Independent Communications Authority of South Africa (ICASA) on its impact on all entities in terms of its ICT mandate

Telecommunications and Postal Services

17 August 2015
Chairperson: Ms M Kubayi (ANC)
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Meeting Summary

The Independent Communications Authority of South Africa (ICASA) briefed the Committee on its impact on all the entities in terms of its Information Communication and Technology (ICT) mandate.

ICASA had ensured that the South African Post Office (SAPO) received exclusive provision of basic mail services, with a 25-year licence. Price control was aimed mainly at protecting consumers. There was compliance with the reserved area, and it had to meet the Universal Service Obligation (USO). The decline in revenue of SAPO had to do with the decline in basic mail services, and this was the issue to be addressed in the turnaround strategy that had been implemented by the Department of Telecommunications and Postal Services (DTPS).

ICASA had introduced possible support measures to ensure the sustainability of SAPO, and these included enforcing SAPO’s exclusivity, and a consideration to revise its price cap formula. There were also considerations to substitute the physical infrastructure of SAPO with mobile units, and to implement differential geographic standards.

Sentech had been designated as the signal distributor for terrestrial television and radio broadcasts, and provided support for local broadcasters. ICASA realised that more licensees resulted in more revenue for Sentech, and had already licensed over 256 community radio stations to date, and the Invitation to Apply (ITA) for commercial radio stations in the Northern Cape had already been issued. The ITA for Multiplex 3 was to be issued before the end of quarter 2. There were still challenges in terms of high prices for Digital Signal Transmission. Priority was being focused on Digital Terrestrial Television (DTT).

Broadband Infraco (BBI) was still operating without a retail licence, despite the fact that the entity was the wholesale network provider for over 10 000 km of fibre rollout. ICASA was still awaiting the outcome of the State-Owned Entities (SOEs) rationalisation review in order to clarify the role of BBI going forward. ICASA was also collaborating with other regulatory authorities, like the Media Development and Diversity Agency (MDDA), whose role was to ensure the sustainability of the community broadcasting sector,

ICASA and the Film and Publication Board (FPB) had agreed on a Memorandum of Understanding (MoU) on a collaborative framework for the regulation of content and related services. It had also signed an MoU with the National Consumer Commission (NCC) to establish a collaborative framework for dealing with consumer complaints. In order for the sector to move forward, it was critical that the regulator, policy makers, the legislature and industry worked together for a common vision as outlined in the National Development Plan (NDP).

Members wanted to know about the deadline for the end of the exclusivity of the licence of SAPO. It had been impossible for SAPO to achieve its 95% target for service delivery, considering the four-month postal strike which had had an impact on the operation of the entity. It was important for the sector to prioritise on the liberalisation of the market so as to ensure that there was competition by the mobile operators. Was there a way of monitoring the licences that had been granted to the operators? It was good to see that ICASA was able to regulate the fees that were charged by the operators, as this was protecting the consumers. Was anyone monitoring the school connectivity, as there were cases where some of the gadgets were not being utilised because of poor maintenance or expiry of data connections? The cost to communicate was still a major concern, especially the hidden costs in the contracts of the end-users, and the package of services that was offered with the contracts. Data costs were ridiculously high, and this would have an impact on the utilisation of broadband and internet in the country, particularly on school connectivity.

Meeting report

Briefing by Independent Communications Authority of South Africa (ICASA)

Mr Rubben Mohlaloga, Acting Chairperson of the Independent Communications Authority of SA (ICASA), said that ICASA had already authorised a total of 621 broadcast channels, including 129 for Top TV, 29 for e-TV, and 450 channels for DSTV. The licence fees that had been collected in 2014/15 had amounted to R1.62 billion, compared to R800 million in 2010/11, and this again showed the major contribution they made to the national fiscus.

ICASA had already identified targeted licensees to connect to about 5 250 schools, providing 24 tablets for students, three laptops for educators and two printers for each school. So far, 334 schools that had been connected, and a further 860 would be connected by March 2016. The service that was offered to end users had also drastically improved. The number of fixed telephone subscribers was 4 302 606, fixed broadband subscribers were 1 706 313. Mobile voice subscriptions were 79 540 205, while the number of mobile data subscriptions was 24 815 991. Before 1994, the country had had two mobile operators and now there were four; there had been one 1 fixed line provider, and now there were over 50 fixed line service providers. ICASA had also identified the problem of limited access to services, and the situation had now improved to the stage where there was over 90% population coverage, coupled with a 90% reduction in termination rates -- from R3.20 per minute (prepaid), to R1.25 in 2009 and R0.13 in 2017.

