ICASA on licensing and various regulations before it; with Minister and Deputy Minister

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Communications

23 June 2020
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

Video: Portfolio Committee on Communications, 23:06:2020

The Independent Communications Authority of South Africa (ICASA) delegation took the Committee through its presentation on the International Mobile Telecommunications (IMT) Spectrum, the regulation of Television White Spaces, the licensing of the Wholesale Open Access Network (WOAN) and some of ICASA’s responses to the COVID-19 pandemic. Both the Minister and Deputy Minister of the Department of Communications and Digital Technologies (DCDT) were present to introduce the presentation and answer questions.

ICASA gave an overview of the licensing process, and highlighted key objectives for the IMT Spectrum and the WOAN, whose processes were planned to start simultaneously. The Authority was planning to start auctioning the IMT spectrum by December 2020, and start public hearings on the WOAN in quarter one of 2021. It stressed that the process of both the IMT Spectrum and the WOAN was transparent, that the submissions were being taken seriously, and that ICASA was trying to manage the risk of litigation. The presentation also provided information on the regulation of Television White Spaces (TVWS) and indicated that during the COVID-19 period, in terms of the Information and Communication Technology (ICT)  regulations, interested parties were allowed to offer internet services using TVWS temporarily for this pandemic period.

Members asked about the Digital Terrestrial Television (DTT) services, whether there should be a shift to Direct-to-Home (DTH) services and the rationale behind using the DTT services’ budget for Integrated Digital Television (IDTV). They questioned the viability of the WOAN and whether it would work and be capable of achieving its transformative, economic and competitive policy objectives. The Committee asked for further information on the research done on the WOAN so that the it was taken on board and able to properly defend the policy on the WOAN. Concern was raised on the risk of litigation and its potential for delaying the processes further. Members also questioned ICASA on the practicality of issuing the allocated spectrum on a temporary basis, taking into account that expectations may be created. They asked about the process of auctioning and licensing the spectrum, and whether the timelines would allow effective and speedy implementation. ICASA was also questioned on its data market inquiry, and when the results of this would be publicised.

Meeting report

The Chairperson said the Committee would be briefed by the Independent Communications Authority of South Africa (ICASA) regarding various regulations and status updates on high demand spectrum. He thanked those Members who had joined last week’s seminar, as it had been helpful in equipping the Committee to engage the matters coming up for discussion. A number of such sessions on different topics were due, so Members were being empowered in their oversight role through understanding different elements of the sector.

Ms Pinky Kekana, Deputy Minister of Communications, introduced the delegation, which included the three councillors and the Chief Executive Officer (CEO) of ICASA.

Ms Dimakatso Qocha, Acting Chairperson: ICASA, said that regrettably the Council of ICASA had not been able to attend the workshop referred to by the Chairperson of the Committee, which was held in conjunction with the University of Witwatersrand. She acknowledged reports from the ICASA technical teams which indicated that it had indeed been productive.

She asked all the councillors to introduce themselves: Nomonde Gongxeka-Seopa; Thembeka Semane; Palesa Kadi(Councillors); CEO Willington Ngwepe; Davis Moshweunyane; Manyaapelo Richard Makgothlo; and Bomkazi Somdyala. She said the attendance of the delegation from ICASA reflected the seriousness with which ICASA took the engagement with the Committee.

Licensing of International Mobile Telecommunications (IMT) Spectrum

Ms Qocha gave an overview of the licensing process, and highlighted the key objectives for the licensing of the IMT Spectrum as aligned with the National Development Plan (NDP). She provided a status update on the licensing of the IMT Spectrum, starting with the publication of the policy direction from 26 July 2019 and ending with the assignment/award in the licensing of IMT Spectrum, to be finalised by the end of the fourth quarter of 2020/21.

Ms Gongxeka-Seopa said that after publishing the Information Memorandum (IM) for public comment on 1 November 2019, ICASA had received 48 comments from stakeholders by 31 January 2020, and concluded the analysis of these comments by the end of April. The process to finalise the Invitation to Apply (ITA) was under way, and was almost ready to be tabled to Council. She outlined the timelines of the licensing of the IMT Spectrum, focusing on the auction process. The timeline showed that ICASA was expecting to start receiving applications by September 2020, and start the auctioning of the IMT Spectrum by December 2020, in the third quarter of this fiscal year.

Wireless Open Access Network

Ms Semane said the process of licensing the Wireless Open Access Network (WOAN) was similar to the IMT process presented. The timeline had begun with the publication of the notice outlining the process to be followed in the licensing of the WOAN on 23 March 2020, and would end with public hearings projected for the first quarter of 2021. So far, ICASA had received submissions and analysed them, and what had been gleaned from this was that many of those who made submissions were concerned about the viability of the WOAN, particularly regarding the minimum capacity at take-off, and the duration thereof. At this stage these submissions had not yet been presented to Council to allow it to apply its mind. Inherent in this process was a high risk of litigation, which required that ICASA should at least meet its deadlines on its licensing process.

Ms Qocha took the Committee through some of the key project risks, saying that these roadmaps for the IMT and the WOAN had been conceived in the pre-COVID-19 crisis period. There was thus a risk in meeting the timelines as planned, but ICASA had stuck to the timelines and would tweak them only when the need arose. She highlighted that due to funding challenges and limited human resources, it would have been difficult for ICASA to achieve what it had, had it not been for the funding supplied by National Treasury.

Regulation of Television White Spaces

Ms Qocha then took the Committee through the part of the presentation on Television White Spaces (TVWS) which outlined the regulations providing for the implementation of TVWS through a Geo-Location Spectrum Database (GLSD) system. She provided some details on the TVWS framework for qualifying to operate the secondary-GLSD. The presentation explained the way forward for TVWS regulations and stated that in the interim, interested parties were allowed to offer internet services using TVWS temporarily during the COVID-19 period in terms of the Information and Communication Technology COVID-19 regulations.

