Department of Communications on its Revised Strategic Plan and Budget for 2020/21; with Minister

NCOP Public Enterprises and Communication

22 July 2020
Chairperson: Mr T Matibe (ANC, Limpopo)
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Meeting Summary

Video: Select Committee on Public Enterprises and Communication, 22 July 2020
Audio: Department of Communications on its revised strategic plan and budget for 2020/21

In a virtual meeting, the Department of Communications presented to the Select Committee on its revised Strategic Plan and budget for 2020/21 due to the impact of the COVID-19 pandemic. The presentation addressed the 2020 Medium Term Economic Framework (MTEF), special adjustment budget, broadcasting digital migration, impact of the budget reduction and the current funding status and implications. 

COVID-19 related matters have been prioritised by the Department and most goods and services budget has been shifted to fund these initiatives. The Department is the process of reviewing its 2020/21 Annual Performance Plan (APP) in light of COVID19 and the budget cut. 

Members asked which provinces the Department intends to cover as part of providing the decoder subsidy when the phase two presentation begins, if the Department has the capacity, and a clear plan, to ensure proper governance and implementation processes are in place for the digital migration, ahead of the switch off date of the Set-Top Box (STB) and the extent to which the Minister was able to speak to companies, such as MultiChoice, regarding repetition on its channels, the lack of live content (except the news) despite the increased prices they charge consumers.  The Member felt this was inappropriate in light of the economic hardship currently faced. 
The Committee wanted to know to which extent the Department was involved in the district model, checks and balances in place to ensure money government invests in the District Model is not used irregularly, mobile networks building 5G towers on private property, progress on the Wireless Open Access Network and value for money of the set-top boxes. 
The Minister thanked Members for allowing the Department to present. She said the Department will return to the Committee with more details on broadband. - She asked Members to assist in creating awareness on the Digital Migration Programme, and Beneficiaries. A strategy will be given to the Committee for this. 

The Chairperson said there is an outstanding issue with Broadband Infraco (BBI). The Committee will inform the Department when it is ready for a briefing on this. 

Meeting report

Minister’s remarks 

Minister Stella Ndabeni-Abrahams thanked the Committee for giving her and the delegation from the Department an opportunity to present, particularly during the challenging circumstances of the COVID-19 pandemic. 

The Department’s budget was cut by the Minister of Finance, Tito Mboweni. COVID-19 exposes the country’s infrastructure weaknesses. Even where people have access, there are still challenges such as signal. This is a reality the Department is faced with. There are infrastructure challenges. The Department introduced interventions and reprioritised to address this. Budget cuts mean cutting services. Parliament therefore gave the Department the opportunity to seek alternative funding and to partner with the private sector. 

The Department identified key priorities. Covid exposes weaknesses but also presents opportunities, such as this meeting on a virtual platform. Even government must now prioritise connectivity. Like electricity, it is a basic need. People have to be connected. 

Some learners are unable to access digital learning. The Department intends to build from the Digital Migration Program (DMP). Digital Terrestrial Television (DTT) beneficiaries are prioritised. This includes households with matric pupils. 

The Minister handed over to the Department. 

An apology was tendered for Acting Director General (ADG), Mr Omega Shelembe, who was at a Portfolio Committee meeting with the Deputy Minister, regarding the SABC. 

Briefing by the Department on its adjusted 2020/21 budget 

Chief Financial Officer (CFO), Ms Joy Masemola, presented to the Committee on the Department’s Revised Strategic Plan and budget for 2020/21. 

The presentation dealt with the 2020 Medium Term Expenditure Framework (MTEF) Budget Allocation, Special Adjustment Budget, Broadcasting Digital Migration, the Impact of the Budget Reduction, Broadcasting Digital Migration (BDM) deliverables, the current Funding Status, and current Appropriated Funding and its implications. 

On 21 April 2020, the President announced a fiscal support package. It includes spending towards COVID-19 priorities. Part of the funding sources for this package is a R130 billion baseline reprioritisation in the 2020/21 financial year.  

