Reducing high interconnectivity rates in South Africa: Briefing by ICASA, Competition Commission & Department of Communications

Meeting report

The Chairperson stated that, in his view there had been tacit collusion in hiking the interconnection rates to their present levels. There had been phenomenal increases over a very short time, which had not been publicly acknowledged. It had been accepted as fact but the public did not know why this had been done. The high interconnection rates had become an obstacle to economic development and innovation in South Africa. It impacted negatively on all the citizens, but had a particularly negative effect on the poor and the marginalised. He was concerned that ICASA, as the regulatory authority, had taken an unduly long time to deal with the matter. The Committee wanted an explanation for the delay in dealing with the issue. South Africa had reached a critical juncture and decisions had to be made in the immediate future. South Africa was faced with an untenable situation and Members would fail in their responsibilities and duties if they did not raise the issues in the public interest. The Committee sought to understand how the current situation had developed and was particularly interested in what could be done to rectify it.

Independent Communications Authority of South Africa (ICASA)
Mr Paris Mashile, Chairperson: ICASA introduced the delegation. He commented briefly that the approach ICASA had taken was one of moral suasion and that ICASA had engaged with mobile operators on the reduction of wholesale mobile termination rates.

Mr Thabo Makhakhe: Councillor: ICASA, stated that the purpose of the presentation was to brief Parliament on the progress the Independent Communications Authority of South Africa (ICASA) had made in respect of regulating call termination rates in South Africa and how ICASA planned to move forward. ICASA endeavoured to develop regulations to reduce the mobile termination rates (MTR) in South Africa. Their specific focus was the reduction of wholesale MTR. The regulatory requirements pivoted on Section 10 of the Electronic Communications Act (ECA), which required ICASA to draft evidence-based regulations. The process of developing regulated was specified in Section 67(4) of the ECA and Section 4(b) of the ICASA Act. The next steps were to gather information from licensees via a questionnaire (to be released by end-September 2009), evaluate and design proportionate pro-competitive remedies and release draft regulations imposing pro-competitive remedies by March 2010. Their engagement with industry was explained as consisting of several multilateral and bilateral meetings with industry players, where ICASA would facilitate an industry-led voluntary negotiation process. The next meeting was scheduled for 9 October 2009.

Discussion)
The Chairperson asked if there were timeframes attached to this process.

Mr Mashile responded that ICASA had called upon operators to look at interim measures to reduce the MTR. Operators had agreed and would present a proposal by December 2009 with proper justifications for their proposal. ICASA played a supervisory role and would interrogate the proposal to check if it met the benchmarks they had in mind.

The Chairperson noted that six interest groups were represented at the regional meetings and asked what was meant by a "bilateral process" when this seemed to be more of a multilateral process.

Mr Mashile responded that the people they had invited were the role players in the MTR arena. The Internet Service Provider Association (ISPA) was particularly pertinent, as they represent approximately 500 other operators. The other targeted were the known operators to whom MTR was pertinent.

Mr Makhakhe responded that they were aware that the process was sensitive and that it was important to avoid creating the impression of collusion.

Mr N van den Berg (DA) pointed out that the objective of the Committee was to lower rates. If ICASA granted a licence must have all the information in mind. ICASA had taken time to get to this point and he could not understand why ICASA was dragging their feet.

Mr Mashile responded that the Section 67 (6) of the ICASA Act stipulated that the information they needed had to come from the operators. As to ICASA dragging their feet, he noted that the Act stipulated 30 working days for this process. This translated into 45 working days in practice. ICASA had to respect the legislation that governed them. The practical application of the Act was quite different and the Act may need to be amended to address this.

Mr E Kholwane (ANC) commented that people in South Africa did not know what costs were attached to call termination. He wanted to know what it currently cost the operators in terms of MTR. There was a need to speak out about actual costs.

Mr Robert Nkuna, Councillor: ICASA, replied that ICASA had done its own analysis of costs and have found that the cost was not more than 40c.

Mr Kholwane asked what the problems were with the legislation, specifically what ICASA needed to ensure a speedy resolution to this matter. The Committee was ready and able to amend the legislation and wanted to know what had to be done to ensure that the matter was resolve in the shortest time possible.

