Mobile operators share RICA jitters

Mobile operators are concerned about the implementation of a legal amendment that will force them to keep records of their prepaid customers.

The Regulation of Interception and Provision of Communication-related Information Amendment Act (RICA), which was published in January, could see mobile operators fined by up to R2 million a day, for not keeping information on their prepaid subscribers by the implementation date.

The date for the changes to take effect has not yet been announced and is dependent on the new presidency, which will be decided by the general elections next week. This is another factor that has the mobile operators more than a little concerned.

Leona Mentz, Cell C's head of regulatory compliance, explains that, without a timeframe, the logistics of getting all the company's prepaid subscribers documented could be drastically affected.

She says the problem is compounded by the fact that registration has moved away from a paper-based system to a “face-to-face” verification system, meaning customers will have to meet with a telecoms operator representative.

While Cell C, MTN and Vodacom have been busy beefing up their SIM card registration strategies, they have taken their concerns to Parliament, including worries over the new “face-to-face” verification system and the implementation date of the Act.

“MTN is aware of the contents of the Bill and is taking all the required steps and necessary processes to get the required subscriber information,” says MTN legal and regulatory general manager Graham de Vries.

Vodacom seems far less concerned. “Vodacom supports RICA, and will, as soon as the effective date is proclaimed, have the systems required for the effective implementation of this legislation in place,” says Vodacom's chief communications officer, Dot Field.

Yet in the company's pre-listing statement, which was released last month, it says: “As a result, Vodacom SA's business operations could be disrupted and their net profit could decline and Vodacom SA may be liable for penalties to the extent that it is not able to comply with RICA's requirements. Vodacom SA is in the process of determining an effective and efficient way to implement the requirements of RICA.”

Field says the latter statement was a precautionary measure, which Vodacom was mandated to make to potential investors ahead of its listing on the JSE.

“The JSE states companies must consider all potential risks the business could face and outline the worst case scenario of the situation with RICA.”

The amendments to RICA have been in the pipeline since 2005, and will require operators to record the name, ID number and address of the owner of every cellphone SIM card and prepaid phone owner in the country.

IDC researcher Richard Hurst noted, last month, that there were more than 42 million SIM cards active in SA at the end of 2007, of which at least 92% were prepaid. None of those customers have had to walk through a face-to-face registration process.

In the mobile operators' year-end results for 2008, MTN indicated it had over 14 million prepaid SIM cards in circulation, while Vodacom boasted over 21 million. Telkom had 743 000 prepaid subscribers, according to its financial results ending December 2008.

Bowman Gilfillan associate Carmen Cupido says the new amendments have far-reaching consequences, not only for the incumbent operators, but also the newly-licensed operators, previously known as value-added network service providers.

Cupido says much of the controversy of the first legislation, which was enacted in 2003, has not been removed by this new Act. She says it does not take into account the old VANS now licensed under the same terms as the incumbents.

“The concern is more valid now as the licensees previously known as VANS received their converted electronic communication network service licences, placing them on a par, theoretically, with the incumbent operators.”

She adds that the smaller operators will be held liable for the same contraventions as Telkom, Neotel, MTN, Vodacom and Cell C; the costs of which could stem the growing competition in the telecoms market.

The telecoms industry has lobbied Parliament, saying costs associated with recording and storing clients' information could cripple SMEs entering the sector.

According to RICA, not only will operators have to register customers, they will also be held liable if that customer sells, or provides a SIM card to someone else, like a family member. “A customer who fails to comply is guilty of an offence and liable, upon conviction, to a fine or imprisonment not exceeding 12 months,” explains Cupido.

Operators are also now responsible for getting the information of the millions of customers who have already bought prepaid SIMs. If they do not, they could face up to R2 million in fines, or 10 years' imprisonment.

In November, the Department of Justice struck a deal with mobile operators, giving them 18 months to register all prepaid handsets in the country. The deal stemmed from the Act being stalled at the National Council of Provinces and the Constitutional Affairs Select Committee in 2007.

This was due to a fallout between the police and justice department over which amendments were really necessary. Parliament gave the operators 18 months, beginning November, to register their prepaid customers and report every six months on progress made with registration and the challenges encountered. All three mobile operators say they are in the process of compiling this information.

Senior state law adviser Sarel Robbertse insisted, during the fallout last year, that the registration of SIM cards needed to be implemented as quickly as possible. He said it would help law enforcement agencies to combat crime, especially with the 2010 Fifa World Cup around the corner.

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