Telkom and Transtel on State Information Technology Agency Amendment (SITA) Bill: briefing
Public Service and Administration
25 June 2002
Meeting Summary
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Meeting report
PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE
25 June 2002
TELKOM AND TRANSTEL ON STATE INFORMATION TECHNOLOGY AGENCY AMENDMENT (SITA) BILL: BRIEFING
Chairperson: Mr PJ Gomomo
Documents handed out
State Information Technology Agency Amendment Bill [B24-2002]
Telkom Submission (Appendix 1)
Transtel Submission (Appendix 2)
SUMMARY
Telkom presented submissions on the proposed amendments to the State Information Technology Agency Amendment Bill. Telkom provided specific comments on both the desirability and consequences of certain provisions of the Bill. The submission centred around three issues; the provision and procurement of services; exclusivity for SITA to provide authentication products and services; self-provision of a government network by SITA.
Transtel only distributed written submissions and the Chairperson ruled that since members of the Committee had not yet read the submission it would be discussed after recess.
MINUTES
Telkom
Mr Makhakhe, Telkom executive - Telecommunications Policy and Licensing Development, expressed reservations on the desirability of amendments and also questioned the likely consequences of certain provisions. He drew attention to the objects of the Bill which are the improvement of service delivery to the public and promotion of efficiency. He questioned whether the reservation of exclusive rights to SITA would promote the above objectives.
Self-provision of a Government Network by SITA.
It was noted that for the purposes of attaining the aims of the Bill, SITA must and may provide as opposed to procure wide area information technology networks. Telkom expressed its dissatisfaction with this provision since the rendition of network or telecommunications facilities is, in terms of the Telecommunications Act of 1996, reserved for Public Switched Network providers.
It was submitted that it would have been proper to limit the duty of the Agency to procuring and not providing services. Mr Makhakhe said that the Bill went as far as making SITA a fully-fledged market participant and telecommunications provider and this was at variance with the Telecommunications Act. Moreover, such position did not accord with the government privatisation plan.
Exclusivity for SITA to provide authentication products and services.
The proposed amendments endeavoured to create statutory exclusivity for SITA to provide authentication products and services for all departments and organs of state. Such competency would be absolute and brought with it the problem that the Agency would be able to decide, despite any law to the contrary, whether to render the services.It was felt that such unlimited discretion was not compatible with the stated aims of the Bill.
Telkom also raised the issue that since the issue of authentication services is dealt with in the Electronic Communications and Transactions Bill the proposed section 7(5)(c) is unnecessary. It was submitted that the reservation of exclusive rights for SITA, to the exclusion of all other entities whose products and services are accredited, would not optimally promote the efficiency or improve service delivery to the public. This is more so given the fact that some departments and organs of state already have existing contracts with independent service providers and such departments could use their leverage to negotiate discounts.
In conclusion Telkom recommended that the Committee did not legislate for the self-provision of telecommunications networks and services by SITA nor afford it exclusivity in so far as the rendition of authentication services to departments and organs of state were concerned. It is believed that if the amendments were passed as they are at the moment, then the aims of the Bill would be frustrated.
Discussion
Mr Baloyi (ANC) asked that since some provisions dealt with communication issues
if the Department of Communications had been consulted about the proposed amendments?
It was replied that the Bill was sent to all government departments. There was full communication with the Communications department. The Director General in that Department is a board member of SITA.
An ANC member stated that it was clear that the department wanted to limit wastage. Did Telkom have any problem with that?
Telkom stated that it fully supported government in this regard. However concern was expressed about the way government would to achieve this.
Telkom indicated that the whole process was flawed. The major area of contention was that there was no proper consultation as required by rules of parliament.
The Chairperson agreed in principle that there was no proper consultation. He went further to state that since Telkom was ready to make submissions the whole issue of consultation should be abandoned. The Department had prepared some answers to Telkom's submissions.
The Chairperson ruled that it would be proper to adjourn the meeting so as to enable Telkom and Committee members to peruse the department's response to the submission. This was important given the fact that the meeting focused on issues that were not on the agenda. The Committee would convene after recess to find out if Telkom was satisfied with the response as well as giving Transtel an opportunity to state its case.
The meeting was adjourned.