[See presentation slides for budget allocations prior to adjustment budget ]

The Department is allocated R3.4 billion for the 2020/21 financial year. Following the announcement by the Minister of Finance, the Department met to reorganise and earmark funds allocated. These include:

-SA Connect Phase One: Broadband Connectivity: R184 million

-Universal Service and Access Fund (USAF): New Model for BDM: R522 million

- Universal Service and Access Agency of South Africa (USAASA): Distribution costs for South African Post Office (SAPO) and BDM: R178 million

 

Looking at the special adjustment budget, a contribution of R33 million from goods and services – amounting to approximately 17% of G&S budget once SA Connect, operating payment sand Property payments, are removed. The cut was mainly effected on subsistence and travel, advertising, consultants, training and development, venues and facilities and other items - items the Department will spend the least money on in the current financial year. 

There is no contribution under programme two. This is because of the negative impact on the budget by an unfavourable exchange rate during payment of the international membership fee. The savings declared from this branch are shifted to defray excess costs in the programme. 

Programme four is mainly driven by transfers to the entities and received no contribution. 

15% of R522 million (amounting to R78.3 million) was reduced from the BDM budget allocation - the R78 million is from the USAASA voucher system. 

National Treasury granted provisional approval for surplus funds from interest earned amounting to R242 million to be retained by USAF for the 2019/20 financial year. These funds will be used to assist indigent Grade 12 learners affected by the lockdown due to the Covid-19 virus

On the impact of the budget cuts, the Department prioritised the following COVID-19 related matters:

-Procurement of Personal Protective Equipment (PPE’s), santisers, sick bays, scanners 

-Decontaminating premises

-Provision of data and tools of trade for all employees

The Department is in the process of reviewing its 2020/21 Annual Performance Plan (APP) in light of the changes brought on by the COVID-19 pandemic. It will be presented to the Minister, the Portfolio Committee, the Select Committee, and will then be retabled in Parliament. 

Ms Masemola handed over to the Deputy Director-General (DDG) of SA Connect and BDM, Mr Tinyiko Ngobeni.

Mr Ngobeni briefed the Committee on the Digital Migration progress. There are two phases of the programme:

-Phase One: completion of stock depletion and indigent registrations. This included stakeholder engagement, registration, implementation, efficient installation management processes

-Phase Two: implementation of the voucher system. Key ingredients included the affordability of migration devices, encourage update of commercial DTH satellite decoders for out-of-subsidy households, promotion of adoption of digital TVs and other technologies to broaden choice, implementation approach based on early dividend spectrum release, supplementing with existing commercial products to foster collaboration, supplementing marketing on existing broadcast and mobile platforms and the industry social responsibility element to encourage participation. 

Looking at the current funding status, the total estimated indigent households is 4.7 million. 1.5 million is already catered for in phase one through the decoder subsidy. Free State, Northern Cape, North West and Limpopo are targeted in phase one. The remaining 3.2m households would be catered for in phase two. National Treasury has made R1.6b available for the decoder subsidy. Cabinet has approved implementation of the voucher subsidy through provision of the Integrated Television (IDTV). 

Discussion 

Ms L Bebee (ANC, KZN) asked which provinces the Department intends to cover as part of providing the decoder subsidy when the phase two presentation begins. She asked if the Department has the capacity to ensure proper governance and implementation processes are in place for the digital migration, ahead of the switch off date of the Set-Top Box (STB). She asked for a clear plan.

The Minister said the Department is busy with the four provinces in the current phase. Phase two will cover all the other provinces which were not covered. The Department has struggled with capacity for a long time. This is why it roped in SENTECH, through USAASA, to be the implementing agent of the project manager for the roll out of this phase. This phase builds on the capacity SENTECH has. USAASA is in the process of bringing in more capacity internally. Previously the project was managed by the Department with SAPO as the delivery agent. USAASA installed and procured the STBs itself. Now the Department distributes the work. 

In the past, for example in the Free State, people complained about the quality of the installations and boxes which do not work. Installations in the Northern Cape were by entities from Gauteng. When issues occur there is no one to call around, as the service provider went back to where the provider comes from. This is why the Department decided installation must be localised to give an opportunity to local people. 

Mr M Nhanha (DA, Eastern Cape) said some of the issues he wants to raise are not part of the presentation. He wrote to the Minister on the first issue. While everybody else is revising its budgets to meet COVID-19 challenges, companies such as MultiChoice, the owners of DSTV are hell bent on milking South Africans during lockdown Levels Five and Four. 

