Parliament of the Republic of South Africa Public Hearings on: Interception & Monitoring Bill 2001

1. Parliament of the Republic of South Africa Public Hearings on: Interception & Monitoring Bill 2001 Submissions By Cell C (Pty) Limited August 30, 2001

2. Cell C representatives • Zwelakhe Mankazana Director • Zeona Motshabi Head of Corporate Communications • Norman Ober Advisor to the CEO • Dr. Jonathan Fiske Regulatory Planning Manager • Rob Otty Partner, Deneys Reitz

3. Contents Cell C (Pty) Limited Rights and Obligations Accountability Technical / Compliance Considerations Commercial Considerations Effect of Legislation on Cell C Recommendations and Concluding Remarks

4. Background Cell C is a newly licensed cellular mobile operator and is under-going the process of preparing for its commercial launch into a market with 2 well-established cellular mobile operators. Cell C will initially offer its services through a combination of its own rolled-out network and through a roaming agreement with Vodacom. Cell C is is 40% owned by CellSAf a consortium of Black Empowerment Groups and 60% by Oger Telecom, which carries the risk for 100% of Cell C’s startup finances. CellSAf remains liable for 40% of the investment required in Cell C.

5. Fundamental Principles Cell C: • supports the intention of the Interception & Monitoring Bill (“the Bill”) for the purposes of protecting South Africa’s society against crimes of a serious nature, in ensuring the protection of national security and in supporting emergencies. • believes that the intention of this Bill is a serious effort to pro-actively counter criminal elements that severely handicap South Africa’s social and economic fabric, obstructing the country’s development potential. • acknowledges that monitoring and interception is a sensitive subject which, if misused, can disrupt peoples’ and companies’ rights to privacy. • acknowledges that it, as well as other communications service providers, will have to implement a newer form of interception & monitoring

6. Fundamental Principles Cell C has given the Bill consideration from both the perspective of how Cell C as a private cellular mobile operator and service provider is affected and from the perspective of its customers Cell C concluded that the Bill in its current form is deficient in that it: • Appears to lack clear accountability processes • imposes a high burden on private, commercial operators & service providers • assumes guilt and non-cooperation and over-penalises for incomplete compliance of monitoring orders • risks hindering South Africa’s economic and social development through constraints on technological deployment

7. Rights and Obligations • Public Interest Cell C recognises that there are situations where the public interest demands that interception and monitoring of private communications be permitted to prevent or prosecute serious crimes or to protect the security of the country • Licence Obligations The Telecommunications Act 1996 and the mobile service licence granted to Cell C (as with all such licences), place an obligation on Cell C to preserve the privacy of communications on its network, which obligation has to be balanced against the purposes sought to be achieved the Bill. • Bill of Rights The Bill of Rights confers on citizens the following: • right to privacy, • right of access to the Courts and • rights of accused persons under the Constitution

8. Rights & Obligations Constitution of the Republic of South Africa Interception & Monitoring Bill Telecommunications Act and Cell C Licence customer The Bill places a high burden of responsibility, costs, technical-requirements on existing responsibilities of the licensee ( a private “legal person”). This burden of responsibility on the private “person” must be limited as much as possible The right to call for costs should carry with it the obligation of prudent financial consideration

9. Accountability • Although the information gathered by monitoring communications and individual movements may be used to prevent or investigate crimes, every opportunity must be used to prevent: • Corruption • Misuse of information • Abuse of position / power (or perceived power) • “Fishing expeditions” • Unaccountable or unauthorised individuals issuing or executing Directions or Warrants • Unnecessary retention of information: • By operator / service provider • By government enforcement agencies

10. Accountability • Difficulties in compliance • Providing new services in a startup environment • Roaming • Technical constraints • Time (e.g. the request for call-data extending over a period of time, may not be instantaneously available) • Appropriate legal measures and penalties for non-compliance • Section 205 of the Criminal Act • Licence revocation (after a 2nd offence, revocation may be ordered by the Minister of Communications) • Fines