COVID-19 related initiatives

Ms Qocha said that as part of ICASA’s response to the COVID-19 pandemic, it had developed the Information and Communication Technology (ICT) COVID-19 National Disaster Regulations. She highlighted the interventions relating to tariff notifications in terms of these ICT COVID-19 regulations, and described the types of COVID-19 linked tariff notifications received from MTN, Vodacom, MWEB, Rain, Cell C, Telkom and Metro Fibre.

Another COVID-19 pandemic-related intervention had been the temporary assignment of high demand spectrum (HDS), to ensure continuity of services during this pandemic, and in response to the heightened use of ICT services. The allocation was on a temporary basis and would be available only until November in anticipation of the auction process planned to follow. The presentation tabulated the temporary assignment of HDS, showing who had received what, and how much, as well as information on the temporary assignment for TVWS.

Discussion

Mr C Mackenzie (DA) said that as he understood it, spectrum was a finite resource that was always available whether used or not, and had been around since time immemorial. Network providers who have been asking that it be made available have experienced delays of about 15 years since ICASA last released commercial spectrum. Network providers had complained that they had had to use 3G to roll out 4G, and 2G to roll out 3G, making the process very expensive. During this COVID-19 crisis, however, ICASA had quickly sprung into action and made spectrum available to network operators, even on a temporary basis. He asked that ICASA enlighten Members on what had stopped ICASA from making spectrum available as long as ten years ago. He commented that this would have been the sensible approach, and would have allowed a revenue stream to flow into government coffers.

He asked the ICASA delegation to comment on the viability of WOAN, assuming a worst case scenario. He referenced the seminar that the Committee had attended last week, and said that the presentation by Dr Sutherland and Lucienne Abrahams had not been very complimentary of ICASA -- actually quite scathing -- and he had not been able to quite pin down why this was so. He referred to the case study of the Mexican WOAN, which he said was quoted a lot during the last Parliamentary term as a model for the way South Africa should roll out WOAN. He said that this concept of the WOAN had fallen away in Mexico, and asked that the delegation answer as to where else in the world the WOAN was operating successfully. What made them think that if WOAN was not operating successfully anywhere else in the world that it would perform well in South Africa?

Mr Mackenzie commented on the intention to allocate the high demand spectrum to the WOAN, and asked that the delegation clarify whether it was correct to say that nobody would be allowed to use this spectrum until they had contracted with the WOAN. If the WOAN was not ready to go in November, he asked that ICASA share whether it was willing to allocate that spectrum that it would have used for the WOAN to any other network operators who may be interested on a temporary basis, in order to bring costs down. He commented on the high demand spectrum, saying that in the lower bands spectrum could be freed up as a result of broadcast digital migration. ICASA was going to auction off that spectrum, but there were still a lot of occupiers sitting on that band because the broadcast digital migration programme, which should have been finished in 2015, was still seemingly stuck in the mud.

He said there had been a news release stating that the Universal Service and Access Agency of South Africa (USAASA) would issue 100 000 television sets to indigent learners. He asked whether these television sets would be a replacement for the set-top boxes (STBs) and whether ICASA saw this as a way of freeing up the 700mhz band of spectrum.

On the high demand spectrum, he said the litigation risk being reported as unavoidable filled him with horror, as this had been the status quo, and it retarded growth and opportunity for all involved, including the public. He asked ICASA to indicate what litigation it saw coming its way, and what steps it was putting in place to avoid litigation.

Ms N Khubeka (ANC) asked about the auctioning of the spectrum, and those players who already had some access to the spectrum. She understood that because of the COVID-19 pandemic, access to the spectrum was given on a temporary basis. She asked that ICASA clarify what its intention was immediately after November if these stakeholders continued to have an interest in moving forward with the spectrum.

Ms P Van Damme (DA) commented on the USAASA tender for televisions. She said that the USAASA website had indicated published tender processes, a withdrawn tender process and then the republishing of the tender, and asked for an update on that story. She asked how the decision that learners would receive television sets had been reached. She said the Committee conducted oversight over the Department of Digital Technologies, and commented that how the country entered the fourth industrial revolution would be through access to the internet, and not television sets. If money was available, it should have been spent on laptops and access to the internet.

On sports broadcasting regulations, she said that the last time ICASA had appeared before the Committee, the Committee had recommended that ICASA go back and consult further, as ICASA had created a false impression to the public that the SABC would be able to broadcast the Olympics, the rugby world cup and the soccer world cup, when it was clear that the world federations were the ones who auctioned the sports broadcasting rights to the highest bidder. There could never be a situation where the public broadcaster could compete with a broadcaster like Supersport, because it did not have the money. She asked that the delegation clarify whether ICASA had gone back and done this consultation, and what the outcome of that consultation had been.

Dr M Ndlozi (EFF) referred to the temporary spectrum allocation, and asked for clarification on the direct financial implication -- whether this allocation would be rented, and for how much. If the allocation was free, ICASA should clarify why this was so. He wanted to understand what temporary meant in this situation, in relation to the auctioning of the spectrum.

He said he may have some different ideological stances on the WOAN, saying that it was an important strategy that had been developed by the Organisation for Economic Co-operation and Development (OECD) for developing countries. WOAN was an important instrument to address the lack of competition, the cost of communication and high mobile prices and, in light of 5G technologies, the duplication of infrastructure. Because of this purpose, it was important to keep WOAN unless there was pursuit of another alternative using the spectrum allocation to break competition. Auctioning would lead to the existing network operators remaining as they were, who at the moment were not assisting government because of the lack of competition. In this way, government would have not broken the sector or had any form of transformation because the spectrum was a finite product. He asked that the delegation clarify whether ICASA had done the WOAN feasibility study for its structures and implementation. In light of the fact that ICASA regulated in the public interest, he asked that if this study had been done, the delegation clarify whether it had shared the study with the industry or the public, focusing on the model for South Africa.