The Authority conducted Quality of Service (QOS) monitoring to protect consumers from poor service. This had been conducted from 2014-2015 in provinces like Northern Cape, Free State, North West and Limpopo. The monitoring measured the accessibility and availability of network signals and quality of services by mobile operators. The Authority also assisted other state entities, such as the  South African Revenue Service (SARS), to monitor the availability of the network signals in the border posts, as well as Universal Service Access Agency of South Africa (USAASA), to assess the quality of subsidised networks in the under-serviced rural areas. An international company called Omnitele had also been hired to conduct comprehensive network benchmark monitoring in all 9 provinces.

ICASA had ensured that the South African Post Office (SAPO) received exclusive provision of basic mail services, with a 25-year licence. Price control was aimed mainly at protecting consumers. There was compliance with the reserved area, and it had to meet the Universal Service Obligation (USO). The decline in revenue of SAPO had to do with the decline in basic mail services, and this was the issue to be addressed in the turnaround strategy that had been implemented by the Department of Telecommunications and Postal Services (DTPS).

ICASA had introduced possible support measures to ensure the sustainability of SAPO, and these included enforcing SAPO’s exclusivity, and a consideration to revise its price cap formula. There were also considerations to substitute the physical infrastructure of SAPO with mobile units, and to implement differential geographic standards.

Sentech was designated as the signal distributor for terrestrial television and radio broadcasts, and provided support for local broadcasters. ICASA realised that more licensees resulted in more revenue for Sentech, and had already licensed over 256 community radio stations to date, and the Invitation to Apply (ITA) for commercial radio stations in the Northern Cape had already been issued. The ITA for Multiplex 3 was to be issued before the end of quarter 2. There were still challenges in terms of high prices for Digital Signal Transmission. Priority was being focused on Digital Terrestrial Television (DTT).

Broadband Infraco (BBI) was still operating without a retail licence, despite the fact that the entity was the wholesale network provider for over 10 000 km of fibre rollout, and its mandate was outlined in terms of section 3 (1A) of the Electronic Communications Act (ECA) and the BBI Act of 2007. ICASA was still awaiting the outcome of the State-Owned Entities (SOEs) rationalisation review in order to clarify the role of BBI going forward.

Mr Mohlaloga said that ICASA was also collaborating with other regulatory authorities, like the Media Development and Diversity Agency (MDDA), whose role was to ensure the sustainability of the community broadcasting sector, and there was a Memorandum of Understanding (MoU) currently under negotiation with the Regulatory Projects Office. ICASA and the Film and Publication Board (FPB) had agreed on a MoU to be signed before the end of September 2015 on a collaborative framework for regulation of content and related services. ICASA had also signed an MoU with the National Consumer Commission (NCC) during June 2015 to establish a collaborative framework for dealing with consumer complaints. There was also an MoU in place with the Competition Commission in order to ensure that there was a cooperative framework to deal with competition matters in the sector.

In conclusion, ICASA aimed to prioritise on being an efficient and independent regulator. The organisational realignment had been completed, and this positioned the organisation to be efficient and effective to serve consumers and industry in order to fulfil its constitutional mandate. In order for the sector to move forward, it was critical that the regulator, policy makers, legislature and industry worked together on a common vision, as outlined in the National Development Plan (NDP). The country could realise the NDP vision only if the sector’s priorities were relevant, targeted and realistic in focusing on digital migration, spectrum assignment, infrastructure deployment and transformation.

Discussion

Mr C Mackenzie (DA) wanted to know about the deadline for the end of the exclusivity licence of SAPO. He expressed concern that SAPO had not met its Universal Service Obligations, and wondered whether there was a way of holding the previous Board of the entity to account for such failure. It would have been impossible for SAPO to achieve 95% of its service delivery targets, considering the postal strike that had lasted four months, as this had had an impact on the operation of the entity. It was important for the sector to prioritise on the liberalisation of the market so as to ensure that there was competition by the mobile operators. It was not clear what comprised transformation in SAPO -- whether this was transformation of the operation of the entity, or simply racial transformation.

Ms J Kilian (ANC) also shared the concern about whether licence holders were able to comply with regulations, and the imposition of unrealistic targets in the USO had had a negative of the operation of SAPO. Regarding services to licensees, there were not enough licenses to grant to the most populated areas, and the major problem was whether the licenses that had been granted were useful. Was there a way of monitoring the licenses that had been granted to the operators? She commented that ICASA had managed to provide an increase to the national fiscus, as this was a good indication of the operation of the entity. It was important to know if the schools that had been granted licences had been given them on a permanent or temporary basis. It was good to see that ICASA was able to regulate the fees that were charged by the operators, as this was protecting the consumers. What ways could be introduced to ensure that there was a regulation of data fees that were charged by the mobile operators?        

