Department of Communications Strategic Plan 2011-14: briefing

NCOP Public Enterprises and Communication

15 March 2011
Chairperson: Ms M Themba (ANC, Mpumalanga)
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Meeting Summary

The Department of Communications Strategic Plan 2011-2014 presentation focused on the DoC’s key achievements, its financial performance, its strategic alignment, the ministerial flagship programmes, other strategic priorities, the e-Barometer Index, and key challenges facing it. The DoC showed that 75.4% of its allocated budget had been spent as at 14 March 2011. The DoC’s strategic plan was in line with the Medium Term Strategic Framework (MTSF) and was drafted in support of the government outcomes stemming from the MTSF. The Strategic Plan was also aligned with ministerial flagship programmes, which included job creation, e-skills development, broadband connectivity, Digital Terrestrial Television (DTT), the Postbank and rural connectivity. The e-Barometer Index, which was a summary of the ICT sector, government, education, individual, households and community growth, showed that there was steady growth from 41.8 in 2000 to 51.9 in 2009. Key challenges for the DoC included human resource capacity constraints, delayed finalisation of the DTT standards, and departmental instability due to low staff morale, suspension of key senior managers and the ad hoc redeployment of staff within the department. The DoC appealed for assistance from the Committee about raising awareness of ICT issues within their constituencies.

The Committee raised concerns about the system the DoC was using in order to “measure or conclude” the e-Barometer Index, whether the DoC put more emphasis on urban areas than rural areas, if the statistics the DoC had on the number of people that had access to the internet was correct, how many irregular staff appointments had been made, what would happen to the jobs created for the manufacture of the Set-Top Boxes (STBs) once they were manufactured and implemented, and if the DoC had a strategy to attract more people to the Postbank's borrowing policy in order to protect people from “sharks” and from money laundering. The DoC had promised the Committee that it would monitor the performance of its State Owned Entities against its Key Performance Indicators; however, the DoC did not focus on this matter in their presentation today. The Committee was extremely concerned that the DoC's presentation did not show any real focus on job creation nor did it show what the SOEs would be doing with its funds in terms of creating employment. Members needed to know how many jobs the DoC would be creating in each province and what the reasons were for the slow growth in the communications sector. They were also concerned about when the re-deployment of staff within the DoC would come to an end and whether the same employees would still be in their current acting positions in a year’s time. The Committee informed the DoC that they had been to Japan and had been briefed by one of its Deputy Ministers, who said that they wanted to see if South Africa would follow through on its commitment to use Japan's modems or instruments for digital migration within the country. Members wanted more clarity on this matter. The Committee told the DoC that they had visited a number of rural areas and found that many people in rural communities had bought television sets, but the areas did not receive any signal. They asked if the low budget allocated to Sentech negatively affected the digital migration process. The Committee warned that more focus had to be put on rural areas.

Meeting report

Briefing on the Strategic Plan
Harold Wesso, Acting Director-General: Department of Communications (DoC), informed the Committee of the DoC's key achievements to date. He said that there were a few pieces of legislation that the DoC had been involved in. The South African Post Office Bill was being deliberated on with the Portfolio Committee on Communications, the South African Postbank Ltd Bill had been passed by the National Assembly and had been signed by the President into law, and the ICASA Amendment Bill had been finalised and approved by Cabinet for public consultation. The Broadband Policy had been approved and key focus groups had been formed to develop the Broadband Implementation Plan. The Information and Communication Technology (ICT) infrastructure for the 2010 FIFA Soccer World Cup had been a success, 33% population coverage had been achieved by Sentech in terms of the Digital Terrestrial Television (DTT) infrastructure roll-out, there was a draft action plan in place to facilitate the involvement of Small Medium and Micro Enterprises (SMMEs) in the development of Set-Top Boxes (STBs), and a draft ICT Rural Development Strategy was developed which would be implemented in the 2011/12 financial year.