What lessons had ICASA learnt from the sharing agreements between Vodacom and MTN and other spectrum licensees, such as Liquid Rain and Cell C.  How could these lessons be used to constitute an operating model for WOAN and the provision of mobile wholesale services?

Had ICASA had looked at the experience of WOAN in Mexico and Rwanda, as well as what lessons could be taken from there, taking into consideration the unique features in South Africa regarding lack of competition, different demographics, population sizes and so on? Had ICASA sent people to Mexico to conduct consultations and attend to stakeholders? On the apparent reliance on the CSIR study, he highlighted that the study had been limited to 4G services, and 5G services had been explicitly excluded. He asked the delegation to clarify whether ICASA had assessed the 5G spectrum requirements for WOAN, noting the fact that the Minister had requested ICASA to ensure preferential treatment to the WOAN.

Dr Ndlozi referred to the licensing process, and questioned whether ICASA, considering the interrelation between the licensing and auctioning of the WOAN, would ensure that the timing between the licensing of these was appropriate to ensure the participation of all role-players. How was it going to make sure that there was no duplication when it came to the provision of rural services vis-a-vis the mobile network operators (MNOs), who would obtain access to the high demand spectrum in the auction? What was WOAN going to do that the network operators were not going to do in the rural areas?

On the Information Memorandum, he said that the Authority was meant to assign in the 700, 800 and 2.6 band of the WOAN. The WOAN would therefore be excluded from accessing the 5G spectrum, which was the 3.5 band. He asked that ICASA clarify what role the WOAN was expected to play in the 5G market, noting the huge demands of network density and costs which supported collaboration in 5G network deployment.

Dr Ndlozi asked whether it was not time to admit that Digital Terrestrial Television (DTT) had failed. If today there were to be a legislative change to allow the South African Broadcasting Corporation (SABC) to enter into the Direct-to-Home (DTH) market with specific intelligent regulations that still allowed it to become the public broadcaster and accessed for free, all of that spectrum would be free. He said that majority of this remaining spectrum was held on by the DTT process, which must be considered to have failed. The majority of South Africans were already using DTH services, and asked whether it was not time to amend legislation and policy direction to abandon DTT. He asked the Minister and the ICASA delegation to comment on why there was still an insistence on a path that had already failed. In his view, in less than a year the country would have all of the spectrum freed that was held in relation to the analog television provided by the SABC if those policy changes were made. Because most of this spectrum that had been in the hands of the SABC was going to be allocated or auctioned, was ICASA going to be giving the SABC any percentage of the proceeds made out of the auction?

Ms P Faku (ANC) asked that ICASA clarify how far it was with its engagement with stakeholders on the process leading to the auction of the spectrum. Since ICASA had licensed the spectrum on a temporary basis to support the increase in demand for data services, she asked how operators would be able to support the increased tariff without the temporal spectrum, and how long the auction was expected to take.

ICASA’s response

Ms Qocha answered the question from Mr Mackenzie on why it had taken the Authority so long to make the spectrum available, by highlighting that ICASA operated within a regulatory framework as a creature of statute that acted on policy directives from the Minister. In the absence of an enabling policy environment, the Authority was more hamstrung when it came to progressing in certain areas. ICASA had been able to move because of a policy directive directing ICASA on the allocation of the spectrum. She explained that the temporary allocation was basically a trial for ICASA, designed to indicate whether or not this spectrum was as high demand as it was alleged to be. Going forward after November 2020, the temporarily allocated spectrum would be revoked from the licensees and the auction process would begin.

She replied to Ms Khubeka on the expectation that may have been created for those currently accessing the spectrum, and said that this issue had been critical to Council after a submission was made with the same concern. Council had resolved to ensure that the Authority did not create an expectation on the licensees, and made it clear in the licensing process that the spectrum allocations would be revoked and brought back to the authority at the end of November 2020.

Ms Gongxeka-Seopa responded to the question on the relief of the spectrum during this COVID-19 pandemic, and why there had been such relief. She said that during COVID-19, most people found themselves working from home, which would have created a much higher demand from the licensees. On the question on congestion, she had picked up that with the temporary availing of this particular spectrum, this had afforded licensees the opportunity to provide services without compromising on the quality of services, as expected by the Authority. On why ICASA had made this a temporary allocation ending on 30 November, she replied that when the Authority availed the temporary spectrum, it had been made clear that there was a limited timeline ending on 30 November to allow vacating of the spectrum and the auctioning process to follow. ICASA had made a commitment dated December 2020 to license the spectrum.

On the question from Ms Faku on the engagement with stakeholders, she replied that ICASA’s publication of the IM had been the first point of ensuring participation from stakeholders. This had resulted in the consideration and analysis of the 48 submissions reported, which had informed ICASA’s work and guided the work towards the invitation to apply (ITA).

Ms Kadi referred to the sensitivities around the spectrum and how ICASA had initially dealt with the processing and licensing issues, and said there was a policy directive providing that ICASA was part of ensuring the distribution of information. ICASA had planned to communicate thoroughly to bridge the gap between the type of questions asked by the public representatives and the information that needed to reach the public.

On litigation, she replied that the nature of ICASA’s work was quite litigious, and attracted judicial reviews and many components of discontent amongst interested parties. ICASA was going to look into its own assurance levels by looking at its processes and the proposed phases and ensure good governance on the deliverables. She assured Members that there were preparations to mitigate the risk of litigation.

