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PRESENTATION BY SENTECH LIMITED TO THE PORTFOLIO COMMITTEE ON COMMUNICATIONS, REGARDING THE TELECOMMUNICATIONS AMENDMENT BILL 2003

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SENTECH TEAM

• Gladwin Marumo

(Chief Operating Officer)• Johan Raath

(Group Executive Business Development)• Dingane Dube

(Senior Manager: Government & Regulatory Affairs• Matime Nchabeleng

(Manager: Government Relations)

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INTRODUCTION

DESIRED OUTCOME OF THIS PROCESS, INTER ALIA :-

• Declaring Sentech a Public Operator for its Carrier of Carriers and Multimedia Services Licences– Benefit to the End User

– Obtain facilities from Telkom at Wholesale Rates

• Acknowledgement that Sentech carries traffic of the End Users

• Limitations placed on Sentech need to be re-examined• Commitment to introduce competition in the Communications

Sector• Enabling Sentech to fulfil its statutory mandate as contained

in the Sentech Act and Telecommunications Act

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HISTORICAL OVERVIEW:

1. The first draft supplementary Facilities leasing guidelines (Government Gazette, Notice Number 358 of 15 March 2002) declared Sentech a Public Operator.

1. These guidelines read as follows:

“ 2.1 These guidelines apply to the persons identified in section 2.2 and set out additional rights and obligations applicable to such persons when entering into a Facilities Leasing Agreement pursuant to General Notice 1260 of 2000….

2.2 These guidelines shall apply to the following:

a. PSTS licensees contemplated in Section 36 of the Telecommunications Act as amended and does not apply to licensees as contemplated in section 40A of the Telecommunications Act as amended.

b. Sentech, only in relation to the provision by Sentech of carrier of carriers services.”

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2.3 For purposes of these guidelines and the matters addressed herein, Telkom SA Limited is declared a major operator and its facilities leased in accordance with these guidelines shall be considered essential facilities.

2.4 For purposes of these guidelines and the matters addressed herein, persons listed in section 2.2 are public operators”.

2. Draft Interconnection Guidelines, published under Notice 784 of 2002 in Government Gazette No. 23458 on 24 May 2002

“Public Operator’ means a provider of a public switched telecommunications service or a public mobile telecommunications service, or an under-serviced area licensee or Sentech for the purposes of its provision of multimedia services or carrier of carriers service.” (Sentech’s emphasis)

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Public Operator status for purposes of interconnection and facilities leasing

• To provide the services at affordable prices, Sentech must be able to obtain facilities at competitive prices (wholesale prices)

• Real benefit to economy if duplication of facilities is limited.

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Sentech pays Telkom retail rates for SAT3 half- circuits

Sentech pays Telkom retail-based rates for national transmission

Overseas Operator

SA Mobile

OperatorSAT3 Cable

Telkom uses SAT3 half- circuits at cost

SentechSAT3 Cable

Sentech and Telkom pay Mobile termination rate = TM

Overseas operator pays Sentech termination rate = TS = TM + costs + margin

Telkom uses national transmission at cost

Note: Competition between Sentech and Telkom for traffic

Customer pays retail rate TR = TT or TS + costs + margin

Direction of call

Customer makes call to SA mobile customer

SA Mobile customer

Telkom

Overseas Operator pays Telkom termination rate = TT = TM + costs + margin

Overseas customer calls SA Mobile customer via either Sentech or Telkom.

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Sentech pays Telkom retail rates for SAT3 half- circuits

Sentech pays Telkom retail-based rates for national transmission

Overseas Operator

Telkom

SAT3 Cable

Telkom uses SAT3 half- circuits at cost

SentechSAT3 Cable

Sentech pays Telkom termination rate = TT

Overseas operator pays Sentech termination rate = TS = TT + costs + margin

Telkom uses national transmission at cost

Note: Competition between Sentech and Telkom for traffic

Customer pays retail rate TR = TT or TS + costs + margin

Direction of call

Customer makes call to Telkom SA customer

Telkom customer

Overseas Operator pays Telkom termination rate = TT

Overseas customer calls Telkom customer via either Sentech or Telkom.

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Customer Branch A

Customer Branch B

SentechTelkom

Sentech radio link at cost to Sentech

Telkom optic fibre charged to Sentech at retail-based rates.

Telkom optic fibre at cost to Telkom

Telkom optic fibre at cost to Telkom

Sentech and Telkom competing for provision of video conferencing service to a customer. Sentech using Telkom links to customer A at uncompetitive prices

Sentech and Telkom competing for Multimedia customer with Telkom charging retail-based rates

for facilities.

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At this time, VANS can utilise Sentech’s network up to the point of interconnection with the VAN, but must use Telkom network to provide Sentech services to their customers.– Only Telkom benefits !!!

Why Sentech should be included in S40(2):

– Costs• increased competition• Affordable prices to end-customers

– Services• VANS able to offer Multimedia Services to their

customers• VANS able to utilise Sentech’s Multimedia network

AMEND - S40 (2)

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