Universal Service and Access Agency of SA, USAF & .ZA Domain Name Authority on their 2016 Annual Performance Plans, with Deputy Minister

Meeting report

Briefing by Universal Service and Access Agency of SA (USAASA) and the Universal Service and Access Fund (USAF)
USAASA and USAF were represented by Mr Mawethu Cawe, Acting Chairperson, Ms Makhotso Moiloa, Acting CEO and Ms Vuyo Njoko, Executive: Performance Management.

Mr Cawe briefed the Committee.
The board of USAASA would continue the old board’s work because it was important to build an integrated ICT model. USAASA policy drivers which were 100% broadband penetration by 2020; NGP targets of job creation in the ICT sector; expanding access to ICT according to SIP 15; MTSF goals of connecting all schools and public health faculties through broadband by 2020 and SA Connect. It looked at its links to the DTPS plans before moving on to its strategy implementation plan.

30% of the funding for 2016/17 to 2018/19 would come from beneficiaries. The budget for the year was R69m.

Strategic risks were identified as the lack of skills to deliver on USAF targets, ineffective disaster recovery plans, a failure to produce GRAP compliant financial statements; the lack of clarity on the role of USAASA in the implementation of SA Connect, the lack of the institutionalisation of the ERP system and an inability to continue operations based on declarations made in the ICT review document. USAASA’s focus areas for 2016/17 would be organisational development and the realignment of processes, the implementation of the ERP system and improved governance and accountability. There were perennial delays to the launch of the BDM project, which only started in the middle of December 2015. Orders were made but payments had only been effected this year. CZ Electrical was the only company that was paid. The challenges in making payments related to the CEO, who had the authority to make payments, being booked off sick for a month. Payments were only made a fortnight ago.

It then looked at USAF’s strategy implementation plan and identified the strategic risks for USAF which were; an inadequate technical skill pool; inadequate funding to rollout integrated broadband infrastructure; the low uptake and usage of digital broadcast services; negative stakeholder perceptions; an inability to ensure affordable connectivity services; an inability to deliver on USAF’s mandate and inadequate funding to facilitate the roll out of broadband in identified under serviced areas. USAF’s focus would be connecting communities and institutions through broadband infrastructure and access, the maintenance of connectivity of schools and healthcare centres and the implementation of the BDM programme.

Discussion
The Chairperson said an organisation could not have staff costs amounting to 66% of the budget. She was confused on USAASA’s role and asked for clarity regarding the demarcation of what USAASA and what the Department would be doing in places like O R Tambo municipality, so that there would be no duplication of services. Was there consequence management or had that not been achieved.

Mr C Mackenzie (DA), on networks under serviced areas, wanted USAASA to make sure that there were contractual obligations to maintain the network by the installer and that it occurred in under serviced areas. He said USAF had 58 employees but only 47 posts, and asked for clarity on the role of the one person who was employed for stakeholder relations. He wanted to see real targets, not jargon and nebulous phrases.

Ms M Shinn (DA) said there was a very lengthy process to determine the final three qualified suppliers of set top boxes who did get orders, yet two of them did not have the proper facilities to make the boxes. What consequent actions had been taken against them? Neither USAASA or USAF’s plans were signed by the Minister. What happened to the increase in the levy and was it affordable? Was one per cent too high? How much money was in the fund? What impact had the ICT policy review had on roll plans?

Ms N Ndongeni (ANC) asked how many set top boxes had been delivered.

The Chairperson said the responsibility of USAASA was to deliver a service and it should not be concerned about the media image. Turning to the USAF annual performance plan, she asked for clarity on what the three areas funds were allocated for. What was the difference between broadband infrastructure rollout and rapid deployment of access centres? Was one of the allocations for a handover ceremony? How was the inability to address USAF’s mandate being addressed? There were no plans by USAASA to take over the maintenance functions regarding schools connectivity yet it was doing new school connectivity projects. The BDM project had had long delays and there were shortfalls, while the allocated funds had not been spent. No additional money would be recommended by the Committee, given the fact that previously allocated funds had been rolled over and given the constrained fiscal climate and that USAASA had to show it had the capacity to spend the money. There should also be a discussion with the Department of Communications on the project. Did the USAASA board change the criteria for the set top box manufacture and if so, was the whole tender process being reviewed?

Mr Mackenzie said there was no mention in the plans about optic fibre.

The Chairperson asked where the board chairperson was and why Mr Cawe was the acting chairperson.

Ms Shinn added that there had also been a different CEO on the previous occasion USAASA had met the Committee.

Mr Cawe said the CEO’s term of office ended on 31 March 2016 and he had exited the organisation. The appointment process for a new CEO was almost done.

He noted the comments on the fibre networks and on targets linked to external bodies.

The shortfall on the BDM project was based on the assumption that USAASA would get better and the target number of set top boxes of 5.2m, so that USAASA did not have to go back and forth to Treasury to get funds. The two set top box manufacturers were sent letters of notice in December 2015 to pull up their socks otherwise drastic action would be taken. The criteria remained the same and the tender process was not being opened up.

On the sequence of network rollout and then maintenance, it would be discussed with the Department.