On the sports broadcasting issue raised by Ms Van Damme, Ms Kadi replied that she was quite delighted to see that Multichoice and the SABC had managed to broadcast the rugby final. This meant that at any given moment, the parties were able to find each other when the need arose. This had happened right in the middle of the process of setting up regulations, and how the public perceived the expectations that an international sporting event like the world cup could be broadcasted required more information on authoritative terms as to how these choices were made. ICASA had not misled the public at any point, and neither had the SABC, but the perceived expectation had been created by a lack of information. Looking at the current process, as per the legislative requirements, ICASA had engaged with the two Ministers -- the Minister of Sports and the Minister of Digital Technologies. This had been done in a cordial manner, as there had been a shift in the administration and the political lens, resulting in a need to get on the same page once again and this had been done successfully. ICASA was now in the process of gazetting and was going to inform the Ministers on the progress, and would then come back to the Committee when all was ready for gazetting. ICASA would continue to allow for consultations and also brief the Committee when required.  

Ms Qocha responded to Members’ concerns on the risk of litigation, and said that unfortunately this was the nature of the environment in which ICASA operated. This was why the Authority had outlined such a laborious process for licensing. to make sure that no steps were missed on the prescripts of administrative justice and ICASA regulations. There were no shortcuts being taken, so that ICASA’s processes remained transparent and predictable. She assured Members that internally, ICASA was trying as much as possible to minimise the prospect of litigation.

Mr Ngwepe also responded to Mr Mackenzie’s question on why it had taken so long for ICASA to make the spectrum available, and reiterated that ICASA was a creature of statute, and could do only what was allowed by the law. The COVID-19 pandemic had created circumstances where it had been able to trigger certain provisions, resulting in this temporary availing of the spectrum. In response to the questions on the temporary availing of the spectrum in relation to the anticipated auction, he replied that the spectrum had been released on a temporary basis and on the basis that the operators would not have to pay for it, primarily because it had been released to alleviate some of the challenges that were expected because of the surge in demand in the sector. It was free, but also came with attached obligations related to the pandemic -- for example, allowing learners to access internet services.

On the question of a specific study on 5G, he said this had been requested by the Minister, and a report had duly been submitted to. Regarding the lessons from the sharing arrangements, he replied that these issues were more adequately ventilated by the current process of the mobile broadband inquiry. The likelihood was that ICASA would come up with wholesale regulations out of that inquiry, given the wholesale markets that had been identified. Those wholesale access regulations would hopefully give ICASA a better guideline, framing some of the incentives that may be required for new entrants, including the WOAN and the existing entrants that perhaps did not have market power.

Mr Moshweunyane responded to the question on the IMT700 and IMT800 spectrum currently occupied by the broadcasters, and said that the regulations regarding the migration had been put in place and ICASA was waiting for the pronouncement date from the Ministry for the broadcasters to vacate the band. The Authority had also published the Radio Frequency Spectrum Assignment Plan, to facilitate the migration of the incumbents in the band and this had been published in May.

The Chairperson of the Committee reminded the delegation to comment on the comparative studies on WOAN that would have been done, and asked the delegation to clarify whether it had done anything in this regard.

Mr Ngwepe responded that the WOAN was a policy intervention aimed at dealing with the concerns about the market structure. When the concept of the WOAN was first mooted with the integrated ICT White Paper, ICASA -- as the entity that would have been tasked with licensing the WOAN -- had actually commissioned both the technical and economic studies to assess the viability of the WOAN. These studies had been commissioned with a long-term view to assessing how licensing conditions and incentives that would be applicable to such an entity, would have to be framed. This process had then been overtaken by the subsequent policy developments and policy directions.

As part of the WOAN process and the IM process for the licensing of the IMT spectrum, ICASA had undertaken an additional economic analysis of the market, assessing what the competitive dynamics in the market were and how a successful WOAN would need to be positioned. When Councillor Semane had presented, she had highlighted that there had been a lot of submissions that ICASA had made which also touched on the on the viability of the WOAN. The WOAN had been introduced as a policy intervention and ICASA, in considering how to implement it, had commissioned a few studies both at the early stages of the integrated ICT White Paper, and more recently through the considerations of the representations received from the industry. ICASA had not really put out a model showing what WOAN would look like, but had done the necessary studies.

Mr Ngwepe said ICASA had not specifically sent people to Rwanda and Mexico to engage specifically with the regulators and policymakers on this issue, but had looked at all the relevant documentation emanating from those markets as part of the technical and economic analysis. ICASA had collated the necessary information that it needed. The ultimate question looked at the South African conditions and environment to ask whether there were specific incentives and regulatory regimes that could be framed for any introduction of the WOAN in a sustainable manner.

Dr Praneel Ruplal, Executive: Engineering and Technology, ICASA, answered the question on comparative studies, and said that looking at Mexico, for example, the operators there had access to continuous spectrum in the 900mhz and 850mhz band, while South African operators did not. The operators in Mexico would possibly find it easier not to rely on the WOAN than the South African operators. The technical characteristics where the spectrum had been assigned in different countries made an impact on the sustainability of the WOAN. Looking at the way ICASA had framed the IM with regard to the allocations to the WOAN, the WOAN would have access to both the 800mhz and 2.6ghz band, giving it a leg up in terms of its sustainability going forward. He agreed that there were not many success stories about the WOAN in other countries, but there were definitely lessons to be learnt and ICASA had tried to change the approach for South African conditions. In his view, it was possible that the WOAN could be successful if these engineering principles alluded to were applied. There were a lot of negative stories about wireless open access models, but also a lot of positive stories about open access models. Open access models had shown that they did increase competition and drive down prices. ICASA was in new uncharted territory, but had every intention of giving the WOAN every prospect of success.