Mr Nkuna responded that there was no problem with the legislation. The legislation prescribed a process that needed to be followed. Information asymmetry was always an issue between regulators and operators. In the absence of information, the regulations stated that ICASA had to ask operators for information.

Mr Mashile assured the committee that ICASA shared the Committee's concerns and ICASA would do their utmost to resolve the matter. ICASA would supervise operators. Operators will present their proposal by December and they envisaged implementation after the Christmas period. ICASA had to adjudicate and agree to the proposal. ICASA would not be a rubber stamp.

Mr Makhakhe replied that it would be unwise to speed up the process at the expense of due process as stipulated in the legislation (ECA Act and ICASA Act)

Mr Kholwane stated that there was a need for competition. One of the basic tenets of economics and what was defined as perfect competition was that there should be no entry barriers to the market for new businesses. He asked what was happening in the telecommunications sector currently and whether new operators able to enter the sector.

Mr Makhakhe replied that the reduction of the MTR should make it possible to encourage competition. The high connection rates were an entry barrier to the market and this reduction would solve this problem.

Mr Nkuna responded that ICASA believed that reduction of MTR would impact on the reduction of entry barriers through the reduction of interconnection rates. ICASA had recently licenced 500 new entities.

Mr Kholwane noted that prices had increased by 500% when Cell-C had entered the market. He asked how ICASA explained this.

Mr Nkuna replied that industry had excused this jump in pricing as a consequence of higher costs of implementing universal access. ICASA had done its own study and concluded that this did not justify the current pricing. The only snag in responding to this was the prescriptions of the legislation in obtaining information from operators.

Mr Kholwane asked what the impact of the reduction in wholesale MTR would be on consumers and whether this reduction would have an effect on the end-user.

Mr Makhakhe responded that users would benefit from the lowered prices. The reason for the reduction of wholesale rates was meant to filter down to the prices affecting the end-users.

Ms Marcia Socikwa, Councillor: ICASA replied that the reduction of wholesale call termination rates would not automatically mean a reduction in rates to the end-user. There was a need to look more carefully at the retail rate.

Ms J Kilian (COPE) stated that Portfolio Committee was there to represent the people's interests. There was a perception among the people that ICASA was dragging its feet. From the beginning of the process, ICASA had taken 3 years and 2 months to reach this point in bringing down the costs of interconnection rates. While she understood the remarks regarding due process, she still had to ask why the process had taken so long.

Mr Nkuna responded that they had followed Section 67 (4) of the ECA. Section 4(b) of the ICASA Act gave them the option to go straight to regulations. It was for this reason that they had conducted a wide inquiry. The findings of this inquiry had been released in 2007 and the regulations had been drafted in mid-2008 in consultation with the industry.  On the regulations, questions on the legal procedure followed had been raised by industry. ICASA had to pause to seek legal opinions on these questions before regulations could be finalised. Although the information was subject to certain confidentiality agreements, ICASA could release this information to the Members.

ICASA operated in the two legal dynamics outlined in the ICASA Act and ECA and it was important for them to follow process as stipulated in the legislation. This was crucial as the industry would focus on the process and use disputes on this to delay the process.

Ms M Magazi (ANC) asked what ICASA had done to evaluate retail rates.

Mr Mashile replied that they envisaged that the wholesale rates would filter down through the value chain. ICASA believed that automatic translation would take place. The improved conditions for competition would also play a role in ensuring that retail rates were reduced. They saw the reduction of retail rates as a logical consequence of reduction in wholesale rates.
 
The Chairperson asked what could be done to ensure that retail rates dropped. In South Africa they were not dealing with a normal market and he wondered how they would respond to the abnormality in the market.

Mr Makhakhe responded that the impact of the reduction of wholesale rates was two-fold. The first impact was that it enhanced competition to lower retails rates and the second aspect was that ICASA would look into the matter and ensure that operators were conscious of the need to pass on the reduction in wholesale into retail rates.

Ms Magazi responded that the matter had been a concern for some time. ICASA had been asked to regulate this in 2002.

Ms Magazi noted the comments on how the repeal of the Telecommunications Act and the transition to the Electronic Communications Act had caused delay. She asked why ICASA had not informed the Committee of their problems. She asked why ICASA had been quiet.

Mr Nkuna responded that they were guided by legislation and the changes in the legislation had impacted on how ICASA regulated. All the licences had to be converted in line with the new framework. ICASA was tackling other related matters and following due process as they addressed these issues.