Mr Sam Vilakazi, Acting Deputy Director-General: Finance and ICT Enterprise Development, focused on the financial performance to date. He said there were six programmes within the DoC that received funding from the budget: Administration, ICT International Affairs and Trade, ICT Policy Development, ICT Enterprise Development, ICT Infrastructure Development, and the Presidential National Commission. The overall budget allocated to the Department amounted to R2 138 001 000. The Administration Programme received R159 001 000 of which 94% had been spent as at 14 March 2011. The ICT International Affairs and Trade Programme received R44 618 000 of which 75.6% had been spent so far. Of the R80 314 000 allocated to ICT Policy Development, 69.3% had been spent. R13 263 000 had been allocated to ICT Enterprise Development, of which 67.4% had been spent. Finally, 58.7% of the R66 756 000 budget allocated to ICT Infrastructure Development had been spent, while the Presidential National Commission Programme spent 78% of its R34 070 000 budget. Some of the funds had been transferred to entities such as the Universal Service and Access Agency of South Africa (USAASA), the Universal Service and Access Fund (USAF), ICASA, the South African Broadcasting Corporation, the South African Post Office, Sentech, and Telkom.

Dr Wesso told the Committee that the Medium Term Strategy comprised of eight Strategic Goals supported by seventeen strategic objectives. The strategic goals and objectives were to be realised through the achievement of numerous three-year targets, which in turn contributed towards the government outcomes. The three-year targets were allocated across the six programmes of the DoC and in certain instances, the achievement of these targets required close collaboration with the DoC's entities.

The DoC's 2011-2014 Strategic Plan was in line with the Medium Term Strategic Framework (MTSF) that was informed by the electoral mandate period (2009-2014). The Strategic Plan was in line with government outcomes stemming from the MTSF, which included improved quality of basic education, a long and healthy life for all South Africans, safety for all people, decent employment through economic growth, a skilled and capable workforce, an efficient and responsive economic infrastructure network, vibrant and sustainable rural communities contributing towards food security, a responsive and effective Local Government system, and an efficient and effective public service.

Mr Themba Phiri, DoC Acting Deputy Director-General:
Presidential National Commission on Information Society and Development, focused on the Ministerial Flagship Programmes, which included job creation, e-skills development, broadband connectivity, DTT, the implementation of the Postbank, and rural connectivity through the ICT Rural Development Strategy. The DoC wanted to increase broadband penetration through the development of a Broadband Strategy and implementation plan. A borrowing policy, investment policy and lending policy was being developed for the Postbank. Regarding DTT, the DoC wanted to accelerate the implementation of the Broadcasting Digital Migration Policy. This would ensure the availability of affordable STBs. The DoC was in the process of implementing e-skills training programmes, and developing and implementing an e-skills awareness campaign. The DoC wanted to adopt and implement the ICT Rural Development Strategy for rural connectivity. The Department would facilitate the roll-out of low power transmitters to cover five million inhabitants. The DoC identified four critical areas which could facilitate the creation of approximately 151 050 jobs over the medium to long term programme. They included broadband infrastructure and services, DTT infrastructure, creative industries, SMME and capacity building, and the postal sector. Other strategic priorities included policy and regulatory reform for the ICT sector, spectrum management, cyber security, stabilising of public entities and alignment with government priorities, reducing the cost and improving the quality of ICTs, and SMME development.

The e-Barometer Index looked at the ICT sector, Government, Education, Individual, Households and Community (CAGR) growth. The Index is a summary of the CAGR growth and showed a steady growth from 41.8 in 2000 to 51.9 in 2009. Between 2000 and 2006, growth in CAGR was 3.01%, which slowed between 2006 and 2009 to an average growth of 1.29%.

Dr Wesso focused on key challenges facing the DoC. He noted that there were human resource constraints within the DoC, the finalisation of DTT standards had been delayed, the functioning of State Owned Entities (SOEs) as the delivery arms of government was not optimal, and there was instability in the DoC in the first half of the financial year due to low staff morale, suspension of key senior management, and the ad hoc redeployment of staff within the DoC. So far, the DoC had stabilised, additional management structures had been put in place, the recruitment for critical posts has commenced, and SOE oversight was prioritised. This resulted in the improvement of project implementation and expenditure. Assistance was required from the Select Committee on raising awareness about ICT issues within the constituencies of the Members, communicating ICT related challenges or needs, and communicating with their constituents about the positive impact of ICTs through their uptake and usage.

