Spectrum licencing; Labour Relations within ICASA

NCOP Public Enterprises and Communication

26 October 2016
Chairperson: Ms E Prins (ANC, Western Cape)
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Meeting Summary

ICASA provided a briefing on the Spectrum licensing process, outlining the spectrum policy and legislative framework, the Spectrum Licencing Regulatory Framework and the International Mobile Telecommunications (IMT) Roadmap to Invitation to Apply (ITA). The mechanisms for Spectrum award included the beauty contest or the auction. The advantages and disadvantages of each were outlined. The guiding objectives for spectrum assignment was to ensure universal broadband coverage, to encourage transformation in the sector and facilitate entry by new players into the market. In their assignment they aim to create a stable and sustainable environment for future investment.

ICASA provided a progress report on labour relations at ICASA following a month-long strike  that ended in August 2016.

The Committee complained about the missing ICASA councillors.

Meeting report

Spectrum licencing: Independent Communications Authority of South Africa (ICASA) briefing
Mr Wellington Ngwepe, ICASA Chief Operation Officer, outlined the spectrum policy and legislative framework. He noted the objectives of the SA Connect Policy which include 100% broadband access to all citizens by 2020, and universal download speed 100 Mbps by 2030. The Electronic Communications Act promotes efficient use of spectrum and open, fair, and non-discriminatory access to services. The Integrated ICT Policy White Paper has been released and ICASA is obliged to consider this in executing its mandate.

He explained the Spectrum Licencing Regulatory Framework and the International Mobile Telecommunications (IMT) Roadmap to Invitation to Apply (ITA) - see document.

Mr Ngwepe discussed Spectrum award mechanisms. He distinguished between the beauty contest and the auction and outlined the advantages and disadvantages of each. He stated that the advantage of the beauty contest as a Spectrum award mechanism is that it allows non-financial aspects to be taken into account. The disadvantages however is that the beauty contest mechanism is not transparent and is open to claims of favouritism and so is prone to legal challenge. The advantage of the auction is that it assigns spectrum in a transparent manner and treats bidders equally. Another advantage is that the auction encourages bidders to bid the true value of the spectrum (knowing the other bidders’ values). It maximizes economic, social benefits and promotes competition. The disadvantages of the auction are that they are complex to administer (depending on the design); they lead to concentrations of spectrum to those with the most money but this can be addressed through spectrum caps or reservations; and auctions have a risk of over-valuing spectrum.

He briefly discussed Spectrum valuation methodologies looking at cost reduction valuation methodology and the full enterprise valuation methodology.

International benchmarking is used where one benchmarks against previous auction results from other jurisdictions. International benchmarking is not used to estimate spectrum value or reserve price but rather it is used as a “sense check” of the value of spectrum due to its inherent risks.

On the economic benefits of broadband, he stated that the University of Munich used data from 22 OECD countries from 1996 to 2007 and found that a 10% increase in broadband penetration raises per-capita GDP growth by 0.9 to 1.5 percentage points. A World Bank study used data from 1980 to 2002 and found that an increase in broadband penetration of 10% in low and middle-income countries yielded an additional 1.23% increase in GDP growth. Other studies found 1000 more broadband subscribers create 50 more jobs and a doubling of broadband speed can lead to 0.3% growth in GDP.

Mr Ngwepe concluded by discussing the benefits for the South African economy. According to a study by Deloitte, the benefits of releasing additional IMT spectrum (including DD1 and DD2) for the South African economy over the period 2015-2020 are quantified as follows:
• It will allow for an increase of over 10 million mobile broadband subscribers.
• It will allow more than 21% increase in mobile broadband penetration.
• It will result in more than US$15,9 billion increase in GDP and an increase of US$30 billion in tax revenue.
• There will be a creation of an additional 1.4 million jobs.
 This data excludes the revenue that could potentially be raised by an auction, the billions of ZAR in infrastructure investment thus illustrating the annualised opportunity cost of not licensing the available IMT Spectrum.

He said it was important to mention the guiding objectives for spectrum assignment were to ensure universal broadband coverage, encourage transformation in the sector and facilitate entry by new players into the market. ICASA aims to create a stable and sustainable environment for future investment.