Ms Van Damme raised a point of order, and said that the Committee had asked a series of questions and every single person from ICASA had spoken. While she appreciated that there were various people with different expertise, it was not absolutely necessary for everyone from ICASA to speak. She said that usually there were one or two people responding to questions.  

The Chairperson responded to say that this point of order was understood, and the Acting Chairperson of ICASA should consider what Ms Van Damme was raising to save time in future.

Ms Nomvuyiso Batyi, Director-General, Communications and Digital Technologies, responded to the question raised by Dr Ndlozi on direct-to-home (DTH) broadcasting services. She pointed out that as far as the Department of Communication and Digital Technologies (DCDT) had seen, terrestrial broadcasting had been successful in many other countries that had used it, especially in Europe. In the South African context, she said that even those that had been relying on DTH of late were still using terrestrial broadcasting. Why new entrants had moved to DTH had been to offer more channels. If legislation was amended to include DTH, the assumption was that DTH would be cheaper, but this had not been proven. In recent weeks it had been clear that other broadcasters were partnering with over the top service providers as a competitive edge, and she made the example of the agreements with Netflix. She said people were looking for alternatives, and the alternative was not DTH as opposed to DTT. DTT was still required, so if there was going to be a policy shift it should not be DTT over DTH, but rather newer technologies. ICASA had to move broadcasters to below 694, in line with the International Telecommunications Union (ITU), and to have a policy shift this late in the game would not be ideal. Broadcasters should be given the opportunity, which she says they had taken, to compete effectively with over the top services. She asserted that it was ideal to continue with the trajectory and see this project to its end, instead of looking for alternatives.

Minister’s response

Ms Stella Ndabeni-Abrahams, Minister of Communications and Digital Technologies, replied to Ms Van Damme on the preference for the Integrated and Digital Televisions (IDTVs), whilst the fourth industrial revolution required data and laptops, and emphasised that broadcasting was part of the DCDT’s work. It was within this channel that the Department was considered as an issuer of policy direction, and this was a response to the COVID-19 pandemic, with a focus on education. The DCDT had taken a conscious decision to position the SABC as the content driver, which had resulted in the SABC establishing the SABC DTT channel, where it had been provided the audience to be able to generate income and drive the relevant content. She explained that the intervention involved IDTVs because the Department was not going to take money from DTT to use on laptops. What had been said was that the Department was going to look at the beneficiaries that qualified for DTT using the Department of Basic Education’s (DBE’s) information and the Department of Social Development (DSD) households’ database of children that accessed SASSA grants. She reiterated that this intervention was a DTT programme targeting education as a response to the COVID-19 pandemic, and as part of driving broadcasting and an audience for SABC.

On the questions regarding DTT over DTH, the Minister highlighted that the fact the Department was saying that it had different technologies, even as it wanted to participate in the fourth industrial revolution, did not suggest doing away with cable, because there was fibre, for example. These technologies were required and should complement each other to make sure that services were accessed.

On whether studies had been done on WOAN, she echoed Mr Ngwepe’s answer that this was a policy matter, and consultation had indeed been conducted. Whilst she was the Deputy Minister, her predecessors had had engagements with the industry on WOAN, allowing the Minister to build on that work. The Department was aware that there were industry players who refused to allow the policymaker to transform the sector. These were some of the things the Department could not be apologetic about. The auction process could not address the imbalances referred to, nor the high costs of communication.

The Minister said that when the Department looked at the likes of the United Kingdom and the United States of America, it was clear that open access had worked, so it was the government’s responsibility to investigate why it had failed elsewhere and learn from this in order to avoid it. This was why the policy direction issues had provided that even government bodies may be allowed to participate in this process. The Department appreciated that today the country had a beloved Vodacom, MTN, and Telkom, for example, which all came from state coffers. Government had to make certain compromises and sacrifices, and it would do away with Transtel in order to establish this. WOAN similarly had to be given the support that it required in order to do what was owed to the public.

On the 15 years without issued spectrum, the Minister replied that in those 15 years, members of the public had regrettably been nothing but consumers who could not provide devices or services in the face of a policy imperative saying the public should at least be able to have mobile virtual network operators (MVNO’s). There was no better time than now to ensure that people participated in the spectrum revolution being discussed.

On the issue of the 5G and the exclusion of WOAN, the Minister replied that the policy direction issued was mainly on 4G, which was why the Department was responding to the report by ICASA, and would be issuing a policy direction on 5G. She said 5G was not just a telecommunications matter, but provided an entire ecosystem bringing everyone on board, and offered a cloud-based platform. If the government was to position South Africa well, it should avoid creating a situation where the public had to rely on a particular component which created a monopoly or duopoly built by the government. The Department wanted to make sure that it created an opportunity for new entrants and young people to participate and drive the digital revolution. She clarified that a policy directive on 5G would be issued, and WOAN would not be left out. She said WOAN had been introduced as a measure to address transformation within a hybrid process so that the existing companies, having done so well in achieving 99% population coverage, could continue to exist whilst space was given to others that must complement them. She emphasised that strategies and methodologies on the successful implementation of WOAN would require wide collaboration.

The Minister said that DTT was not a legislative process -- it was a policy choice given under the ITU. When it came to what technologies were being used, it depended on what the country had invested in. The government had a choice when it came to approving the annual performance plans and the budget for money had to be spent on DTT, or making changes on matters that did not add much value in terms of technologies.

On the issue of receiving responses at this meeting from various people, she said that ICASA and the Department had delegated different committees and council members to make sure that Members got the best and most accurate response. This had nothing to do with undermining the Portfolio Committee, but rather reflected the shared responsibility on the matters at hand.