Appendix 1
TELKOM SUBMISSION ON THE STATE INFORMATION TECHNOLOGY AGENCY AMENDMENT BILL, 2002 (AN EXPLANATORY SUMMARY OF WHICH WAS PUBLISHED IN GOVERNMENT GAZETTE NO. 23337 OF 26 APRIL 2002)
1. INTRODUCTION
1.1 Telkom SA Limited expresses its appreciation for the opportunity to comment on and make representations with respect to the proposed Bill. An explanatory summary of the Bill was published in Notice 580 of 2002. The full text of the Bill itself had apparently not been gazetted.
1.2 The object of Telkom's submission is to provide specific comments on both the desirability and consequences of certain provisions of the Bill.
1.3 The Bill provides inter alia for a redefinition of the objects and functions of the State Information Technology Agency ("SITA" or the "agency") and for the alignment of provisions regarding the regulatory powers with the adjusted functions of the Agency.
2 OBJECTS
2.1 The objects of the Bill are twofold:
improvement of service delivery to the public through the provision of information technology, information systems and related services in a maintained information systems security environment to departments and organs of state, and
promotion of efficiency of departments and organs of state through the use of information technology.
2.2 Telkom submits that the amendments to the Bill effectively create another telecommunications operator in the form of SITA. The amendments further introduce a dispensation of exclusivity for SITA to provide authentication products and services. Telkom doubts whether this approach will advance the objects of improved service delivery and efficiency of departments and organs of state.
3 SELF-PROVISION OF A GOVERNMENT NETWORK BY SITA
3.1 For purposes of attaining the aims of the Bill, the Agency must in respect of every department and may in respect of an organ of state provide, as opposed to "procure", 'wide area information technology networks'.
3.2 The rendition of network or telecommunications facilities is, in terms of the Telecommunications Act No. 103 of 1996, reserved for Public Switched Telecommunication Network providers who must provide all telecommunications facilities for Private Telecommunications Networks and Value Added Network Providers, among others. See sections 32A (1), 5(a), inter alia, of the Telecommunications Act. Sections 40 (2) and 41 (1) of the Act are also relevant.
3.3 However, the State Information Technology Agency Amendment Bill, now seeks to both mandate and obligate SITA to self-provide telecommunication services within Government Departments. For that purpose it must become a provider of wide area information technology networks to every Department and will be competent at its own instance to render telecommunication services to organs of state.
3.4 In addition, the Agency is funded from monies received for services rendered. In that connection the Minister for the Public Service and Administration or the Minister appointed by the President for that purpose must "determine from time to time reasonable market-related rates for establishing the cost of a service or product … [provided by SITA in terms of the Bill]."
3.5 The effect of the provisions cited is the establishment of a single Government Departments cum organs of state wide area information technology network operated, maintained and charged for at market related rates by SITA. In so doing SITA will become a full-fledged market participant and telecommunications provider under its own unique statutory licensing, pricing and tariffing dispensation utterly at variance with the Telecommunications Act.
3.6 This state of affairs effectively extends Government business operations and needs to be checked in the light of Government's stated objective of phased privatization of government owned enterprises. In that sense it would also appear to be in conflict with Government's World Trade Organisation undertakings in the context of the General Trade in Services agreements.
4 EXCLUSIVITY FOR SITA TO PROVIDE AUTHENTICATION PRODUCTS AND SERVICES
4.1 The State Information Technology Agency Amendment Bill endeavours to create statutory exclusivity for SITA to provide authentication products and services for all departments and organs of state.
4.2 The competency is absolute and SITA may, "despite anything to the contrary in any other law", at its instance and at any stage, elect whether or not to render the authentication products and services provided for.
4.3 In view of the provisions of the Electronic Communications and Transactions Bill on the issue of authentication services and so-called "advanced electronic signatures" the effect of the proposed section 7(5)(c) is in our view not appropriate since SITA will clearly not be the only provider of accredited authentication services.
4.4 Furthermore, the Electronic Communications and Transactions Bill provides that when a signature is required by law, that requirement can only be met in the e-communications environment by means of an advanced electronic signature produced pursuant to a process accredited by the Director General of the Department of Communications.
4.6 Telkom submits that the reservation of exclusivity for SITA, to the exclusion of all other entities whose products and services are accredited, will not optimally promote the efficiency of departments and organs of state or improve service delivery to the public in terms of the stated objectives of the Bill.
5 CONCLUSION
5.1 In conclusion Telkom deems it advisable to recommend to the honorable Committee not to legislate for the self-provision of telecommunications networks and services by SITA nor afford it exclusivity in so far as the rendition of authentication services to departments and organs of state are concerned. The motivation for our recommendation is simply that it may frustrate the objectives of the Bill and that the proposed provisions do not in our view take account of the provisions of other relevant Acts of parliament.