State of Labour Relations within ICASA
Ms Busi Mtsweni, Human Resources Executive at ICASA, stated that historically ICASA employees belonged to the Communications Workers Union (CWU), where matters of collective bargaining, such as salaries, policies, terms and conditions of employment were negotiated between the union and ICASA. Over a period of five years, since 2010, negotiated salaries were unmitigated, inordinate to norms in the labour market and the ICT Industry. Unfortunately, this created squeeze between Managers and Senior Managers, who were part of the bargaining council, as well as internal anomalies and remuneration inequalities within ICASA. The uncoordinated organisational structure led to the duplication of resources/positions. A detailed study on Organisational Development by Adam Smith International was conducted which triggered restructuring or structural realignment that started in 2009, but this was never executed.

In 2014, ICASA embarked on a process to revise old policies and formulate new ones. As per the provisions of ICASA/ Communication Workers Union Recognition Agreement, all the HR policies were subject to consultation. The meetings were attended by ICASA’s shop stewards and the national union office bearers. The policies updated were: Performance Management; Disciplinary Code; Grievance and Overtime policies. Remuneration, Job Evaluation and Probation policies were newly developed policies.
From September 2015, employees started resigning from the Communication Worker’s Union and as a result, the union’s membership threshold fell below 30%.In line with the provisions of the Recognition Agreement, the union was notified of the decline in membership and was given 90 days to correct the situation. By November 2015, the situation did not change and the union was given a month’s termination of the agreement notice. In December 2015, the Recognition Agreement with CWU came to an end by operation of law. She stated that on 16 November 2015, ICASA received a group grievance in line with the provisions of ICASA’s Grievance Policy. Upon reaching the last stage of the grievance process, the employees referred the matter to the CCMA for a dispute resolution in accordance with the grievance policy.

On 1 April 2016, ICASA received a letter from the labour consultant (acting on behalf of ICASA employees) listing demands. The letter was duly responded to on 18 April 2016. No agreement could be reached and accordingly, a certificate of non-resolution was issued by the CCMA. On 22 June 2016, a notice of intention to embark on a protected strike was received from the labour consultant. The strike commenced on 4 July 2016 and 39% of the workforce participated in strike. The Management Task Team was appointed to engage with the representatives of the striking employees and the parties mutually agreed to the appointment of a mediator. Management committed to consider all remuneration related disputes in accordance with the relevant Governance structures and approval from Council. The striking employees re-commenced duties on 10 August 2016.

The Management Task Team made a recommendation of 7% salary increase across the board and a merit escalation as guided by Performance Management and Development Policy. Council approved this. She noted there is a new union, National Trade Union Congress (NTUC) and 163 employees have joined it. The first meeting with NTUC was held on 14 September 2016 to discuss organisational rights of the Union in accordance with Section 21 of the LRA. A second meeting is being arranged for 24 October 2016 to discuss collective agreement matters.

Mr O Sefako (ANC, North West) said he appreciated how the industrial action was handled.

Mr A Nyambi (ANC, Mpumalanga) asked what transpired at the meeting of 24 October 2016. He stated that there are allegations that ICASA was refusing to negotiate with the employees before the strike started, therefore he wants to know the truth. He asked about the current status of the CWU. He added that he was not impressed with the number of people who are not present at the meeting.

Ms Z Ncitha (ANC, Eastern Cape) agreed about the number of people from ICASA that are not present. He asked whether it is true that Telkom is planning to take ICASA to court.

Mr J Julius (DA, Gauteng) shared the concern that ICASA councillors are not present at the meeting. He pointed out that the Minister has not attended a Select Committee meeting in a long time. The problem of absenteeism starts with the political head and filters down. He commented that the meeting was scheduled a long time ago therefore there is no excuse for ICASA councillors not to be present. 

Mr A Singh (ANC, KwaZulu Natal) asked if there are any other cases pending.

Mr Ngwepe replied that he had noted the concerns about ICASA councillors not being present at the meeting. He apologised for not providing feedback about the meeting that took place on 24 October 2016. He would respond to the Select Committee in writing about details of that meeting with the National Trade Union Congress.

The meeting was adjourned.


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