DTPS’s response

Mr Dick Sono, Chief Director: Radio Frequency Spectrum, Department of Telecommunications and Postal Services (DTPS), offered some insight on the Mexican case study. He said that in December 2016, before the policy was finalised, the Department had gone to Mexico. On that particular study tour, the delegation had met with the secretariat of the Department of Communications from the Mexican administration, and the Federal Institute, which was the regulator, had met with a company called Telcel, which owned 70% of the market share in Mexico at the time. When Mexico introduced the Red Compartida, which was their WOAN, the administration aimed to address the monopoly that was experienced. What the delegation on the study tour had discovered was that just the creation of the new reforms had dropped prices in that context. He commented that the issue of the Red Compartida Mexican case depended on which side of the fence one stood, to conclude that it was failing. Red Compartida was still deployed today, and as a result there had been more competition instead of dominance by one particular player. WOAN in Mexico had been successful because the same company, Telcel, had been supporting that particular reform to build the Red Compartida.

Responding on other benchmarking studies conducted, Mr Sono shared the example of Rwanda. In Rwanda, the study had found that the government of Rwanda, together with Korea Telecom, had built a 4G WOAN network, and in 2016 this 4G covered 25 of the 30 regions of Rwanda, which reflected a success. He The failure there had been a result of the fact that those dominating in 3G were not willing to buy into the 4G being built by Korea Telecom Network Rwanda. He averred that the chances were that all the regions in Rwanda were now covered by that particular 4G. Rwanda was still using their WOAN to provide 4G.

Looking at the American case study on the Public Protection and Disaster Relief (PPDR), he said that America was using a wholesale open access, which had been successful for years. To state that WOAN was not working depended on the enforceable regulations that needed to be put in place to support the policy determinations that had been made. The only way for ICASA to succeed was to put in enforceable regulations that would ensure its success. Another case study that the Department had looked at was Safaricom in Kenya, which was also providing 4G using WOAN.

Follow-up questions

Ms Van Damme raised a concern that the Minister’s tone, in her view, was disrespectful. She argued that the mandate of the DCDT was not only communications in the SABC, but also included digital communication. Preparing learners and basic education meant providing them with access to a laptop, to the internet and giving them this opportunity to better themselves. The DCDT’s mandate was not to provide televisions to learners so that they could have access to the SABC. She said that maybe the problem lay in the Minister misunderstanding the digital technologies aspect in her portfolio. She understood the mandate to go further than the traditional view of increasing the reach of the SABC, towards thinking about the fourth industrial revolution and preparing learners for a digital economy. This intervention on television would be opposed as an utter waste of money when that money should be used for the digital technologies aspect of the Minister’s portfolio.

Ms Van Damme asked the Minister to speak to the Committee humbly, saying that none of the Committee Members had used the tone used by the Minister. She commented again that it was a waste of time to have several people talking when replying to questions from the Committee. The sitting was not there to give a platform to everyone, and since there was leadership, the Minister or Acting Chairperson of ICASA should be briefed and equipped to answer questions so that the time at these Committee meetings was used wisely. Members of the Committee were united in purpose on what was best for South Africa, and asked that the Committee be clear on the importance of preparing the youth of the future for a digital world, which would involve laptops and internet access rather than television sets. She would be much more satisfied if the tender advertised by USAASA was for locally made laptops for matric learners.

Ms Faku said it seemed to her that the Chairperson of ICASA, in responding to questions about the risk of litigation, was trying to be defensive. She said that as the Committee, Members had taken a stand when it came to litigation, and were saying that ICASA should try to minimize the risk of litigation. On the issue of television sets raised by Ms Van Damme, she said that some communities were not as privileged as where Ms Van Damme might have come from.

Ms Van Damme interrupted Ms Faku, and asked that the Chairperson tell Ms Faku that there should be no personal references made in these engagements.

After a heated “back and forth” between Ms Van Damme and Ms Faku, the Chairperson pleaded for order and allowed Ms Faku to continue, having noted Ms Van Damme’s concern.

Ms Faku continued to say that on the issue of television sets, it may be important to get more information, as from her view and experience, every classroom needed a tset. She stressed that many learners were not privileged, and said it was important that ICASA and the Department take the Committee through the plans regarding television sets to avoid rushing to conclusions now. 

Mr T Gumbu (ANC) asked for clarification on the timelines of the auction process of the IMT spectrum, saying that ICASA should clarify whether the drafting and publication processes had been concluded, since time was moving towards the end of June.

Dr Ndlozi said that he was not convinced that there was a reconciled thinking around the WOAN between the Minister and the Council. He commented that if the directive was that the WOAN ought to take priority, this was not reflected, even in ICASA’s responses. In their responses, the delegation had conceded that it had not consulted the public or the industry on the WOAN. He asked that the delegation why the research had been kept secret and not made publicly available. The slides in the presentation relating to the WOAN were not detailed, which he assumed indicated that ICASA was not serious about the WOAN. If ICASA was not serious about the WOAN, it did not matter how strongly the Minister felt, because the structure of the market was going to remain the same. At the moment, the assignment of the spectrum did not favour the WOAN. He was of the view that the WOAN was an important instrument for the transformation of the sector, and was concerned that it was still the least articulated matter. He asked that the delegation share the details on the WOAN, including the findings of the studies and the economics that underpinned it.

Dr Ndlozi said he wished to caution the Minister that all of this discussion about WOAN would just be talk if there continued to be no determination and effort to make sure that it was going to work. Because of technical difficulties, he had not heard the responses in relation to DTH and DTT. He reiterated that he thought there had to be a legislative and policy shift away from DTT, as there were new technologies that could be distributed. Because broadcasting was moving mostly online or to over-the-top (OTT) services, there were already technologies allowing the transmission of the digital signal that were accessible and that government should be making available, but it was not doing this because it was protecting Multichoice’s monopoly. Once the government allowed the SABC to get in the space of those technologies, Multichoice was going to get a run for its money.