Appendix 2
TRANSTEL SUBMISSION ON THE STATE INFORMATION TECHNOLOGY AGENCY AMENDMENT BILL [B24-2002] AND THE EXPLANATORY SUMMARY WHICH WAS PUBLISHED IN GOVERNMENT GAZETTE NO.23337 NOTICE 580 OF 2002
Transtel thanks the Portfolio Committee on Public Service and Administration (the "Committee") for the opportunity to make comments on the State Information Technology Agency Amendment Bill (the "SITA Bill") which seeks to amend the State Information Technology Agency Act No. 88 of 1998 (the "SITA Act").
The comments set out in the submission below are preliminary comments on the SITA Bill. Transtel would welcome the opportunity to make oral representations to the Committee and would be in a position to provide further written detailed responses on the SITA Bill.
GENERAL COMMENTS
While Transtel welcomes the government's rationale behind an "IT house of value" as referred to in the slides containing the briefing to the committee, namely; "lowering costs, increasing productivity and enhancing service delivery", Transtel is concerned that:
The provisioning of IT related services and facilities is not the core function of government. This may also run counter to government's stated objective of re-structuring state assets and entities. To this end SITA functioning as a procurer/broker of IT related services and facilities for government as opposed to being an independent provider of the same, would be more consistent with government's re-structuring objectives;
There has been insufficient consultation with affected entities on the development of the SITA Bill;
Significant background information supporting the objects of the SITA Bill, is not included in the Preamble of the Bill. This information would assist interested parties make more informed comment on the Bill;
Certain provisions of the Bill may offend the legal rights of State organs to freely conduct their economic activities. Therefore the objects of the Bill should be limited to government departments only. Organs of state that are incorporated in terms of the Companies Act or are governed by the Companies Act should be exempted from the Bill, especially because the operational efficiencies that such organs of state seek to achieve and maintain may be hampered by their having to procure IT related services and facilities through SITA. These same provisions may also be anti-competitive for State organs that operate under the ambit of the Companies Act, No 61 of 1973, as amended;
Other possible anti-competitive provisions of the Bill may be the preferential treatment of State organs compared to private companies in respect of the right to self-provide infrastructure;
Certain provisions are not in conformity with the Telecommunications Act No. 103 of 1996, as amended (the "Act"); and
Additional thought should be given to other options regarding SITA's remit. For example, in terms of being a broker of IT related services and facilities for government and to limit the amount of bureaucracy involved in this process, as well as to streamline procurement of IT related services and facilities, SITA's role should only be triggered when procurement demands reach certain monetary thresholds, such as purchases over R5 million. Another option of SITA's remit may be SITA managing IT outsourcing contracts on behalf of government departments. Issues around limiting the amount of bureaucratic red tape regarding this particular suggestion will need to be investigated further.
The Bill provides that government departments requiring compulsory information technology and related services must acquire them from SITA. This is provisioned through the proposal that SITA provide wide area information technology networks. In terms of the current wording of the section, the provision is ambiguous and there are two ways in which one could interpret this provision.
The one way of interpreting the section is that it means that SITA will facilitate the provisioning of information technology services, thereby centralising the SITA function for all departments. This does not envisage SITA creating an independent network. If this is what it the section means, then Transtel has no objection to the provision but would recommend that the section be clarified.
If however, the section is intended to imply that SITA establish an independent network, Transtel submits that the suggested amendment encroaches upon the domain of public switched telecommunication services operators as explained in paragraph 6.2.1 below.
In our submission below, we provide alternatives to the suggested amendment that are in conformity with the objectives of the Bill and in accordance with the Act.
SPECIFIC COMMENTS TO THE CLAUSES
Section 7 - Duties and Powers of Agency
Section 5 of the SITA Act provides for the functions and powers of the Agency, which were discretionary as opposed to mandatory in the provision of various services related to information technology. Section 7(1)(a) of the Bill mandates the Agency to:
"(i) provide wide area information technology networks ;
(ii) acquire, build or maintain transversal information systems; and
(iii) provide data-processing or associated services for transversal information systems…"
for every government department.
In relation to organs of state, the Agency's power is discretionary. The broad ambit of the provision of the section directs the Agency to be a provider rather than a procurer of all information technology related services except where the Agency is not able to provide.