Mr M Sibande (ANC, Mpumalanga) said that he was concerned about what system the DoC was using in order to “measure or conclude” the e-Barometer Index. It was still very difficult for many areas to get a simple radio; therefore, he did not think the DoC's statistics on the number of people that had access to the internet were correct. The emphasis was more on urban areas than on rural areas. The DoC had spoken about STBs, but he wondered if the country was ready for digital migration. He was happy that the South African Postbank Bill had been passed, and asked if the DoC had any strategy to attract more people to the Postbank's borrowing policy in order to protect people from “sharks” and from money laundering.

Dr Wesso said that the question on the e-Barometer Index was difficult to answer. It had been difficult to define and to come up with Key Performance Indicators (KPIs). Overall, in respect of ICTs, there was growth. However, there were certain areas or sectors where growth had stagnated. This was why SA was decreasing in the international rankings in terms of growth. The CSIR was doing wonderful work about mass networks or wireless networks in rural areas. This allowed people in rural areas to access broadband wirelessly. There were many initiatives being taken in rural areas. However, one could only measure general trends, which allowed the DoC to understand what was happening. It was clear that, over the last few years, there was stagnation in growth and in the use of ICTs in government. This was a problem that had to be addressed. If the government used ICTs then the public would use them too.

Dr Wesso said that the DoC was fully aware of the situation in the rural areas. People in deep rural areas did not have the basics when it came to communication. The DoC had been to a few rural areas to see how they would be able to provide those communities with connectivity so that they could be connected with the world.

He said that the DoC had to be careful with how they managed the Postbank so that it did not become just another bank. This was why a lending, borrowing and investment policy would be developed to stipulate the conditions under which people would be allowed to borrow and under which conditions banks would be able to invest in people so that the Postbank could really cater for the poorest of the poor.

Mr Z Mlenzana (COPE, Eastern Cape) asked how far along the implementation process of STBs was. He asked how many irregular staff appointments had been made within the DoC. What action had been taken against those members of staff that had made the appointments? The DoC told the Portfolio Committee on Communications that this matter would be finalised at the end of March 2011. Was this accurate? What were the financial implications of the irregular appointments? What steps had been taken to curb further irregular appointments and fruitless expenditure? Last year, the Committee asked about the alignment of State Owned Enterprises (SOEs) with government priorities. The DoC promised the Committee, through its Strategic Plan, that it would monitor the performance of the SOEs against its Key Performance Indicators (KPIs). One expected the DoC to speak to this matter in their presentation today. There were policy imperatives included in the DoC's last Strategic Plan that related to provinces and municipalities. What progress had been made in relation to these policy imperatives? The Committee was aware that there were programmes in place to address the matter. He noted that the DoC had spoken about job creation with regard to the broadcasting digital migration plan. But, what about the sustainability of these jobs?

Dr Wesso answered that the issues raised on irregular expenditure could be answered at a separate meeting. The issues had been dealt with but the DoC was not aware that they would have to report on it at this meeting. All the matters of concern mentioned to the Committee at the last meeting had been dealt with conclusively. There were hearings and legal court cases in process. The same went for matters of fruitless expenditure. Measures were put in place to ensure the DoC’s supply chain management operated properly.

Dr Wesso replied that the DoC was working very hard to receive regular reports from SOEs on a monthly basis. The reports would show what the SOEs were and were not doing. The DoC also had quarterly meetings with the SOEs to ensure that they were aligned with the DoC and government's strategy. The DoC was trying to build its own capacity in order to provide the SOE’s with strategic direction.

Mr M Jacobs (ANC, Free State) said he was worried about the presentation that had been made to the Committee. In the State of the Nation Address (SONA), the President had said that this year was the year for job creation. However, the DoC's presentation did not show any real focus on job creation. The DoC allocated funds to SOEs but the presentation did not show what these entities would be doing with the funds in terms of creating employment. The Members of the Committee represented their respective provinces; therefore they needed to know how many jobs the DoC would be creating in each province.

Dr Wesso replied that the government could not create actual jobs, but they could create the space for the private sector and for other people to create employment. This was true for the government as well as the DoC. The DoC was not a job creation type of department such as the Department of Transport. However, the DoC could create the space and develop the policy that would allow the ICT sector to grow. This would lead to job creation. The DoC would create jobs where it could.

Dr Wesso said that he understood what the Member was saying about the provinces. He felt that there was a need for the Committee to receive a presentation on what was happening in the provinces so Members knew exactly what issues they were dealing with.

