Proposed legislation emanating from National Integrated ICT Policy White Paper, with Minister

Meeting report

The Chairperson (ANC) welcomed the Minister of Telecommunications and Postal Services, the delegation from the Department of Telecommunications and Postal Services and all entities presented in the meeting. She asked Members of the Committee to allow Ms J Kilian (ANC) to assist her and chair the meeting, as she was not well. Members of the Committee agreed to this request and Ms J Killian assumed the Acting Chairperson position for the meeting.

Minister’s introductory remarks  

Mr Siyabonga Cwele, Minister of Telecommunications and Postal Services, said legislation must be developed to support the implementation of the national integrated information communication technology (ICT) policy White Paper. He gave an overview of the legislative programme drawn up by the Department of Telecommunications and Postal Services (DTPS). The Department had identified existing legislation which needed to be amended and new legislation that needed to be drafted and enacted. These legislative changes would establish the institutional and legal frameworks needed to govern and regulate the ICT sector.

The Minister said that the Department had developed the Digital Development Fund Bill, the ICT Sector Commission and Tribunal Bill, and the Ikamva National e-Skills Institute Bill. The Universal Service and Access Agency of South (USAASA) would be dissolved and the Universal Service and Access Fund (USAF) would be transformed to a stand alone body, as outlined by the Digital Development Fund Bill.  

He informed the Committee of relevant legislation which needed be amended. These amendments were addressed under the Electronic Communications Amendment Bill, the Postal Services Amendment Bill, the South African Post Office Amendment Bill, and the Electronic Communications and Transaction Amendment Bill.  The last set of proposed legislation included the State Information Technology Agency Amendment Bill and the State ICT infrastructure Bill.

Minister Cwele emphasised that the Department had priority Bills, and aimed to have them tabled before the end of the year.  

DTPS legislative programme

Mr Robert Nkuna, Director General, DTPS, presented the contents of the Department’s legislative programme.

He began with a brief recap on the policy review process for the national integrated ICT policy White Paper. He continued with a breakdown of the integrated ICT framework and stated its vision. The Department was working on a planning horizon of 2017-2030, and aimed to have a digital South African society with universal services and access to ICT networks by 2030. It was crucial that the objectives of this White Paper were attained as it would ensure that South Africa benefited from the transition to the fourth industrial revolution.

The White Paper broke the ICT sector into four key areas: supply-side measures, demand-side measures, postal sector reform and institutional framework. Under the supply-side measures, the DTPS was implementing the “Internet for All” project, in partnership with industry. The Department had begun to establish mechanisms to promote trust and security in ICT through the establishment of the National Cybersecurity hub.

Mr Nkuna acknowledged that while the National Development Plan regarded the DTPS as the key enabler of the ICT sector, the implementation and success of the White Paper required a collaborative and government-wide approach.

The legislative programme was divided into three groups -- amendments to current legislation, legislation to establish new entities, and future legislation. The bills under future legislation would be processed for drafting only once the Department received Cabinet approval for the creation of the state ICT company and infrastructure company. Seven legislative activities would be undertaken to support the implementation of the White Paper. These activities included making legislative amendments to existing laws within and outside the portfolio of the DTPS, establishing inter-ministerial platforms for coordination, establishing new institutions, and conducting further research for policy work.

Policy areas

Mr Nkuna informed the Committee of the five policy areas and interventions covered by the proposed legislation. The first and second policy areas identified by the DTPS dealt with transforming the postal services sector and the South African Post Office (SAPO). The former policy area focused on the licensing framework within the postal services sector, while the latter policy area addressed re-defining the mandate of the SAPO. This mandate would see the Post Office become the key driver of digital inclusion and promotion of e-commerce in South Africa.

The third policy area was funding universal service and access. The policy intervention for this area included creating the Digital Development Fund (DDF) and finalising the small, medium and micro enterprise (SMME) strategy. Once the SMME strategy was approved by the Cabinet, the DTPS aimed to create a business case for the DDF. The Minister would determine how much the private sector would contribute to the fund.