Mr Mackenzie said that one thing that was clear, was how fast this sector moved.  At the seminar attended by Members last week, the presentation was already talking about rolling out 6G networks, yet South Africa was still fixated on the WOAN. He was concerned that regardless of how the industry moved and how Mexico looked, there was a need to revisit the WOAN concept. The government was working in the same direction with the aim to empower people, create opportunities and increase inclusion. However, looking at some of the spectrum allocations -- especially in the white spaces -- the companies playing there raised questions on how transformed the industry was. He had asked Dr Sutherland who the major players were, and where government could act to ensure support for those who had less of the spectrum, and he had responded that this push would be effective in the applications level and the services layer. There had been three or four years of talking about infrastructure, access to infrastructure and WOAN, when perhaps the government should have been speaking at a different level. He said that metaphorically, the government should be talking about the cars and petrol, instead of the highway.

On the WOAN, Mr Mackenzie asked that the delegation indicate whether an entity had been formed, with what name, with or without an electronic communications licence, and who the stakeholders were. The Acting Chairperson of ICASA had mentioned 14 to 18 months for the establishment of a WOAN, which horrified him. Effectively, all that spectrum was going to be held hostage for at least 14 to 18 months until the WOAN had been formed, and when one considered factors of government speed and litigation delays, he would likely be retired by the time the government got around to allocating this spectrum. He was concerned about what happened in the mean time, as it had been unpleasant to have seen what delays had cost the country, particularly by making the cost of data more expensive. Delays came at a cost to this country in terms of development and black economic empowerment.

He asked the delegation to clarify how much continuous spectrum was available outside of the WOAN to other commercial MNO’s, saying that it seemed to him that the only continuous band available had been set aside for the WOAN. He wanted to know whether wholesale access regulations for MNOs, was planned to be a similar process to what was done to Telkom, where ICASA had forced Telkom to separate its wholesale and retail operations. Given that the digital migration project was proceeding at pace, and that in November 2020 the broadcasters would still be sitting on the 800Mhz band, he asked how ICASA would be able to auction off property that was not available. Would the Authority auction it off on condition that buyers paid only once it became available? Regarding ICASA’s market review, he knew that the Competition Commission had beaten it to the punch, and asked when its market review on the cost of data would be available for the public or the Committee to see.

Mr L Molala (ANC) said that he would advise his fellow Committee Members to refer to the presentation by Professor Sutherland, which included a scathing attack on ICASA. He commented on Mr Sono’s averment that whether WOAN had succeeded elsewhere depended on which side of the fence one stood, saying that it would not be ideal to have the Committee divided by such a fence, as this would compromise its role. He recommended that the officials conduct some comparative studies on Dr Sutherland’s and ICASA’s presentations, saying that there were a lot of contradictions between the two presentations in the main. He proposed further that Mr Sono should bring back research information, even if in a summarised form.

He said he was interested in whether the WOAN would strengthen Telkom or new entrants, saying that Dr Sutherland’s presentation had suggested that the prospects for new entrants was zero. He emphasised that this Committee should be speaking about transformation, balancing the sector and eliminating the situation of a few entities dominating the market, as they would dominate the Committee and government in the long run. The sector was moving very fast and away from the reach of poor people and from regulation, which he said needed to be arrested as early as now. He put forward a recommendation that ICASA also provide the current structure of the market, to inform Members on which specific areas required transformation.

ICASA’s response

Ms Qocha referred to litigation, and acknowledged that the questions were not necessarily an attack, but an indication of the need to minimise the litigation, and this had been duly noted. To allay Members’ concerns on litigation, she said that ICASA’s operations involved the publication of an information memorandum, which was open for public comment and thus was a transparent process. She assured Members that each and every document that the Authority published would have gone through legal vetting internally before being published, which assisted in minimisation litigation.

On the state of readiness of the ITA’s for both the IMT spectrum and the WOAN, she indicated that the two processes were running side by side. ICASA’s council was holding an engagement on 24 June for the ITAs on the WOAN in order to consider submissions and advise on the way forward. These two ITAs were being vetted to minimise possibilities of litigation. She explained that the two processes were not the same -- the WOAN process would be conducted through a “beauty contest” rather than an auction process, to take into account the various empowerment and developmental elements. The auction process, on the other hand, would be used to guide the IMT process. She assured Members that ICASA would be able to provide a more detailed presentation to address Members’ concerns.

Mr Moshweunyane, CEO of ICASA, answered the question on whether there was reconciled thinking between the regulator and the policy maker on the prioritisation of the WOAN by emphasising that the policy direction was clear. The policy direction provided that the licensing process for the WOAN and the industry must start simultaneously. In his view it would be premature, particularly at this stage, when no ITA had been published, to say that there was prioritisation of one over the other. Nonetheless, the two processes were materially different and were subject to different consultative and legislative processes, and so they may not necessarily be concluded at the same time. He said that there was an appreciation from the policy level, hence the prescripts had provided that at the least, the processes must be started at the same time.

The Minister apologised to Ms Van Damme, saying that she had not intended to project a derogatory tone.