11. Accountability • Cell C considers the following to be important: • Closed list of government officials entitled to call for call information • Seniority and integrity • Identifiable to telecommunications companies • Guidelines are drawn up in consultation with the communications sector about achievable and realistic objectives (e.g. time periods for call-record collections) • Limit the applicability of Section 205 of the Criminal Act to operators (or amended to refer to utmost extreme case of blatant lack of co-operation)

12. Technical / Compliance Considerations • Cell C intends full compliance with this requirement, but: • Interception is not part of our core business – need a “fail safe” system with straight-forward administration • Concern with privacy safeguard if system uses anything short of a fully contained administration process • Public privacy concerns • Operator / service provider liability concerns • Initial review of some potential intercept solutions may not sufficiently contain access at operator level • Could include solutions utilising HLR as subscriber intercept marking point • Initial review of vendor – specific interception solution appears to offer better containment of access • Requires vendor proprietary software in each MSC • Supports interception of broader base of services

13. Technical / Compliance Considerations • All solutions will require equipment additions: • Line termination groups • Fixed – links (inter-MSC and to monitoring center) • Intercept control unit • All solutions require trained, reliable core of operations specialists • All solutions need to ensure that advances in technology and new, competitive service offerings to SA subscribers are not delayed by need to update interception capability • Subscriber Database Considerations • Expect that organised crime will subvert user identification requirement • Notification to operator of changes to pre-paid subscriber user data may not occur • Cell C domestic roaming agreement may require tracking subscribers on 2nd networks

14. Commercial Considerations • Costs for interception and monitoring can be significant • equipment & installation • system implementation • system management • staffing faciltiities • US and UK governments have offered wireless industry and service providers significant financial assistance to support the implementation of interception technologies • - FBI offered USD 500 million • South Africa, using mature GSM technology, will be able to benefit from solutions developed for other operators, but still the costs remain significant • Cell C can only sustain cost-based reimbursement of associated CAPEX / OPEX • Certain costs are clearly not operator specific • - the provision of inter-facility 2MB links should be arranged directly with TELKOM and/or the Second Network Operator by the government • - the interception control centre and monitoring centre are not GSM network equipment and should be supplied by the government.

15. Recommendations and Concluding Remarks

16. Cellular Mobile Development Mass Market Uses Video Streaming 2,000 1G 2G 3G Still Imaging 384 Remote Medical Service (Medical image) Audio Streaming Video Conference (High quality) 144 Video on Demand: Sports, News Weather Text Messaging 128 Data Transmission Speed - k bps Voice Video Conference (Lower quality) 64 JPEG Still Photos Mobile TV Image E-Commerce Viideo Surveillance, Video Mail, Travel 32 Electronic Newspaper Voice Mail Karaoke Electronic Publishing 9.6 Mobile Radio Fax E-Mail 0 PSTN Source: Motorola Audio Data Telephone (Voice) Weather, Traffic, News, Sports, Stock updates Voice-driven Web Pages Streaming Audio 1980 1990 2000 2005 2010 +

17. Effect of new legislation on Cell C Cell C is controlled by a consortium of 40% Black Empowerment group and 60% by Oger Telecom. Jointly the parties will invest $650m over the next 5 to 6 years. Cell C has budgeted to: • Contribute a % of revenue to the Universal Service Fund • Pay a % of NOI to the regulator • Pay taxes • Pay service and spectrum licence fees • Build 52 000 Community Service Telephones • Commit a minimum total investment of 1Billion Rand towards a National Economic Development Plan directed towards empowerment Cell C relies on current and future operations (e.g 2.5 G) to fund these commitments Cell C has not budgeted for monitoring and interception infrastructure .

18. Recommendations • Government or appropriate Ministry covers costs for infrastructure and facilities set-up • Government or appropriate Ministry pays for services at commercial tariffs • Warrants authorized by an identifiable, high ranking official, judge in service • 4. Penalties for non-compliance should be fines • 5. Section 205 of the Criminal Act should not be applicable to the Interception & Monitoring Bill • Demonstration of inability to meet a request for information, monitoring or interception should be permitted before an impartial body & judge • New telecommunication applications should not be subject to progress in the monitoring of such applications. Rather government should co-operate with the industry in finding solutions that meet international best practice.

19. Thank You