The fourth identified policy area was market reviews, and would be addressed by the Electronic Communications Acts Amendment Bill. He lamented that the current regulator, the Independent Communications Authority of South Africa (ICASA), had conducted only one market review in the past 11 years. Therefore, the Amendment Bill would enable the DTPS to regularly review the multiple markets within telecommunications sector.

An important policy area for the DTPS was skills development. The Department wanted to create a massive skills base that went beyond the academic space. The new Ikamva National e-skills Institute Bill and National e-skills Plan would address this need.

Phases and objectives of proposed Bills

Mr Nkuna informed the Committee of the two phases for processing the proposed legislation. Bills identified under the first phase were linked to the DTPS's annual performance plan, and were priority Bills. These identified Bills were:

• Ikamva National e-Skills Institute (iNeSI) Bill;
• Postal Services Amendment Bill;
• Digital Development Fund Bill;
• ICT Sector Commission and Tribunal Bill;
• Electronic Communications Amendment Bill; and
• Electronic Communication and Transactions Amendment Bill.

The Bills identified in the second Phase were:

• South African Post Office SOC Ltd Amendment Bill;
• State Information Technology Amendment Bill;
• State ICT Infrastructure .

The Director General summarised the objectives of each Bill and assured the Committee that they would have the opportunity to get the full content of these Bills at future meetings.

The DTPS's policy review paper and proposed legislation were guided by the principles of the NDP and the Nine-Point Plan. The Department would highlight this alignment in upcoming Committee meetings on the individuals Bills.

Time framework for processing Bills

Mr Nkuna presented the processes undertaken by the Department since the approval of the White Paper, focusing on the Department’s activities from April to September 2017. These processes included drafting the legislation in line with the National Integrated ICT policy White Paper. The Department had held preliminary consultative meetings with other government departments that would be impacted by the proposed legislation. He said that the DTPS had engaged the Office of the Chief State Law Adviser.

He also provided the processes which the Department would undertake until public consultation for the Bills took place. These processes would begin from 11 October 2017, and would include submitting the priority Bills to government clusters, which would ensure that the legislation complied with all relevant policy. Once approved by the clusters, the Department would submit the Bills to Cabinet and await approval. The Department aimed to serve Cabinet with the four Bills by 1 November 2017. 

Discussion

The Acting Chairperson said that the Committee programme was based on previous information submitted earlier by the Department. The Department had informed the Committee that it intended to table the Ikamva National e-Skills Institute (iNeSI) Bill to Parliament, and the Committee had made provision for a briefing meeting on 14 November. She asked if the new set of Bills had rendered this briefing unnecessary. Did the Committee need to develop a new programme? 

Mr N Koornhof (ANC) thanked the Department for the presentation and giving the Committee a glimpse of what was coming. He said that fibre was the future of ICT, and asked the Department when they expected it to phase out other technologies? What would be the impact of fibre on the digital divide be? He asked how the DDF would be funded. He noted that the South African Post Office SOC Ltd Amendment Bill sought to provide for the expansion of services rendered by the Post Office. He asked if the Post Office needed the amendment before they could take over the pension pay-outs, or could they do it now?

Mr C Mackenzie (DA) said that in the absence of detailed legislation, it was difficult to interrogate the legislative programme. He appreciated the intention shared by the Department. It was unfortunate that the Minister had been absent from the previous meeting, but applauded his overall attendance at portfolio Committee meetings, as it stood at around 97%.

He said it had been interesting to engage with Mr Barnes, CEO of SAPO, on the reserved areas of SAPO and how it was not being enforced by ICASA. This had led to the Post Office being brought to a standstill. Mr Barnes held the opinion that the reserved areas should be scrapped in their entirety and consideration be given to providing a direct government subsidy for universal service obligation. It would be interesting to see how the Department would deal with challenges of enforcing legislation. What enforcement process would the Department implement?

He asked if the telecommunications entities would perceive the DDF as another form of taxation on their industry. The work of the previous boards and management of USAF and USAASA had been plagued by corruption and debt. Managing good governance of the DDF was critical in ensuring that tax money was not stolen, misappropriated or redirected.