Ms P De Lille (ID) stated that part of the ICASA mandate was to make communications accessible and affordable. She asked why Parliament had not acted when the rates were hiked so dramatically. They had raised the matter with operators but did not act.

Ms De Lille referred to the study that found that South Africa had the highest communications costs worldwide. She asked what ICASA had done with this study.

Ms De Lille asked why ICASA had not intervened in the prepaid market. Poor people made up the bulk of prepaid users and they paid much more than contract customers. She wanted to know why must poor people had to pay more.

Ms De Lille stated that according to the ECA, ICASA might regulate pricing. The fact that the ECA did not stipulate "subject to" meant that ICASA could regulate immediately. There was no need to wait for a Section 10 process.

Ms De Lille referred to the mismatch between what Telkom paid operators and what operators paid Telkom.  Telkom paid more to operators than they received from operators. This was alarming because Telkom was a national asset. She asked if ICASA acted on this.

Ms Nomvuyiso Batyi, Councillor: ICASA responded that they had conducted a mobile pricing study. ICASA had found that there were problems with prepaid mobile packages, specifically subscription fees and value added services. They could not force a regulation. Their finding was that the consumer had to have a choice.

Ms De Lille stated that the Committee wanted to see a 60c reduction. She was of the opinion that based on the current profit margin, operators would still make a substantial profit. She also took issue with the delay in implementation until after Christmas. She felt this was a ploy to extract maximum profit out of consumers in the Christmas season and did not accept this.

Mr Nkuna responded that ICASA would have liked to see a reduction sooner, however, this was a negotiated process and this was the current negotiated timeline. He added that they could return to review what had been done before Parliament at a later stage. Four ICASA councillors were focused on this project.

Ms De Lille referred to the legal opinion of SC Gilbert Marcus and asked why ICASA did not follow this to reduce prices immediately. She was of the opinion that they should have faith in the judiciary and not assume that it was not equipped to rule on these matters. Any dispute would simply have to go to court.

Mr Nkuna responded that the telecommunications sector was highly litigious and could not be compared with other sectors. The Portfolio Committee on Communications in the Third Parliament had commented on their high legal costs, which had arisen from the need to seek legal advice because of litigation by operators.

Ms De Lille responded that the Committee had also queried the travel expenditure. ICASA needed a balance in expenditure.

Ms Socikwa responded that ICASA was trying to avoid litigation. Operators used procedural issues to delay processes in the courts. She added that she was fearful of judges making decisions the regulator should make. The operators were able to absorb the high legal costs and ICASA was trying to avoid these costs.

Ms De Lille responded that everyone should respect the independence of the judiciary. This was not about the time it would take; rather it was a matter of what was right and wrong. This was what the courts would decide on. She detected an unwarranted fear of the courts and remarked that ICASA should not insult the courts in this manner.

Mr Makhakhe responded that the ICASA was aware of the legal opinion. ICASA had obtained legal opinions on many matters. ICASA had decided that if they were to proceed with the Section 41 process and disregard Section 10 of the ECA it would cause problems. Based on this ICASA had adopted the position that they could not ignore Section 10 of the ECA.

Ms De Lille asked how many ICASA councillors had worked in the cellular phone industry. She had observed the trend of people going directly from the industry to working for ICASA and the reverse also applied. She noted that the Minister of Communications was considering a cooling-off period in these instances and asked ICASA for comment.

Mr Kholwane said that Parliament must be clear about the outcomes they want. This was a matter of protecting people’s socio-economic rights. He expressed his confusion with ICASA’s position that there were no problems with the legislation. He opined that ICASA’s mandate was possibly too complex and that telecommunications should remain with the Minister of Communications. He noted that Namibia had dealt with the issue of dropping rates quickly. He asked what other countries did with regard to interconnection rates and wanted to know what the shortest route was to reducing interconnection rates. He reiterated that the Committee was ready to address the legislation issues.

Mr Mashile responded that the shortest route was to instruct operators directly to reduce rates. He reiterated that following due process should never be compromised. The shortest route would be an amendment to the ECA to change the timeframe from 30 working days to 30 calendar days.

Mr Nkuna responded that ICASA could look at other options. In the Namibian case, there had been no prescription to consult with industry. The Minister had benchmarked and an agreement was reached with industry through negotiation.