Mr E Siwela (ANC) commented that it was confusing that the presentation had asserted that the priorities of the sector were not clear enough, despite the fact that the NDP had already highlighted the priorities of the ICT sector.

The Chairperson wanted to know if there was anyone monitoring the school connectivity in the country, as it had been reported that some of the gadgets that had been given to various schools were not operational. There seemed to be confusion on the number of schools that had been connected to broadband, and the extension of the gadgets to other schools. It was commendable to see that there was provincial intervention in the school connectivity, as this would improve synchronisation with what was happening nationally. Had an evaluation been done on the USO, especially since it had been mentioned that there were 2.5 million SIM cards that had been distributed by Cell C, Vodacom and MTN. The cost to communicate was still a major concern, especially the hidden costs in the contracts of the end-users, and the package of services that was offered with the contracts. Data costs were ridiculously high, and this would have an impact on the utilisation of broadband and internet in the country, particularly on school connectivity. It would not be viable for the government to spend a huge amount of money on data and the country needed to learn from other countries like Brazil, where data costs had declined significantly.

She expressed concern that there was no Blackberry plant in the country, despite the fact that South Africa had one of the highest penetrations of Blackberry in the world. The intention of the turnaround strategy of SAPO was to ensure that the entity was able to generate profit and operate on its own. BBI had not been granted a licence to operate, but the Department was still awaiting the results to come from the SOEs’ rationalisation review on the future of BBI.

Mr Mackenzie commended the fact that ICASA had admitted that at the moment there were no measures in place to regulate SAPO. The decline of the SAPO mail volumes was mainly because of the lack of services, and this was the issue that needed to be addressed. He wanted to put it on record that he was against the strict regulations of the operators, as this discouraged competition and penalised the excellence of the those companies that had excelled in favour of those that were performing dismally.

Ms Kilian said little information had been provided on the need for an amendment of the legislation, considering that there had been lot of developments in the ICT sector. It was impressive to see that countries like Namibia were able to use ICT in the agricultural sector, mainly in the monitoring of weather conditions for the suitability of farming. What should be the role of the regulators to identify blockages in the ICT sector?

The Chairperson wanted to know what progress had been made in the rapid deployment policy, and what progress had been made with the proposal to increase the Universal Service and Access Fund (USAF) fund? The Department needed to address the problem of unavailability of a network or signal in some areas, as this had been evident during the Committee’s oversight visits to the rural areas of Northern Cape, Limpopo and KwaZulu-Natal (KZN). This often made it difficult for people to call basic health services, like ambulances or the police. The high cost to communicate was also disadvantaging the investors in the country, which was an issue that needed to be addressed, as this would certainly have an impact on school connectivity and broadband penetration in the country. What was the situation right now regarding Neotel?

Mr Mohlaloga responded that Cell C, Vodacom and MTN had already provided 2.5 million SIM cards for those who lived in under-serviced areas, and this was to improve broadband connection in the country. ICASA had already implemented proposals to revamp universal service and access obligations, which cut down on operators’ requirements. This was to ensure that network operators complied with the requirements within a specific timeframe. Under the mooted changes, licensees would have to provide internet access, computers, servers, printers and other local area network-related equipment to schools. ICASA had released a document setting out the reasons for its decision in approving the applications before it for the transfer of control over Neotel’s services and spectrum licences. Neotel was facing pressure because of inadequate fixed network coverage relative to its competitors, like MTN, Vodacom and Cell C.

Mr Tinyiko Ngobeni, Acting Director-General (DG), Department of Telecommunications and Postal Services (DTPS), said that the Department had already played an important role in reducing the cost to communicate, as this had been the case in the reduction of the rates for voice calls. The priority was now on the reduction of the data costs, as this was having an impact on poor people.  

Adoption of minutes

Mr Siwela moved the adoption of the minutes of 23 June 2015, and was seconded by Ms D Tsotetsi (ANC).

The minutes were adopted as is.

Ms Tsotetsi moved the adoption of the minutes of 4 August 2015 and was seconded by Ms Kilian.

The minutes were adopted as is.

Earlier, the Chairperson informed the meeting that there had been apologies from the Minister, Dr Siyabonga Cwele, and the Deputy Minister, Prof Hlengiwe Mkhize, Ms M Shinn (DA) and Ms M Mafolo (ANC).

The meeting was adjourned.

 

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