Ms M Shinn (DA) wanted clarity on the process to finalise the Phase 1 Bills. She said the DTPS had mentioned six Bills it had commenced work on in the first phase of amendments, the process to finalise these Bills stated that four Bills would be processed. She asked what had happened to the other Bills, such the Ikamva National e-skills Institute Bill. What had caused the Department to reprioritise the Bills?

She said a majority of the DTPS’s goals and objectives which required legislative changes could be achieved by fixing ICASA. If ICASA was properly financed and resourced, it would be able to address the matters identified in the presentation. ICASA had been subject to political interference, inadequate staffing and overall poor financing. These challenges had undermined ICASA’s ability to carry out its legislative duties. She suggested that the Department should first focus on fixing ICASA before the DTPS introduced a new set of Bills.

Based on the call for a new regulator, she asked if the Department aimed to lobby for the new regulator to become a Chapter 9 institution, to protect it against commercial and political interference. ICASA was a Chapter 9 institution and was meant to be protected against interference, but this had not occurred. The Department should focus on properly formulating ICASA and curbing the interference that affected the current regulator.

Given the timeline for the processing of the four priority Bills, the Department was looking to get Cabinet approval for them by the end of the year or early next year. She wanted to know how the Department would conduct public hearings or ensure public participation on the Bills. When would they start this process? Would the DTPS clump the Bills together or organise separated meetings for each Bill?

She asked if the Department had done an impact assessment for the Digital Development Fund. The intentions of the DTPS for the Fund were clear, but they had not stated if there were any cost implications in implementing this policy. What were the potential increases in the costs of communication? The Department needed to address the financial stability of all licencees. How many licencees did it need to finance the Fund? She added that the DTPS must be aware of the policy’s impact on the private sector and communities. She was concerned that the White Paper stated a minimum 1% rate for tax, with no ceiling. This was an incentive for corruption, and must be tackled.

The Chairperson thanked the Department for the presentation. She commented that other Members had raised concerns over the Digital Development Fund. Looking at the presentation, the DTPS had a mammoth task in achieving this objective. Had the DTPS anticipated any obstacles that may hinder progress and negatively impact the implementation process? These anticipated challenges would enable the Committee to maintain realistic expectations and assist the Department when challenges arose.

Ms Kilian wanted clarity on the role and the need for the regulator. She agreed to a certain extent with Ms Shinn that ICASA had become a Chapter 9 institution because of the broadcasting aspects. However, she maintained that ICASA had not initially been established as a Chapter 9 institution but had come into this category only by virtue of the clumping together of the communications function with the broadcasting regulatory function. However, she did acknowledge that she could be incorrect, and wanted the Department to inform the Committee of the correct position.

She asked how the DTPS would create an effective regulator -- one which would perform its role independent of government. Had the DTPS engaged its sister departments on the efficacy of this regulator? During the presentation, the DTPS had said that the markets reviews by ICASA had not been done efficiently -- was it possible to make provision for such issues of inefficiency in the legislation?

She said all fingers pointed to ICASA for failing the South African public by not enforcing universal access services and obligations on other institutions. She asked if the Department would not be overburdening the Post Office with public money, by allowing it to function and prescribe additional points of access. There needed to be a balance between what the DTPS aimed to achieve in the changing world and how it gave access to services that had become more tuned and aligned to electronic services.

While the legislative programme was divided into two phases, she was concerned whether the DTPS had the internal capacity to scrutinise the necessary legislation for the amendments, to adjust and come up with a structure for a new set of legislation. Would the Department be able to meet their deadlines with their current capacities?

Minister Cwele described the public participation process. The process sees the Department publish the Bill for commencement. This occurs a month before the DTPS finalises it for Cabinet. The Cabinet considers the Bill and if Cabinet approves, the DTPS can put the Bill out for public comment. The DTPS would consider the relevant comments and finalise the Bill. This version would be sent to Parliament to be tabled. He did not expect any delays in this process. He emphasised that Bills going to Cabinet must go through the relevant government clusters, as these department’s assessed if the Bills complied with relevant policy.

