical Interconnection Regime; • Clarity on Infrastructures Definition; • Pronouncement on Private/Institutional Funding; • Delays in Second and Third Phase Licensing; • Delays on Spectrum Issuing - (resolved late last year) • Poor Administration and Professionalism(communication and turn-around-times).

8. 2. Executive Summary…continues 2.3 USAASA • Funding and Instruments for Usals; • Unclear and Inexplicit terms and Conditions of the Subsidy Contract; • License Conditions that hinder private equity; • Implementation of Recommendations on Lisa Thornton Report, 30 August 2006; • Lack of strategy regarding USALS and Support thereof; and • Poor Administration and Professionalism (communication and turn-around-times.

9. 2. Executive Summary…continues 2.4 Other Operators • Market dominance or unfair or unreasonable competitive practices – Mobile Virtual Network Operators (MVNO); • Unfair Interconnect Regime; • Unregulated Community Service Telephones Rollouts; • Numerous meetings on each of the above items where held with each respective party but nothing concrete can be reported. All but one of the above items has been raised with relevant bodies for over a period of two and half years but with no concrete or measurable outcome from the stakeholders.

10. 3.RECOMMENDATIONS 3.1 SHORT TERM (before end of Financial Year 2006/7) • Immediate review of the Subsidy Contract with the USALs; Immediate engagements on USALs Skills Development and Training, Mentorship, Policing and Systems Implementation; • Proper Co-ordination between DOC, USAASA and ICASA is critical

11. 3.RECOMMENDATIONS…continues 3.2 MEDIUM TERM (within six (6) months of the Financial Year, 2007/8) • Implementation of the LISA THORNE Report; • Review of the USALs License, Terms and Conditions; • Facilitate Speedy Allocation of Radio Frequency Spectrum; • Facilitate funding – DBSA, IDC, Agencies, etc. • Exempt TAX on Grant.

12. 3.RECOMMENDATIONS…continues 3.3 LONG TERM (within the Budget Year 2007/8 & Post) • Legislation • Amend the Act on subsidizing conditions of the USALs. • Regulations and Policing • Infrastructure Network Service-Sharing of USALs with other government Institutions – Municipalities, Provincial Governments and National, as well as Government Agencies within the USAL operating under serviced areas. • Business and Market • USALs to function as fully fledged Business Enterprises – after 3-5 years of operations.

13. 5. CONCLUSION • APPEAL TO THE COMMITTEE • USALs COMMITMENT

14. 6. VOTE OF THANKS • THANK YOU