Ms Batyi responded that the only thing they were lacking was in the Chapter 10 process was a benchmarking study. This was easier and shorter. South Africa had a more disciplined approach and was not at liberty to take similar action at this point.

Ms L Mazibuko (DA) wondered how difficult it could have been to obtain the required information for the Chapter 10 market review. She asked what tools ICASA could use to compel this information.

Mr Mashile responded that the questions on the questionnaire and this questionnaire would be issued to operators within the next two weeks.

Ms Mazibuko replied that operators would not hand over the information easily. They would use delaying tactics. She wanted to know if ICASA had the power to ensure that the information would be forthcoming.

Mr Jacobus van Rooyen, Councillor: ICASA, replied that ICASA could issue subpoenas and if necessary, they would do that. They would send out a voluntary questionnaire and if this failed, ICASA would use subpoenas.

Mr Nkuna responded that the information was needed to evaluate the cost of services for cost based pricing. ICASA had to make detailed requests in order to ensure that they received the correct information.

Mr Mashile added that the questionnaires had to be returned within 30 days.

Adv J De Lange (ANC) stated that following due process did not mean being spineless. ICASA had to make decisions on behalf of the country. If ICASA did not make these decisions, they would not get made.  He suggested that ICASA’s approach was wrong and that they should not be a prisoner of the industry. ICASA could not be friends with the industry that they had to regulate. He acknowledged the need to avoid litigation but stated that this had to be balanced against the need to reduce the exorbitant profits being generated for the industry.  Every minute they wasted, not making a decision, exacerbated the problem.  He acknowledged that ICASA had to follow due process but was also convinced that they could determine a fixed timeline for making these decisions. He felt that ICASA did not take their mandate seriously, nor did they take Parliament or the public seriously.  He suggested that the Committee should not accept the timeframe presented by ICASA (March 2010). ICASA should present a different schedule for the Committee to review.  The Committee should meet with the whole industry to get the information they needed directly from industry especially as regards costs and expenditure – in public. He concluded that this approach would make it easier to hold ICASA to account.  He had some sympathy with ICASA's concern around litigation delays and the courts making decisions the regulator should make but the problem was that this could not be at the expense of making rational decisions. He had faith that the court would uphold their decisions if they were rational and followed due process. He therefore suggested that the Committee should formulate a plan for ICASA and hold ICASA to this plan. He also suggested a public meeting with industry to hear their problems and also to allow them to answer the tough questions on pre-paid users, interconnection fees, all the costs they incurred and how this related to the amount of money the industry charged consumers.

Competition Commission
Mr Shan Ramburuth, Commissioner: Competition Commission presented the Competition Commission (the Commission) overview of the reasons for and implications of high interconnection rates in South Africa.  Considerations were the potential harm to competition arising from high interconnection costs, high mobile call termination charges, competitive constraints in the mobile telecommunications industry and the possible reciprocal effects of an arbitrary reduction in call termination rates.

Mr Ramburuth explained the difference between the ex-ante powers of ICASA and how this differed from the ex-post role of the Commission. The Commission could only intervene after the fact and determined penalties after finding evidence of collusion.  He expanded that the Commission did not find documented evidence of collusion because operators reached rates agreements bilaterally and the pricing agreed upon was then adopted by the sector. The multilateral forums in themselves did not amount to collusion. This extension of pricing through the industry was based on the non-discriminatory measures in the industry and this meant that there was no need for formal collusion in the industry. The Commission was particularly concerned about allowing ICASA to become the manager of a collusive structure and cautioned ICASA against this.  It should not be left to the industry to make the final call.

Mr Ramburuth felt that the point on the delays in the industry were very well made and agreed that the litigious nature of an industry faced with regulation was well known.  He added that moral suasion never worked in these instances without the use strong consequences.

The presentation concluded that the market failure on call termination rates required a direct ex-ante remedy like price control and the Commission had no tools to effect this.  There was a need for strong regulatory intervention, which should take account of the possible reciprocal (waterbed) effects. ICASA should conduct a thorough market study and must be given the opportunity to determine appropriate levels for call termination rates. The Commission would participate in ICASA's regulatory process on interconnection.

