• OTHER CONSIDERATIONS
  • SPECIFIC EXAMPLE
  • What wireless Internet service is Megawan actually providing
  • Statement of lawfulness – or – what gives Megawan the right to provide this service
  • What action is being taken against Megawan
  • RECOMMENDATIONS
  • In respect of




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    ADVISORY PREPARED FOR

    THE INTERNET SERVICE PROVIDERS ASSOCIATION


    IN RESPECT OF


    WIRELESS INTERNET PROVISION
    This note is intended as an overview only. It is in no way to be interpreted as a legal opinion or advice. It is an internal ISPA document for informational purposes only and does not necessarily reflect the views of the ISPA membership, or those of the Management Committee.
    RELEVANCE
    There is a growing international trend towards the use of wireless telecommunications technologies in addition to, and occasionally in replacement of, existing fixed-wired telecommunications technologies.
    In South Africa this trend has been seen with regard to the adoption of GSM based wireless telephony products. In addition, certain non-GSM based telecommunications providers are utilising wireless solutions, largely to circumvent the existing Telkom South Africa Limited (“Telkom”) monopoly and to increase efficiency by using telecommunications facilities not provided by Telkom, or only provided by Telkom at a central point.
    Of specific relevance is the fact that certain Internet Service Providers (ISPs) are currently utilising “wireless Internet” (which will be more fully defined below) connectivity. The current use is broadly divided into six classes –


    • wireless Internet connectivity used as an interim or emergency measure, particularly while waiting for Telkom to install lines;




    • wireless Internet connectivity as a backup to fixed-line connectivity;




    • wireless LAN;




    • wireless Internet connectivity via mobile telephony (usually mobile cellular or GSM);




    • wireless Internet connectivity as a permanent stand-alone application; and




    • Satellite Internet connectivity.

    The ability to circumvent Telkom’s monopoly in connecting to the end user is obviously a major competitive advantage for anyone utilising wireless Internet connectivity, as is the ability to bypass the requirement that Telkom provide a VANS licence holders telecommunications facilities. In addition, recent technologies give major advantages in respect of speed of installation and connection and amount of bandwidth that can be carried.


    DEFINITION


    There is no specific definition of “wireless Internet” in South Africa and that term is not used in a regulatory context elsewhere. One of the best definitions is that of the Federal Communication Commission in the United States of America, which refers to “Wireless Communications Service” which is defined as “radiocommunications that may provide fixed, mobile, radiolocation or satellite communication services to individuals and businesses within their assigned spectrum block and geographical area.” The Wireless Communications Service “systems will be able to communicate with other telephone networks as well as with personal digital assistants, allowing subscribers to send and receive data and/or video messages without connection to a wire.”
    This is an extremely broad definition that goes beyond the scope of this advisory, which will instead focus on the connection of telecommunications equipment at the customer’s premises to the network operated by an ISP to facilitate the provision of value added network services to the customer, where such connection is achieved using radio or other wireless technologies. In essence this is a wireless telecommunication service for the transmission of data and which is not a mobile cellular telecommunication service or a private telecommunication network.
    Wireless Internet is generally understood (in South Africa at least) as Internet connectivity by the end-user to an ISP (or IAP, though for the purpose of convenience, the term ISP will be used in this advisory) by means of a local transmitter/receiver (point to multi-point), generally operating in the 2,4-2,5 GHz (ISM) band and it is this definition of wireless Internet that will be the focus of this advisory. However, Internet connectivity by satellite and mobile telephony are also of relevance and interest to ISPA members and will be examined in less detail.