On the question of IDTVs, she emphasized that IDTVs were digital technologies. The intervention that the Department was making for households with matric learners was part of the DTT services. The Department could not take money from the DTT services to go and buy laptops. It was not the Department’s responsibility to provide digital technologies to education, or to any other department. She explained that through the corporate social investments of the entities and operators, the Department had an interest in exposing young people to digital technologies and had thus facilitated that process. The Department’s responsibility on digital technologies involved the making of policy, which was what the Department was doing. This was why it was withdrawing the Bill that it took to Parliament so that an updated Bill better considered all the elements that had been added to the Department. She emphasised that it did not matter how much the Department would have wanted to supply laptops -- this was not possible, and this was why the policy directions issued on the COVID-19 pandemic had asked the industry to do this work. She said that ICASA itself had then introduced obligations to the mobile operators to provide virtual classrooms and computers. This push for virtual classrooms was linked to the technology from broadcasting, so the infrastructure in the form of IDTVs would be available where learners did not have access to a laptop. She explained that the beneficiaries were beneficiaries of the DTT programme, which aligned with the letter from National Treasury providing that the money should be used for DTT. The only difference now was that the initial manner in which the Department was rolling out DTT was not looking at the educational aspect.

On the question from Mr Mackenzie on how spectrum still kept by the broadcasters was going to be auctioned, the Minister replied that the auction would still continue, and the operators were aware that the 700Mhz and 800Mhz band was available, but not in its entirety.  The Department’s use of the option of IDTVs would assist in fast-tracking the release of the spectrum, whilst looking after the interests of the SABC. Although she was not the Minister of SABC but of the DCDT, as the shareholder in the SABC, it was her role to make sure that these processes talked to each other and aligned at some level. It was a pity that Dr Ndlozi perceived the DCDT to have a preference of Multichoice over SABC. On his strong averment that there needed to be a legislative shift, she replied that as a Member of the lawmakers, Dr Ndlozi could propose this shift, but for now the Department was operating with what had been approved and budgeted for. She said that when SABC wanted to introduce a different model and business case that affected policy, it had to engage with the policymaker so that research was done, and the policy maker could review the decision if the need arose.

The Minister said that in August 2019, the Department had come before the Portfolio Committee and made a presentation after issuing the policy direction on the spectrum. This presentation had taken the Committee through the hybrid model that was being introduced and its objectives, to allow Parliament to enhance these plans in any way it deemed fit. The annual performance plan had been approved, endorsed and funded, and it was now up to the lawmakers, the regulator and policymakers to ensure that this worked for the benefit of the public. She agreed with Dr Ndlozi that the Minister’s passion would just be talk if ICASA did not support this push for transformation, but ICASA had not given the Department any indication that there was no commitment. This was reflected in ICASA’s issuing of both ITAs for the WOAN and the IMT spectrum simultaneously at the end of June 2020. ICASA was going to deliver on the policy imperatives as was required by the law. There had been extensive consultations with the industry, so the risk of litigation was indeed being mitigated against.

She acknowledged and agreed with the comment from Members that this sector moved very fast and thus required policymakers, lawmakers and the regulator to keep up in order to do justice to the members of the public. On the critiques from the presentation made by Professor Sutherland had said that the Department, the legislator and policymaker, had all criticised ICASA, but there was now renewed confidence in the calibre of people that Parliament had selected, as they had performed well so far and reflected an ongoing improvement in the manner in which ICASA played its significant economic role.

Chairperson’s concluding comments

The Chairperson indicated that the Committee had also been seized with the DTT services in the budget vote, and had made clear recommendations on accelerating implementation. The position was not that there should be no IDTVs, but rather that there should be more information or engagements on how the IDTVs would complement the work to be done. Amongst this work was the need to get the set-top boxes out of the Post Office, and ensure that they reached their destination so that there could be a quantification of what these 100 000 IDTVs would mean, because from an oversight point of view this was important.

The study on the WOAN referred to by ICASA would help Members understand the licensing aspect and whether it took into account the policy imperatives that it should be economic and competitive. The workshop by Dr Sutherland had left him with the sense that the last study done on the market was in 1999, and there had not been any other study since that had been open to the public. The Committee should be furnished with this study so that Members could glean from the study possible contradictions between the regulator’s projected process and the operator’s experience and behaviour. He gave the example that the regulator had deployed temporary spectrum, but in other cities there was already deployment in the infrastructure of 5G using the temporary allocation of spectrum, which would still be withdrawn.

He said that the Committee had the responsibility to protect policy decisions that had been made if WOAN was the vehicle chosen for transformation in the sector, as well as for economic and competitive viability. Members also needed to look at the current situation on matters like roaming arrangements and how roaming arrangements spoke to spectrum. The Committee needed to be taken on board so that Members were able to defend these policy decisions, because they remained correct if this sector was not transformed, saying that there was no real freedom that was unaccompanied by economic freedom. He highlighted that this was one of the sectors seen to be where new jobs would have to come in, as indicated in the President’s pronouncement and the paper from National Treasury. All this was what may need to be revisited, but the Committee allowed space for ICASA to do what it was expected to be doing in terms of policy.

The Chairperson asked that ICASA answer when its data market inquiry was going to be completed, and how this inquiry was going to affect the spectrum programme engaged in, since the spectrum release was also about a decrease in data prices. The Competition Commission had already concluded that the mobile broadband market was ineffective.

He raised a concern that the WOAN and IMT spectrum processes would start at the same time, but not conclude at the same time. The worry was that the by the end of a time lapse of perhaps 18months of consultation, the incumbents would be more entrenched in the market to a point that the question would arise as to whether new entrants would be able to prosper as expected. These questions had been raised in order to influence the process, so that policy decisions taken on effecting transformation in the sector were not compromised.

He stressed that this engagement was not the end of the discussion, and the Committee would allow ICASA and the Minister to come back and make further presentations. The Committee was also interested in hearing other views including the sector itself and their responses as part of the Committee’s oversight role.

Mr Mackenzie asked whether ICASA intended to introduce regulations on MNOs around the wholesale and retail operations. 

The Chairperson responded that if there were questions that had not been answered adequately, there could be further engagements in writing which would also allow some reflection from the Minister and the delegation. This would continue to be an engagement process until the point of a result.

The Chairperson adjourned the meeting.

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