Discussion
Adv De Lange stated that the problem with costs was not just related to call termination. There were far broader cost implications that generated large profits. He asked if the Commission had done any work that found collusion or bad practices in this industry, wider than the call terminations issue.

Mr Ramburuth responded that the cases referred to were the De Lille and Naidoo/ Reynecke cases, which dealt specifically with interconnection. The Commission had not found documentary evidence of collusion around interconnection because there was no need for formal collusion. The Commission was, however, pursuing these cases, as there might be other collusive aspects.

The Chairperson referred to the bilateral and multilateral meetings facilitated by ICASA.  He noted that these meetings were closed and the minutes of proceedings were not accessible. He asked if the Commission would classify such meetings as forums for collusion.

Mr Ramburuth replied that this was a governance issue. For the Commission's purposes, any meeting by industry players was not automatically considered collusion. Explicit collusion had to occur. Collusion was a matter of fact and the Commission had to find the evidence that collusion did occur. The Commission had legal standards to meet in order to make a finding that collusion had taken place, for example obtaining documentary evidence or affidavits from a person present in the meetings.  In the nature of their mandate, the Commission was obliged to be suspicious whenever closed meetings of this nature were held.   As a governance issue, good governance required higher levels of transparency. The Commission had used transparency as a basis for the Banking Industry and transparency was the way to overcome any doubts around these meetings.

Ms De Lille asked the Commission to explain the Memorandum of Understanding (MOU) between them and ICASA and whether that was working.

Mr Ramburuth replied that they did have an MOU with ICASA.  Part of the difficulties with the MOU was that the introduction of the ECA had necessitated adjustments and the Competition Amendment Act required further adjustments to the MOU. Both parties discussed issues of mutual interest.

Ms De Lille asked if the lack of regulation by ICASA had an effect on the Competition Commission tribunal and making a final decision on the cases brought before them.

Mr Ramburuth replied that one of the difficulties of cases on interconnection fees was that they gave the respondents a ready-made defence. The respondents argued that the problems were because the regulations had not been put into place. The absence of regulations created lacunae.

Adv de Lange stated that the multilateral meetings between companies were a huge problem. He asked what else one could conclude but that collusion was taking place. He wanted to know what needed to be discussed behind closed doors. The practice should not be encouraged.  He felt that the meetings with ICASA gave the operators a legitimate forum. ICASA seemed to wait for the industry to meet. He had expected a stronger stance from the Competition Commission.  If these industry meetings were to continue, there had to be a legal prescript for that information to be accessible to regulators, the Commission and Parliament. He added that he would support strengthening the laws to provide the Commission with access to this information. He felt that these meetings created fertile ground for operators to get around the law.  He also noted that collusion might take place informally in social settings outside meetings.

Mr Kholwane asked what the Commission's view on ongoing meetings, the implications for the price reduction and how collusion created market barriers.

Mr Ramburuth replied that it might well be necessary to meet multilaterally and bilaterally. If the process was multilateral, it was important to take account of who was at the meeting. If the multilateral meeting included a broader forum of representatives, inclusive of representatives of consumers and labour, this would reduce the risk of collusion. It also depended on how these meetings were planned, chaired and generally how they were managed. He felt that the point on informal collusion was very fair. His advice would be that these meetings needed to be managed and that ICASA remained mindful of this.

The Chairperson stated that three main players in the mobile telecommunications industry had made billions in wholesale profits. He asked if it was likely that the CEO of any one of these companies would slash profits and expose the company to competition by reducing call termination rates.

Mr Ramburuth agreed that companies were not incentivised to act in the public interest. The market failure resulting from this lack of incentive was the reason for having regulations. This was a good example of something that needed to be strongly regulated.

Ms De Lille remarked that the decrease in interconnection rates would impact on the profit margins. She stated that these companies would become more vulnerable. She did not think they were likely to make a genuine effort to reduce call termination rates and felt that Parliament had to look at a different process that was above board and open to comment.

Department of Communications
Ms Mamodophi Mohlala, Director General: Department of Communications presented the findings arising from the Department of Communication (DOC) benchmarking study of Fixed Telephony, Mobile Telephony and Data Services.  The DOC had used Chile, South Korea, India, Brazil and Malaysia as comparable economies against which to benchmark South African telecommunications costs.