Mr H Groenewald (DA, North West) noted that the Members were quite worried about the DoC's role in job creation. He was confused about the calculations used to estimate job creation on slide 39 of the presentation. He asked when the reconstruction within the DoC would be completed. Would the same employees still be in their positions in a year’s time, or would other people be employed in their positions? This matter had to be resolved quickly so the DoC could move forward. He wanted to know why cell phone costs were so high. Something had to be done about it. He asked how people “on the ground” would accept the Postbank. Was everything in place in rural areas that would allow people to utilise it? He wanted to know what the reason was for the slow growth within the communications sector. He suggested that the DoC put more focus on the rural areas as this was where employment was needed. Employment had to be created in rural areas so people would have a reason to stay there. He noted that the jobs created in relation to the STBs were only temporary jobs. What would happen to these jobs once the STBs were manufactured and put in place?

Dr Wesso answered that he hoped the “acting” situation within the DoC would come to an end very soon once the new Director-General is appointed. The second phase of adverts for Deputy Directors-General was happening now and the DoC was in the process of appointing 24 people in critical positions.

Dr Wesso addressed the query on why there had been such slow growth. He referred to slide 48 of the presentation. If one looked at the graph, one could see that there had been gradual growth up until 2005, stagnation from 2006, and then gradual growth from 2009. Overall, if one looked at access to email, internet, telephone, and radio, one then would come up with an index that would show slow growth. The graph showed that the ICT sector had remained stagnant over the last ten years. Government usage of ICTs was also decreasing. This was a problem. Over the last ten years, growth in the education sector had been stagnant, but it had started to decline in recent years. The government had to look at what it could do to ensure growth in those areas. They had to look at where they should intervene to allow people the opportunities to use ICTs.

Dr Wesso answered that the DoC was creating an industry in which jobs could be created. The DoC was using the digital migration process as an opportunity, as a catalyst or a starting point to create an industry that would create sustainable jobs. People would always be needed to repair STBs, to create new STBs, and to install them. There would also be a whole research industry around STBs.

Mr R Tau (ANC, Northern Cape) stated that it was important to have the correct systems in place to fight corruption within the DoC. He asked the DoC to elaborate on the types of corruption or alleged corruption that was taking place within the DoC. He told the DoC that the Committee had been to Japan and had been briefed by one of its Deputy Ministers, who said that they wanted to see if South Africa would follow through on its commitment to use Japan's modems or instruments for digital migration within the country. One of the instruments was a small box that could be used by anybody in rural areas where they could get a signal and watch television. Later, there were some changes that took place in the DoC. He remembered that the DoC had not committed to this deal; however, he felt it was important to raise the matter while the DoC was there. He asked the DoC to clarify what had happened regarding this matter.

Dr Wesso explained that the DoC had put certain systems in place to deal with corruption.

Mr Phiri replied that there were certain factual inaccuracies regarding the agreement with Japan. In July 2010, the Southern African Development Community (SADC) sent a team to investigate the European based standard, which was the Digital Video Broadcasting (DVB) standard and the Japanese standard. A comparison was done between the two. The issue arose because South Africa, together with the rest of Africa, formed part of Region 1 of the world, which was how spectrum was allocated to use for television and radio. This was referred to as a regional band. When the world developed standards, specific standards were developed for specific regions. The Japanese standard was not suitable for Region 1, unless it could be amended. SA made a commitment to the International Telecommunications Union (ITU) about which standard they and the rest of Africa would use for the migration from analogue to digital simply because the DVB standard was tested and available. SA adopted a DVB-based standard, which was European. Even the manufacturing capability in the country was invested in on the bases of its capability to manufacture DVB technology. When the DoC went to Brazil to understand the benefits of the Japanese standard, they realised that the standard would only work on six megahertz of spectrum, which was not how SA operated. If the Japanese standard were used in SA, it would mean that the country would lose 2% of its radio frequency spectrum. Radio frequency spectrum was a scarce resource. The DoC also realised that they did not know how the STB manufacturing capability could be set up using the Japanese standard. It was found that Japan had implemented a joint programme on the manufacturing of transmitters. They had to acquire transmission capabilities, which they would manufacture and send to SA. They would also send the STBs to SA, as the country did not have any experience in manufacturing STBs. The problem was that the ITU had not ratified the test for the compatibility of that technology in SA so SADC could not support the Japanese standard. The science behind it was not available for any country to look at. SADC ministers concluded that there was not enough information available about the Japanese standard that would enable the country and SADC as a whole to utilise it. It was then found that the DVB-based standard would allow for more “digital dividend”. The Ministers of SADC also adopted that they would stay with the DVB-based standard until new information about the Japanese standard surfaced.