Transtel would like to know whether the Agency's discretion in this context is primary or secondary? In other words, are government departments mandated to make the Agency their first port of call when they wish to procure IT related services and facilities?
In the event that Bill permits SITA to provide its own services and facilities and in the event that, from an operational point of view, SITA is unable to provide services and facilities immediately to requesting government departments, will government departments be able to procure services and facilities from other providers?
Transtel submits that the provision regarding the provision of wide area networks is not in conformity with the Telecommunications Act for the following reasons -
Sections 36A and B of the Act defines the parameters of a public switched telecommunication services and networks, respectively. Ordinarily, the provision of the services provided by the Agency would fall within the ambit of services provided by a PSTS licensee and, if they were not provided by a PSTS licence holder, they would have to be provided through the use of facilities of the PSTS operator. Similarly, the provision of a wide area network falls within the ambit of a PSTS licence holder and in terms of s32A(1) of the Act, from 7 May 2002 until 7 May 2005, only Telkom and the Second National Operator ("SNO") may provide PSTS services.
If an entity is permitted to provide telecommunications services that ordinarily fall within the ambit of the PSTS licence holder, that entity can only lease telecommunications facilities of the PSTS licence holder to provide those telecommunications services. In this regard we refer the Committee to the following sections of the Act to support this point:
s40(2) of the Act provides that-
"(2) A licence to provide any value added network services including but not limited to, electronic data interchange, electronic mail, protocol conversion, assess to a database or a managed data network service, shall contain a condition that the services in question shall be provided by means of telecommunication facilities-
until 7 May 2002, provided by Telkom or made available to Telkom as contemplated in s44… and
after 7 May 2002, provided by Telkom and the second national operator or any of them until a date fixed by the Minister [of Communications] by notice in the Gazette"; and
S41(1) of the Act provides that-
"(a) A person providing a telecommunication network for purpose principally or integrally related to the operations of such person…shall, notwithstanding the provisions of s32(1) and s33(1) and regardless of whether such network is utilised by means of telecommunication facilities made available by Telkom, or the second national operator…, be obligated to obtain the telecommunication facilities for the provision of its services from Telkom or the SNO.
a private telecommunication network licensee shall, subject to the regulations, be required for the provision of a private telecommunication network, where such network is interconnected to the telecommunication system of Telkom or any other person providing public switched telecommunication service, be obligated to obtain the telecommunication facilities for the provision of its services from Telkom or the SNO.
Hence the Act does not provide for the self-provision of a wide area network for the purpose of providing telecommunication services by any entity for commercial purposes without the use of PSTS telecommunication facilities.
ALTERNATIVE MECHANISM TO MEET THE OBJECTS OF THE SITA BILL
The objectives of SITA as set out in the Bill could be met by the mechanisms suggested below.
The Agency could seek to obtain a private telecommunications network licence. Alternatively, if it chose not to interconnect with the SNO or Telkom, it would not aquire a licence PTN licence as indicated above. The Agency could then lease lines from the SNO or Telkom, thereby using PSTS facilities to provide telecommunication services. Provision for this in the Bill would be in conformity with the Act.
Alternatively, the Agency could provide for the creation of a virtual private network (VPN). The Agency could provide services exclusively for use by government departments on leased capacity from the SNO. Such provision in the Bill would be in conformity with the Act.
SECTION 5(5) - AUTHENTICATION PRODUCTS AND SERVICES
Section 5(5) of the Bill directs that the Agency may exclusively "sell or provide authentication products or services for all departments and organs of state and apply to the relevant authority for the accreditation of such authentication products or services in terms of any law."
As mentioned above, reference to organs of state should be removed from this particular section. This section should only apply to government departments. Organs of state, such as Transtel, that have pre-existing relationships with various IT vendors would want to use their leverage in those relationships to negotiate appropriate discounts. If organs of state were mandated to obtain authentication products and services from SITA, their commercial viability would be hampered because of their inability to manage their business as they deem necessary.
Transtel has no objection to the inclusion of this provision in the SITA Bill provided that the Authority is subject to the same procedures for accreditation as set out in the Electronic Communications and Transactions Bill.
SECTION 20 - BUSINESS AND SERVICES LEVEL AGREEMENTS
Transtel submits that the provision of s20 (1) be amended to reflect the concerns reflected above regarding the provisions of s7(1) of the Bill that deals with whether SITA is going to be an IT services and facilities broker or provider.
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