The findings concluded that South African fixed and mobile termination rates were high. South Africa had the highest price for international 2 Mbps leased lines (twice as much as the next most expensive country) and had very low international bandwidth compared to the benchmark countries.

The general results were presented, as were recommendations to promote competition, develop a national broadband policy, regulate MTR, finalising the spectrum policy and reviewing the Universal Access Policy. The roles of the State, private sector and authorities were outlined, focusing on their contribution to the improvement of telecommunications in South Africa.

The DOC explained the five programmes of action. An interdepartmental task team had been set up. The task team comprised the DOC, the Departments of Trade and Industry, Science and Technology and National Treasury and aimed to monitor the implementation of the programme of action.

Discussion
Mr K Zondi (IFP) asked for an explanation of slide 18, regarding mobile penetration.

Ms Reneva Fourie, Chief Director: Policy Implementation, Tracking and Assessment: DOC replied that more than 70% of South African households had access to a mobile telephone.  People were not using mobile telephony optimally due to the high prices of making calls - people used their cellphones for messaging and receiving calls. This was one of the reasons that the costs had to be reduced.

Mr Kholwane remarked that good research had been done on the part of the DOC. He asked what the Department’s view was on the ICASA legislation, related specifically to the issue of benchmarking. He noted that benchmarking did not seem to be required by legislation.

Ms Mohlala responded that where challenges to pricing were made in other countries, this had been solved through benchmarking. South Africa differed from these countries as we have an independent regulator. She accepted that the market was abnormal and that intervention was necessary. She also said that the DOC would share the information obtained from the benchmarking study.  Regarding the legislation, she replied that the DOC intended to review the ECA and the ICASA Acts to make it possible for the regulator to act in the public interest and ensure that the objectives of the ICASA Act were met speedily.

Mr Kholwane asked what the impact of unbundling the local network would be in terms of cost reduction. He stated that this might be the next issue for the Committee to consider after the reduction of interconnection rates. He added that these costs also impacted on the cost of doing business and may be an immediate matter for the Committee's attention.

Ms Mohlala replied that Telkom currently had a monopoly on the local telecommunications infrastructure (local loop) and this created a barrier for new entrants to the market. Unbundling this loop would allow for more players in the market, as they would have access to the infrastructure at a reasonable price. More players would increase competition and result in better prices and access for the consumer.

Mr Mothibi Ramusi, Special Advisor to the Minister of Communications advised that part of the current planning process was to look at infrastructure sharing to reduce the costs of communication. When all the operators built their own network backbone, they created market barriers.  The biggest cost to small businesses could be managed through service-based competition.

Ms W Newhoudt-Druchen (ANC) compared the high cost of telecommunications experienced whilst traveling abroad. She noted the high costs particularly in countries with very low rates. South Africans traveling abroad still paid high prices to the South African networks. She asked why it was still so expensive to use foreign networks.

Ms Mohlala referred to slide 17 and the cost of leasing an international line. The cost was almost double compared to the benchmarked countries. The DOC expected ICASA to intervene.

Ms Newhoudt-Druchen asked why SMS rates were so high. She remarked that SMS’s used to be quite cheap and had been a useful tool for the deaf community. The current high cost of an SMS was an issue for the deaf community.

Ms Mohlala responded that the DOC acknowledged that SMS was costly and this was noted in the Programme of Action in the presentation.

Ms Newhoudt-Druchen asked for an explanation of bullet 2 on slide 18, i.e. South Africa expensive for fixed local access but inexpensive for fixed domestic and international long distance.

Ms Fourie responded that they had found that the cost of a telephone call in Cape Town was on a par with the benchmarked countries. The cost was still high in the greater international sense but South Africa was on par with the benchmarked countries.

Ms De Lille stated that she suspected collusion around the costs of using a prepaid cellphones. The costs were identical for the three operators. This affected the poor because they made up the majority of prepaid users. She asked what could be done to unlock competition.

Ms Mohlala responded that the DOC had identified this bottleneck. They had identified policy interventions. Their programmes of action dealt with this. She added that they had also provided for public participation in this process.

Ms De Lille referred to the legal opinion of SC Gilbert Marcus that stated that the Minister was entitled to issue a policy directive to ICASA. She asked if the Minister planned to do this. This seemed to be the only hope to resolve the matter.

Ms Dina Pule, Deputy Minister: DOC replied that the Minister had not considered this but based on the day's proceedings, she would convey this to the Minister.