    TELECOMMUNICATIONS ACT 103 OF 1996


    The Telecommunications Act, 103 of 1996 (the “Act”) defines telecommunication as “the emission, transmission or reception of a signal from one point to another by means of electricity, magnetism, radio or other electromagnetic waves, or any agency of a like nature, whether with or without the aid of tangible conductors”. Based on the Act’s definition, wireless Internet is definitely telecommunication.
    The Act further defines telecommunication service as “any service provided by means of a telecommunication system” and telecommunications system is defined as “any system or series of telecommunication facilities or radio, optical or other electromagnetic apparatus or any similar technical system used for the purpose of telecommunication, whether or not such telecommunication is subject to rearrangement, composition or other processes by any means in the course of their transmission or emission or reception”
    It is clear that the wireless Internet service defined above is a telecommunication service, as it provides customers with the service of (at minimum) Internet connectivity over a telecommunications system and includes all of the six classes of wireless Internet connectivity outlined above.
    Section 32 of the Act prohibits the provision of a telecommunication service without a licence and it thus seems clear that no ISP can provide wireless Internet connectivity and/or services without a licence.
    In addition, Section 31 of the Act prohibits the possession of radio apparatus (being a telecommunication facility which is capable of transmitting or receiving any signal by radio, other than a sound radio set and a television set) without a permit. The equipment used for wireless Internet connectivity usually falls within the definition of radio apparatus and as such a permit is required, though occasionally this is modified wireless LAN equipment, which has been exempted, as set out below.
    ADEQUACY OF CURRENT LICENCES
    Section 32 likewise provides that the telecommunications services that may be provided by a licence holder are under and in accordance with a telecommunication service licence issued to that person and a licence shall confer on the holder the privileges and subject him or her to the obligations provided in the Act or specified in the licence.
    The Act does not make provision for wireless Internet licences nor has the Regulator issued such licences to date.
    Most, if not all, ISPs making use of wireless Internet are holders of VANS licences. Is it possible that such VANS licences are adequate to justify the lawful provision of wireless Internet?
    The VANS licence arena is somewhat confused as a definition of VANS was only inserted in the Act in November 2001 and as at April 2002, the VANS regulations sought to be promulgated by the Regulator were withdrawn and are still to be re-issued. What is clear, from both the perusal of VANS licences issued under the Act prior to the amendment, the provisions of Section 40 (and particularly 40(2)) of the Act and the new definition of VANS is that the value added services may only be provided using the telecommunications facilities of Telkom and the proposed second network operator, until a date to be fixed by the Minister in terms of the Act. In addition, the mere holding of a VANS licence seems insufficient to provide wireless Internet connectivity as –


    • VANS licensees are required to obtain their telecommunications facilities from a public switched telecommunications provider (currently Telkom, in due course to be Telkom and the second network operator and possibly to include further operators into the future) (Section 44 of the Act);




    • a radio frequency licence is required in order to transmit any signal by radio or use radio apparatus to receive any signal (Section 30 of the Act); and




    • a public switched telecommunications service licence (such as issued to Telkom exclusively at present) may possibly even be required, as such service includes the provision of telecommunication circuits for telecommunications facilities used for the provision of VANS (Section 36A of the Act).

    It is thus clear that wireless Internet cannot be lawfully provided solely under an existing VANS licence. If the telecommunications facilities are provided by Telkom (or the SNO in due course) and a radio frequency spectrum licence has been obtained, provision of such connectivity may be lawful.


    With regard to mobile Internet, the Act and the three licences issued to date do not distinguish between voice and data. As such, it would appear that Internet connectivity can be carried in a wireless fashion over a mobile telephone network, and indeed this is commonly done by dialling into an ISP’s POP using a mobile handset. However, the principles of Section 40 (2) requiring the use of Telkom’s (and in due course the SNO’s) telecommunications facilities, still apply.
    Satellite Internet connectivity provision in South Africa is divided into two types –


    • connectivity obtained from Telkom, using Telkom facilities and provided to clients using Telkom’s facilities, however these facilities are satellite receivers and transmitters, rather than copper or fibre optic cable, such as provided by Satellite Data Networks; and




    • connectivity using capacity usually reserved for broadcasting, such as Siyanda and Infosat.

    The use of satellites for Internet connectivity does not seem to be a species of broadcasting, as broadcasting is a unidirectional service intended for transmission to the public, a section of the public or subscribers to a broadcast service (Broadcasting Act 4 of 1999). Internet connectivity involves a degree of interactivity that focuses on the individual user. This is achieved in the case of satellite Internet connectivity by a combination of satellite downloading and telephony based uplinking (except where users have a satellite transmitter in addition to a receiver). In addition, the definition of broadcasting service in the Broadcasting Act excludes a service (including text service) that provides no more than data, or no more than text (with or without associated still images) and further excludes a service that makes programmes available on demand on a point-to-point basis, including a dial-up service. As satellite Internet connectivity does not appear to fall within the definition of broadcasting, no licence would be necessary under the Broadcasting Act and the Act would apply.


    Where the Broadcasting Act is relevant is that the broadcasting component of dual-use satellite services will already have a signal distribution licence and a radio frequency spectrum licence.
    EXCEPTIONS
    There is an oft quoted exception to the above provisions, along the lines that “if Telkom cannot, will not, or do not provide a certain type of telecommunications service that it is entitled to do in terms of the Act or its licence, then any party may provide that telecommunications service until Telkom elects to do so”.
    This purported exception is based on a misreading of Section 44 of the Act dealing with the making telecommunications facilities available. In particular, Section 44(1) provides that –
    “Telkom and any other provider of a public switched telecommunication

    service shall, when requested by any other person providing a telecommunication service, including a private telecommunication network, lease or otherwise make available telecommunication facilities to such other person pursuant to an agreement to be entered into between the parties, unless such request is unreasonable.”