The Chairperson informed the DoC that the Committee had visited a number of rural areas. They found that many people in rural communities had bought television sets, but the areas did not receive any signal. She asked if the low budget allocated to Sentech negatively affected the digital migration process. The DoC said that they would provide five million poor households with STBs. Would this be possible with the low budget allocated to Sentech? Would Sentech be able to assist these households? She also wanted to know where the ICT hubs were situated and when they would be available in each province. She was worried about the key challenges facing the DoC. She asked how long the suspensions within the DoC were supposed to last. The ad hoc re-deployment of staff was also worrying. If these challenges were not resolved then the DoC would not be able to move forward. She warned the DoC that they had to make rural areas a priority. The DoC had to commit to doing studies in all rural areas to find out which areas needed signal for radio, television and other means of communication. The Committee wanted to see more work being done in rural areas.

Mr Phiri replied that the Sentech issue was very important. Sentech aimed to put low power transmitters in mountainous areas and in valleys. This would ensure signal for radio and television. This was an important programme and was re-focused as a KPI. This was why it was included in the Strategic Plan. Previously, this was classified as a ministerial project. It was now classified as a departmental programme. A transmitter was launched in certain rural areas in KZN recently as well as in rural areas in the Northern Cape. The issue was that Independent Communications Authority of SA (ICASA) had to approve the spectrum for those areas. Sentech's aim was to upgrade digital transmitters in order to improve digital signal. This would help the DoC to ensure that they could reach more areas. He thought that Sentech was on track with this programme. In terms of Sentech's budget, the DoC could forward the information to the Committee. The DoC could also provide Members with a list of areas that Sentech was focused on and where the programme was being implemented. The programme was on track to achieve 60% population coverage by April 2011.

Dr Wesso replied that the DoC it itself was developmental and this was why one of the projects that the DoC was involved in was to focus on ICTs in rural areas. The DoC had a strategy to deal with development in rural areas. The flagship priority regarding Broadband was not to bring it into urban centres; it was to find ways to bring it into rural areas. This process was very expensive and could be compared to building roads. Sometimes, signal distribution was impossible because of the landscape or the geography of the environment. It was expensive to get certain technologies out into rural areas. These types of activities were limited by the amount of funds the DoC had. A broadband coherent project was being implemented in Kwazulu-Natal. The DoC was using this project to find out methods of getting broadband into rural areas. He had been working in rural areas for most of his life trying to get ICTs into these areas. The willingness to provide rural areas with broadband was there; however, it was an expensive exercise. A lot of the DoC's focus was on rural areas. The DoC had rural development programmes in the Northern Cape and Mpumalanga. They were looking at various ways to use ICTs in these provinces. The rural-urban divide was a problem all over the world and ICTs could be used to close this gap.

He said that the government would subsidise poor households with STBs. A number of households had been identified that had television sets but would not be able to afford new STBs.

Dr Wesso explained that it was not a matter of the DoC not wanting to go into rural areas, as in many cases it was dependent on budget and technology. He assured the Committee that the DoC's focus was on the rural areas.

Mr Sibande interrupted Dr Wesso, saying the DoC had to be honest. He understood that the DoC had said that it was expensive to go into rural areas to give them connectivity, but this was not true in all cases. If a gas pipe could run from Mozambique past rural areas in SA, then why was it so difficult to go into rural areas and connect them to the outside world? It seemed that SA could help neighbouring countries but not itself. So, the DoC could not talk about how expensive the connecting process was.

The Chairperson stated that the Committee would work with their constituencies and the DoC on the matters that were raised. The Committee needed proper information from the DoC that they could take back to their respective provinces. She suggested that the DoC put a small research team together to focus on rural areas that were in need of connectivity. The Committee hoped to receive this information when the DoC presented its budget vote to them.

The meeting was adjourned.


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