The Minister said that the tabling phase was a risk. Parliament informed the Committees of its schedule for accepting legislation, but next year may be a difficult year to enact legislation. He encouraged the Department to come with physical drafts of the proposed legislation to Committee meetings, as Members may provide good insight for improving the content. The Department should share with Members the comments received during the period of public comments. The major challenge to this process was that December was a quiet month, as most consultative partners and industry were away. In January, the Cabinet was busy planning for the year. It was important that the Department went through all these processes before the December-January period. While the Director General had developed a realistic timeframe, he encouraged the DTPS to push and get as much done within the following weeks.

The Minister said that creating a new regulator was not about pumping in more staff and more money. It was guided by the need to have a well capacitated regulator which could perform in a fast evolving environment. This regulator would consist of high quality staff who were accountable, adaptive, and could predict and facilitate changes within the sector. The regulator should not be perceived as a stringent rule-making entity, but as a cooperative enforcement body.

The Department was not looking to establish a Chapter 9 institution, but an effective new regulatory framework and body. This body would focus primarily on the economic elements and not the content provided by the ICT sector. The ICT sector was an important economic sector and needs an economic regulator. It was his intention that this regulator should make independent decisions, but in consultation with other departments, policy and public resources.

Minister Cwele added that it was important to differentiate between the general independence of entities and that of Chapter nine institutions. The latter came through the freedom of expression and addressed content matters. He informed the Committee of the consultative processes with other departments on establishing a new content regulator. From this process, the DTPS had noted there were several existing content regulators, such as ICASA, USAASA and others. These bodies needed to clarify their roles and establish a new and effective content regulator. The policy on this regulator was being by led another department.

The Minister replied ‘yes’ and ‘no’ to whether the current regulator had let down the Post Office. His ‘yes’ answer was based on the former ICASA Commissioner’s admission, that the regulator had not paid attention to the Post Office. ICASA had failed to fulfil its universal service obligation and contributed towards the collapse of the postal services. He asked who would monitor ICASA and ensures that the regulator fulfilled its obligations. This position demanded an adaptive regulator who could intervene and drive fair competition within the market.

Minister Cwele said that not all the troubles facing the Post Office were caused by ICASA. The government once gave the Post Office subsidies for universal services but had stopped, as the Post Office had declared profits using these subsidies. The Postal Services Amendment Bill aimed to address this issue and other challenges currently faced by the SAPO. He added that removing the unserved areas may not address the underlying issues.

The Minister said the Department had an agreement with National Treasury to develop a fund. A dedicated fund would ensure that money was readily available to pursue projects which fulfilled the vision of the national integrated ICT policy White Paper. This fund would be financed by the dividends, rather than the revenue of the operators. If the fund was dedicated and properly governed, it would be a functional entity. He added that the DTPS would be able to change the scope of the fund and provide access to the disabled, rural communities and other marginalised group. He believed that the design of the fund and scope of itsactivities would deter the DDF from becoming a grand scheme for corruption.

The Minister said that the Universal Service and Access Agency of South Africa (USAASA) was not a useless institution. It boasted highly skilled and well trained development economists and scientist who worked under extreme pressure. He cautioned the Committee members not to confuse USAASA’S research with academic or community research. The Department looked at the impact of policies. As a member of the Cabinet, he acknowledged that several policies were sent back because USAASA had raised key issues.

The Minister referred to the impact of this policy on the sector, and its sustainability. He said the market was highly concentrated and this contributed to the existing high costs. It was important to ensure fair competition of services, as it led to lower prices. Small operators were bringing down the cost within the sector. He gave the example of young entrepreneurs in Alexandra, Johannesburg, who were rolling out fibre to the public at half the cost of bigger telecommunications companies. The entrepreneurs’ smart business model was creating competition within the market and driving innovation. It was not the intention of the Ministry to kill the ICT industry with this policy, as it would not benefit the economy. This was an industry that would benefit the fourth industrial revolution. He added that fibre was key to supporting all technology

Mr Nkuna said that the DTPS was addressing the need for fibre through the Rapid Deployment plan and SA Connect. The former aimed to ensure speedy connectivity and deployment of fibre in South Africa. The DSTP would present to the Committee the objectives and interventions of the Rapid Deployment initiative in the upcoming weeks. He also said that fibre was an important to the Ikamva National e-skills Institute, and that the Department was encouraging government departments to use fibre. SA Connect would be instrumental in increasing the use of fibre.