    The Act then enables the Regulator to prescribe the form and content (including price) of the agreement between Telkom or the second network operator and the requesting party. However, at Section 44 (6), the Act provides –
    “In the application of section 43(1)(d)(iii) and (4)(b) in relation to making the telecommunication facilities of a public switched telecommunication service licensee available to another person and where the Authority is satisfied that public switched telecommunication service licensee is unwilling or unable to make suitable facilities available to that person within a reasonable period of time, the Authority may, instead of proposing terms and conditions as contemplated in section 43(4)(b), authorise that person to provide or obtain any necessary telecommunication facilities other than from such holder on conditions determined by the Authority, notwithstanding the provisions of sections 38(2), 40(2) and 41(2)(a) and this section.
    This exception only applies if the party obtains the sanction of the regulator, in accordance with the terms and conditions imposed by the regulator. It does not entitle the party to carte blanche in providing telecommunications services.
    The Section 44 exception may apply to wireless Internet, if the specific requirements of the section are met – though the likelihood of any attempt to invoke this provision succeeding are remote.
    There is an exception which is applicable, being the entitlement to provide one’s own customer premises equipment (such as handheld devices, PDAs and the like) and to create private networks (including wired or wireless LANS) provided that network complies with Section 41 of the Act requiring that the network must be “principally or integrally related to the activities of such person” and that the facilities of a public switched telecommunication service licensee must be used for such network unless it is on a single piece of land or contiguous pieces of land owned by the same person.
    In addition, Government Notice number 1790 of 17 November 1995 excludes certain equipment from the definition of radio apparatus and as such from the provisions of Sections 30 and 31 of the Act, of particular relevance being wireless LAN equipment. The relevant exemptions are –
    “(2) Wireless spread spectrum Local Area Networks (LAN's); used for short distance on single sites e.g. in an office complex in the 2,4-2,5 GHz (ISM) band. The standard to be utilised for such systems in this band shall be ETS 300 328 or an equivalent standard. In particular, RF power requirements shall be in accordance with the standards mentioned which are broadly as follows: The maximum" effective isotropic radiated power is defined as the total power of the transmitter which is - 1 0 dBW (1 00 mW). The peak power density is defined as the highest instantaneous level of power in Watts per Hertz generated by the transmitter within the power envelope. This shall be - I 0 dBW (11 00 mW) per 1 00 kHz EIRP for equipment using Frequency Hopping Spread Spectrum (FHSS) modulation and -20 dBW (10 mW) per MHz EIRP for other modulation types. The following conditions are applicable:

    (a) Only equipment which has been type approved by the Postmaster General may be used. Such type approval shall require compliance with the Radio Regulations and the standard stipulated above.

    (b) No interference may be caused to users of other ISM equipment within the band or to other radio users outside the band.

    (c) No complaints of interference to spread spectrum systems will be investigated.

    (d) LAN's shall be confined to the same premises/buildings and between the computer systems of the same user.

    As defined in 5.2.2 and 7.2.3 of the Standard and includes the gain of the antenna in dBi.

    (3) Wireless LAN's used for short distance, in the following other ISM bands, namely 433,050-434,790 MHz and 5 725-5 875 GHz for use on single sites e.g. in an office complex. Spread spectrum/wide band standards other than ETS 300 328 will be considered within these bands in accordance with the general principles listed in (2) for the 2,4-2,5 GHz ISM band, especially with regard to power requirements.

    OTHER CONSIDERATIONS
    Constitutional and Other Rights
    The right of freedom of expression and the consequent right to communicate is entrenched in our Constitution. As fundamental as this right is, it is not absolute and must be read, interpreted and understood in the light of other competing and potentially conflicting rights. Thus there may be limitation or restriction of rights.
    Regulation through Licensing
    Telecommunications resources are relatively limited and as such it is arguably in the public interest to ensure fair and equitable distribution of the resources. Yet the right to telecommunications, as a subset of the right of freedom of expression, becomes meaningless if access to telecommunications is inadequate or prohibitively expensive.
    Right to Wireless Internet?
    Notwithstanding the aforegoing, it would be optimistic at best to hold the view that the right of freedom of expression entitles an ISP to provide wireless Internet services. The reason for this view is twofold, firstly ISPs are able to provide services using Telkom’s existing infrastructure and the reason for the use of wireless Internet infrastructure is for speed, convenience, cost reduction and profit maximisation. The second reason is the question of scarce national resources outlined above.