Ms De Lille asked for clarity on the 2011 deadline on slide 30.

Ms Mohlala responded that timelines were subject to review based on urgency of issues. They had to discuss these matters with ICASA and set firmer timelines accordingly.

Mr Kholwane asked if there was a performance management system for ICASA.

The Deputy Minister responded that the DOC had discussions with ICASA on the performance management system and would meet for a second round of discussions on areas they had not agreed on.

Mr Ramusi replied that the performance management assessment would involve all the State Owned Enterprise (SOEs) that report to the Minister of Communications.

Mr L Mkhize (ANC) asked if the DOC had shared their benchmarking study.

Ms Mohlala replied that the DOC had met with ICASA to share the findings of the benchmarking study in May 2009

Mr Mkhize asked who would ensure that infrastructure was shared.

Ms Mohlala responded that sharing of facilities and facilities leasing regulation was an ICASA competency. ICASA was responsible for monitoring this.

The Chairperson suggested that the members considered the issues and proposed the way forward.

Resolution of the Committee on Briefings by ICASA, Competition Commission and Department of Communications

Mr Kholwane read the resolution of the Committee.

Ms De Lille stated that she did not think the Committee should use the term "historical collusion” and suggested alternative wording for the phrase.  She felt that the Committee should stipulate who was invited to attend the public hearings. Once these two matters were attended to, she would accept the resolution.

The Chairperson replied that they were not dealing with a legal definition of collusion; rather they were talking about historical tacit collusion. He encouraged the Committee to express opinions.  He added that the usual process would be followed during the public hearings. The Committee would call for written submissions and decide whom to invite based on the volume of responses. The detail of this matter did not have to be in the resolution.

Ms Kilian noted that the resolution had no formal legislative impact.  She suggested the following classification of resolutions: the respondent should be called to respond to why they cannot drop rates as the Committee had resolved, the Committee requested the Minister to finalise the Performance Management System of ICASA councillors as a matter of urgency, the Committee requested ICASA to always act professionally, effectively and boldly and the Committee stated its intention to pass a Committee Bill to amend the Electronic Communications Act.  She asked if the intention was to drop the rate to 15c per minute by 2012.

The Committee responded in the affirmative.

The Chairperson responded that the Committee should not be too prescriptive at this stage and must hear what the stakeholders raised at the public hearings. The public hearings will include all groups, including consumer groups and labour.  Any stakeholder in society may make a submission at the public hearings. The Committee will have a diverse view about what the cost of mobile telecommunication should be.  Depending on what was presented, the Committee will decide on responses, such as whether to introduce a Committee Bill. All the options could be explored after the hearings.

Ms Mazibuko said that the DA supported the general sentiment of the Resolution. She agreed that "historical collusion" should be rephrased.  She remarked that the DA could not endorse such prescriptive amounts, as the Committee did not have enough evidence to make such a determination. She agreed with the need for a public participation process to allow the Committee to hear all the stakeholders.

The Chairperson responded that the Committee was not prescribing the amount. The Committee had to suggest an amount to respond to. The resolution on pricing isolated the core issue. He acknowledged that there was no scientific basis but the stakeholders would have to respond to the figure and tell the Committee why it was not viable.  The Resolution was an expression of opinion and unless the Committee was clear about what they wanted the process would stall. The Committee would hear the public on the areas in which they disagreed with the Committee's opinion on the matter.

Mr Kholwane stated that the Committee would be able to deal with all the concerns presented after the public hearings and this would enable the Committee to act decisively on the matter.

Ms Kilian responded that this was probably a question of semantics. She wanted to ensure the Committee did the right thing in the right way. She was concerned that the wording was too instructive and suggested they substitute "proposal" for "resolution" on the sub points in the Resolution. The stakeholders at the public hearings could respond to these proposals.

The Chairperson responded that this was a helpful way of structuring the Resolution and called for members to vote on the Resolution. He rephrased the Resolution in accordance with members' suggestions.

Mr Zondi suggested the addition of "apparent" before "historical collusion"

The members agreed to the suggestion.

Mr van der Berg stated that the Committee should not be overly prescriptive. The DA agreed to the Resolution, as amended.

The members agreed to adopt the Resolution, as amended. 

The meeting was adjourned.