Mr Nkuna replied to the questions on the DDF. He said one of the reasons that USAASA had not survived was public funding. There was a problem of underserved area licences and other market barriers. In order to prevent another failure, the Department was working with various industry players to develop a functional model. He gave the example of how the Department and industry players recently met to develop a model which would see communities faced with topographical challenges, being connected via satellite technology.

The DTPS and other stakeholders were developing models which focused on entrepreneurship. Access to funding was a challenge for entrepreneurs and it was necessary to ensure that new operators had the necessary means to enter the ICT market. Such an initiative would facilitate localisation within the sector, as it was important that SMMEs developed and explored South African technologies. These models highlighted how the Digital Development Fund was more than a tax entity and should be seen as an enabling mechanism for development.

The Postal Services Amendment Bill was important to establish the core mandate of the Post Office. Currently the Post Office relied heavily on tenders to fulfil its obligations. It did not provide services adequately to the government and the public. The proposed legislation on the Post Office ensured that the institution emerged as an effective and functional service provider.

He commented on the issue of Chapter nine institutions and the independence of entities. He referred to the current legislation regarding the Minister's powers, which stated that the Minister could issue policy directives to the regulator. The Minister did not have the power to tell the regulator who it should give licences to, or who it should work with. This position would not be changed by the proposed legislation, as the independence of the regulator was defined by current legislation. The intention of the new regulator was to ensure the rapid deployment of infrastructure in South Africa.

Regarding the public hearings, as indicated in the presentation, the Department needed to sequence the Cabinet and Parliamentary processes to move faster.

He said that the Department would do due diligence on existing institutions, to assess which would form a part of their design for the new regulator. This diligence would be done in collaboration with other departments, such as ICASA.

Mr Nkuna said that the DTPS always considered issues of risk. One area it viewed as a risk was whether it had the internal capacity to conduct a project. For this legislative programme, the DTPS had done most of the work as it wanted to show the Committee it had the capacity to draft the legislation and frameworks. He admitted that they may require assistance in the future, especially during the public comments and hearings stage. Another risk was that the current administration was coming to an end, but the Department was still guided by the policy.

A DTPS delegate clarified the apparent disparity between the six priority Bills, and the four to be processed., She said all six Bills mentioned in the presentation were priority Bills. The Ikamva National e-Skills Institute Bill had been already been processed, and would be published for public comment in November. The Electronic Communications and Transactions Amendment Bill would be taken to government clusters in November and gazetted for public consultation in December. The other four Bills would be processed from 11 November. The Departments aimed to publish them for public consultation in December. The delegate acknowledge that most stakeholders and members of the public would be away during the holiday. The Department would gazette the four Bills from December 2017 to February 2018.

Mr Nkuna said that the Department would send the Minister an updated version of the processes to be undertaken for the legislative programme by the end of the week. This would ensure that the Department and Committee were in unison over the programme. He added that this document on the processes would prepare the DTPS for when they needed to submit the Bills to Parliament.  

The Minister acknowledged that many Bills had to be processed in a short period. The DTPS may face a challenge in getting all the processed Bills tabled by Parliament by the end of the year. It was important to establish which Bill needed to tabled and negotiate with Parliament to fit it into its schedule.

Ms Kilian suggested the DTPS should contact the Bills Office in Parliament for clarity over the cut-off date for submitting Bills to Parliament. The general cut-off date related to what Parliament must complete in the year before the Members of Parliament could take leave. She said that rushing Parliament’s tabling schedule could cause the Department to do an injustice to the consultation process. The consultation process formed part of the impact assessment.

Ms Shinn asked for clarity on the public hearings for each of the proposed laws. She said that there had not been extensive public participation on the contents of the White Paper. There was a need to engage the public on the proposed legislation. She asked if there would be public hearings in Parliament on the Bills.

The Minister replied that public hearings were done for policy. In comparison, public consultation was conducted for proposed legislation. He said that there was a mandatory one month gazette period for all Bills. Once the Bill was tabled, Parliament decided how it would deal with the Bill.

The meeting was adjourned.