On putting positive communication as a target, he noted the comments. It was about getting people to know the positive things USAASA was doing countrywide.

The ICT review policy was a work in progress. USAASA’s position was it would be business as usual.

He apologised for the fact that the Minister had not signed the documents.

On USAASA improving on the contracts it had with contractors to get value for money, he said it was up to the USAASA team to follow through on the implementation.

Ms Moiloa, on what USAASA would be doing in O R Tambo municipality, said it would be implementing an integrated broadband project by upgrading the network and linking schools and clinics to it within the budget allocated and that the Department could augment connection of additional facilities.

There were 58 employees but with the CEO’s term having ended and two other people’s resignation, that of the CFO and the company secretary, the number now stood at 55.

On what was meant by social skills, the company staff was mainly drawn from teachers and social workers and there was a lack of qualified project management skills.

On the one per cent levy increase, USAASA had been in engagements with ICASA extensively because ICASA would have to take the lead. USAASA was calling for an incremental approach rather than a once off increase. USAASA was waiting on ICASA for feedback.

On how much money there was in the fund, it was just under R2 billion, of which R1.8 billion was for the Broadcasting Digital Migration project (BDM).

1600set up boxes were delivered and installed to the beneficiary and 166 000 delivered to SAPO for distribution.

On the difference between broadband and rapid deployment, she said broadband was a capital expenditure line item to put up the network or upgrade it while the rapid deployment line item was where schools connectivity resided. This was because schools were not situated where the broadband sites itself was. USAASA wanted to move to a point where the schools that were connected were within a broadband area so that there would only be one budget line item.

The handover of existing access centres related to community access centres in Thusong service centres which it wanted municipalities to take over, while some fell under the provinces.

On the inability to deliver because of a lack of skills, Ms Moiloa said the plan was to augment technical skills specifically, but it would move slowly as it got a sense of what was in the white paper on ICT.

On the universal service obligations which were not reflected in the strategic plans, the Ms Moiloa USAASA was still engaging with ICASA on the matter, especially on the financial implications of maintaining school network connections after the contractors initial maintenance commitment was completed.

The Deputy Minister said the lack of a CEO was a set back as the CEO gave input in the ICT review process. The Department was monitoring the entity closely because it did not want it to regress.

The Deputy Director General, Mr Omega Shelembe, said on the issue of the plans not being signed by the Minister, that the Minister could also write a letter of approval which then allowed for issues to be highlighted, which would not have been possible through simply signing. A letter of approval had been written to USAASA.

Ms J Kilian (ANC) asked if signing was not a compulsory requirement in accordance with Treasury regulations.

The Chairperson said the matter would be verified.

Mr Mackenzie said there were only 47 authorised posts while USAASA had 58 employees, 11 more than required and were embarking on a recruitment process so more people would be hired.

Ms Shinn said the USAF fund was to spread ICT to under serviced areas, yet most of the money was used to buy set top boxes. How did this occur?

Ms Moiloa said the figures were correct and were a consequence of a legacy of recruitment that should not have taken place. The national start on unive Mr Omega Shelembe, DDG, rsal service and access sought to chart a new path for USAASA to do what the mandate asks them to do.

The Chairperson said the Department needed to sort out the governance issue. The three critical posts needed to be filled as soon as possible. The Committee needed a follow up discussion with the Department of Communication on the BDM project. The Committee would not be in support of allocating more funds to USAASA at this moment until the issue of current unspent allocated funds had been spent. There should be clarity on the roles USAASA and the role the Department would play in rolling out broadband services.

Briefing by .za Domain Name Authority (ZADNA)
Adv Motlatjo Ralefatane, Chairperson, and Mr Vika Mpisane, CEO, represented ZADNA.
ZADNA spoke to its strategic goals and related annual performance goals. Its goals were to administer and manage the .za domain name; comply with international best practise; license and regulate registries and registrars; publish domain name guidelines; enhance public awareness; conduct research surveys and investigations; publish .za domain name registration information; make domain name policy recommendations to the Minister; evaluate the ECT Act’s effectiveness with relation to .za; oversee the .za alternative dispute resolution process and ensure business sustainability and effectiveness.

The budget would be different because ZADNA would be covering more functions of the ECT Act than in the past. The entity would be moving offices from the current site where it could be regarded as ‘squatters’ to bigger premises to accommodate the increase in staff. It had purchased a vehicle for use in accessing remote areas. The vehicle costs for the year was R467 000. The financials noted that there would be a deficit for the current year of -R474 361.

Discussion
Mr Mackenzie said the budgeted deficit concerned him as state owned enterprises had to deliver value and to contribute to the fiscus. Did ZADNA give input to the ICT white paper regarding licensing and registration? Did ZADNA intend to migrate schools who might have .co.za domain names etc. to the .schools.za domain name and was there revenue implications. Why were ZADNA moving premises? The cost of the vehicle was almost the budget deficit. Why was it necessary to buy a vehicle and would leasing not have been a better option?