    SPECIFIC EXAMPLE
    ISP Megawan has obtained a great deal of publicity over its “lawful” wireless Internet offering and has caused a great deal of interest in the market, including specific requests from members to consider if they may offer similar services.


    • What wireless Internet service is Megawan actually providing?

    Megawan provides Internet connectivity using wireless technology. It is rather secretive as to the exact technology being used, but this appears to be wireless equipment in the 2,4 – 2,5GHz band. Transmission towers are established in high-sites (such as Northcliff in Johannesburg) and customers within transmission distance of these transmission towers (usually line-of-sight) may subscribe for Megawan’s Internet connectivity service. These towers are presumably connected to Megawan’s network using Telkom’s telecommunications facilities.


    When last checked, Megawan’s prices were competitive with those of other ISPs, but had a major advantage in that there are no Telkom costs to be added and bandwidth was likely to be far higher than that provided by most ISPs (though the guaranteed bandwidth levels were similar to those of most ISPs).


    • Statement of lawfulness – or – what gives Megawan the right to provide this service?

    Some time ago, Megawan’s Internet web site contained a definite assertion as to the lawfulness of their system. This assertion has now disappeared. When questioned as to the lawfulness of the system, a company representative replied “…if it wasn’t [lawful], they (sic) would have closed us down a long time ago …”. This appears to have been a disingenuous statement, as the Regulator had already embarked on action against Megawan at the time of the making of this statement.


    Based on what is set out below, Megawan does not appear to have any bona fide right to provide the Internet connectivity services which they have in fact been providing for a period in excess of eighteen months (as at April 2002).


    • What action is being taken against Megawan?

    The Regulator has been taking slow but meaningful action against Megawan for a period of months.


    In 2001, the regulator investigated a complaint of interference caused by Megawan’s equipment in Pietermaritzburg. This investigation carried out partly in secret, led to the conclusion that Megawan were operating unlawfully. Most of the equipment being used was type approved by the Regulator (thus not a contravention of Section 54 of the Act, which references Section 31(1) of the Act), but its mode of employ was not approved or lawful, nor was Megawan licenced for any of its activities.
    Further complaints of interference were received and to avoid procedural questions, the Regulator approached the High Court for an order entitling it to search Megawan’s premises and several of its “high sites”. The order was obtained and the search confirmed that mostly (but not exclusively) type-approved equipment was being used unlawfully to provide services that are required to be licensed, without a licence.
    The High Court was again approached, this time for an order directing Megawan to cease providing the wireless Internet service. There are a number of basis for the application, including the lack of a telecommunications licence at all (Section 32), the lack of a VANS licence (Section 40 (2)) (Megawan relying on the purported transfer of a VANS licence of a company in liquidation, one Spacenet), the lack of a radio frequency spectrum licence (Section 30) and a breach of the Telkom monopoly by providing local access telecommunication services (Section 39 (1)). Megawan is contesting this application, largely on procedural, but also on substantive, grounds.
    No order has been granted as yet (April 2002) and it is uncertain how much longer this litigation will take to finalise.
    It should be noted that in terms of Section 101 of the act, a contravention of Sections 30(1) and 32(1) (as well as 31(1), which is less relevant for this matter) is an offence under the Act and as such a criminal matter. The Regulator has laid criminal charges against Megawan and presumably its directors, which are currently being investigated.
    RECOMMENDATIONS
    Notwithstanding the negative conclusions drawn above, wireless Internet has a place in the market. The question is how to place it there with minimum risk, which may include –



    • using wireless Internet as an interim, emergency or back-up option, based largely around an interpretation of Section 44 of the Act, rather than establishing a complete business model on a questionable lacuna in our law;




    • campaigning for the licensing of wireless Internet. This would involve making representation to the Regulator, the Department of Communications, the parliamentary portfolio Committee on Communications and whoever else will listen. The use of international precedent as an example and possible pressure by international players may assist, but this issue is unlikely to be entertained – notwithstanding the numerous benefits for the speedy and efficient roll-out of Internet connectivity in underserviced areas;




    • assisting the Regulator in prosecuting Megawan, in the hope of gaining a favourable hearing for law abiding industry members wishing to apply for a radio frequency spectrum licence and section 44 exemption to provide wireless Internet services. Also, so that law-abiding ISPs are not prejudiced by Megawan’s behaviour;




    • assisting Megawan in its action against the Regulator, hoping to help open the door for other ISPs;




    • adopt a wait and see approach; or




    • actively start rolling-out wireless Internet service offerings and start saving for the ensuing litigation, including the criminal prosecution that has been embarked upon, as if for extra emphasis to others considering this route.

    Prepared by Michael Silber



    ISPA regulatory sub-committee

    Release date: 22 April 2002
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    In respect of

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