Ms Shinn said ZADNA was basically a registrar, but that it appeared not to know who its customers were and was looking for work to do and was embarking on empire building. It was a R13 million organisation, why did it need nine more directors? What did the schools websites, costing R700 000 have to do with the registrar and who would maintain the websites going forward? Was it true that each director received R10 000 for a board meeting? What public participation was being spoken about in Internet governance policy work? Why was a briefing being given in the second quarter to the National Youth development Agency? .

Ms Ndongeni asked what links ZADNA had with other organisations. What plans were there to ensure financial sustainability? How could the ZADNA develop further joint work?

Ms Kilian said she was concerned about the spiralling costs and assumptions on income, given the state of the economy and the board had to identify what the key priorities were for the entity before it ventured into areas outside its core concerns.

The Chairperson asked why there was a need to still formalise the role of ZADNA before the .cities could be used. Why was there no progress made on the appointment staff?

Adv Ralefatane said the entity had appointed a consultant to assist and were near the end of the process, which would be in approximately two months time. She said it would never be looking for work to do.  ZADNA had a lot of legislative functions it had to do.  ZADNA had to grow to extend its scope and reach the whole of South Africa and be well known. Just just the current two people could not do the work. ZADNA was partnering with other organisations. It had embarked on this strategy the previous year. ZADNA also had to match international practices.

On the amendment of the ECT Act, she said the previous board had already identified bottlenecks, gaps and other challenges to the Act. ZADNA was working with the Department to get the Act amended.

It was true that since its inception ZADNA had never licensed because of a gap in the Act, yet internationally this, together with regulation, were the main function of domain name authorities.

On the schools website, she said it might draw comments of being work done on the side, but it was a social contribution, it raised awareness and contributed towards the education of South Africans in remote, not urban areas.

On the office relocation, ZADNA was currently squatting and the premises were needed to accommodate the new staff.

Mr Mpisane said ZADNA was expanding but the target was to continue running it cost effectively. The previous board had done not everything pertaining to the ECT Act and there were valid reasons for this, namely focusing on making the central registry work. Now that ZADNA was stable it could look at all the work that was required of it in the Act. This was why there was a forecast increase in revenue, expenditure and staff.

On the budget deficit, ZADNA was funded from domain name registration fees. Instead of saying it would not deliver what it wanted to deliver, it had decided to take from interest earnings on its contingency reserve funds.

ZADNA did give input to the white paper in the past, including ZADNA’s envisaged expanded role and was waiting for the final word from the Ministry.

Mr Mpisane said it was not the intention to migrate all schools that had other websites to the .schools site, this was only for schools that did not have websites. An in house analysis had found that there was a large chunk of schools that did not have websites, even while they might have computer labs. ZADNA was talking with provincial government departments and the private sector, which could provide funds to assist schools in setting up and maintaining their websites.

On the vehicle purchase, he said it was done based on planned activities that took place in remote areas. ZADNA felt that it wanted to purchase the vehicle so that it could brand it.

Regarding the marketing focus in the budget, the customer base was all consumers, and ZADNA planned to work with the registrar community.

On the number of directors, it was stipulated in the ECT Act that there be nine directors. The fee, per director, per meeting was R10 000 and was approved in 2014 to make the fees more competitive to other similar bodies lest it lose directors to these bodies. ZADNA was also not an entity falling under the PFMA.

The public awareness briefings were not only about why one should register a domain name it was also about how the Internet and domain names affect the public.

ZADNA had included the NYDA, based on their role and as part of a list of entities it would like to deal with. It would be starting to work with SEDA and SEFA amongst others.

Mr Mpisane said, on financial sustainability, ZADNA had an accrued surplus of R8 million as contingency funds. As the domain names increased the revenue would increase. ZADNA’s commitment was to make domain name registration as affordable as possible. When there had been an increase the previous year, ZADNA had made a written commitment that there would not be an increase for five years.

On the .cities issue, he said that when ZADNA had applied to ICAN for the .Jo’burg and .durban names. The application had been done under time pressure and ICAN required that a framework exist that outlined ZADNA’s responsibilities. The. cities domain names account linked directly to ICAN and ZADNA needed clarity on how far it went regarding responsibilities. It had reached agreement that until clarity was reached on the responsibilities issue, ZADNA would not charge fees. The ICT policy review should provide that answer.

The Chairperson asked if this could not be done through regulation.

Mr Mpisane said ZADNA had made submissions but the Department would make a decision whether it was done through policy review or regulation.

Prof Mkhize said there was no directive that entities should not do what their mandate called them to do.

Mr Mackenzie said he was not convinced on the question of sustainability. ZADNA should be a small, tight, well-managed entity. The best public relations ZADNA could do were give R5m to the fiscus. His fear was that this was the beginning of fiscal extravagance and ZADNA would become a drain on the fiscus.

Ms Shinn said that ZADNA had a specific market, which were the ISP, and was not for every citizen. The schools websites was not the job of ZADNA. The Act may say that nine directors were needed but did ZADNA have work for nine directors and perhaps the legislation needed to be reviewed.     

The Chairperson said the composition of the board needed to go to the Department. She said there was a need to further clarify the mandates of entities.

The meeting was adjourned