The only thing live on TV is the news. Everything is a repetition of what people watched ten or 15 years ago. He said he wants to check with the Minister to what extent she is able to speak to companies such as MultiChoice, because quite frankly he thinks it is unacceptable behaviour on MultiChoice’s part, while everybody else is trying to make ends meet.  People are losing jobs left, right, and centre. MultiChoice finds it appropriate to milk South Africans of hard earned pennies. He said he is sure many Members will agree with him. MultiChoice did not revise its rates to take into consideration the difficulties South Africans are facing. Until it restarted the Premier League, absolutely nothing was live on TV. This conduct is unacceptable. 

Mr Nhanha said he wants to pick the Minister’s brain on this. He knows it is not always ideal for the state or Executive to navigate private business, but where things of this nature are open, surely somebody has got to ring the bell. 

He asked to what extent the Department is involved in the District Model. OR Tambo District Municipality is identified as one of the Districts to pilot the project and the Minister is from this District. He said he is sure the Minister knows what the situation is like in this District. State resources are plundered at will by councillors and officials alike. This is well documented. He asked to what extent the Minister’s Department is involved in the District Model. He also wanted to know if it is involved, which checks and balances are put in place to ensure the money government invests in the District Model is not used irregularly. He asked at which stage the Department will open up auction for 5G. 

The Minister said MultiChoice is a private company and the Minister is responsible for policy which shapes the entire industry. There is the Regulatory Authority which must raise this on its own. The Minister issued ministerial directives regarding interventions which must be made by all in the industry. With broadcasters it is the issue of messaging, and the educational channel so students can have access to education using the broadcaster’s channels. There are things which can be done within the law, and some things the law does not allow, since it is the private sector. 

The Minister said she forwarded this message to MultiChoice after these concerns were raised, but this was all she could do within the law. 

The Department does not transfer money to municipalities. This is done through agencies such as the Sector Education and Training Authority (SETA). The Minister said unfortunately she is not privy to the names of the service providers used for procurement. She did not receive any information about services procured. There was no transfer of money to any municipality. 

The Department provided training for university students doing computer science on Cloud, and the new technologies, as well as data science. The Department will be back in the OR Tambo District with other interventions as well. 

Mr A Cloete (FF+, Free State) asked about a regulation signed on the present day, which basically allows mobile networks to build a 5G tower on its property. Mr Cloete read parts of an article which was gazetted. (Refer to audio for this reading, at 36:14). He asked which regulations which can be seen, relate to this, and which ones which cannot be seen. He also asked if the Department in any way considers business owners with properties in towns, who pay the municipal taxes on which infrastructure is built. He wanted to know what the progress is on the Wireless Open Access Network. 

He asked when the Minister sees this project getting completed.

The Minister said her role in spectrum licensing is only restricted to issuing a policy or a policy directive and it ends there. Parliament appoints Councillors, but the Minister wrote to the Speaker and is awaiting a response. According to the Regulator, the process of high demand spectrum is supposed to be licensed in December 2020. The process around wall licensing is being looked at. This is because it is two different processes. The high demand spectrum already has existing licenses for the wall. Invitations to apply (ITAs) will be issued simultaneously to ensure there are no walls left behind. When licensing Telkom or Vodacom, the Department considers government provided assets and support for it to be licensed. With Wholesale Open Access Networks (WOAN), the Department must create an opportunity for the people of South Africa to not only be spectators or consumers in the economy, but also effective participants in the wall which bridges the gap and addresses the imbalances of the past. 

The Department asked to withhold charging tower operators, specifically for the COVID-19 period. There were meetings with stakeholders involved. The Minister said the Department appreciates the people who own properties and pay taxes. At the same time it understands these people need to access services and be able to work when not in the buildings. This intervention seeks to address this issue. 

Ms T Modise (ANC, North West) asked if the set-top boxes are value for money. She said this process must be speeded up because the community needs it, and asked how soon the next batch will come.

The Minister said set-top boxes are losing value at the post office warehouse because there is no capacity. The process must be decentralised to use local people so it can be fast-tracked. SENTECH is managing the process. The Department is aware it lost a lot of time and money due to COVID-19. During the lockdown period, manufacturers and installers were not allowed to work. This is why the Department had to wait for the current level of lockdown to kick-start the work which should have been done. The Department tries to work with all other Departments, but its primary responsibility is to develop policy. Through its agencies like SENTECH and SETA, it provides connectivity based on the country approved plan. Eight districts were identified in SA Connect. The Department is following this pattern. 

Mr Ngobeni said District Delivery Model participation involves the Department of Co-operative Governance and Traditional Affairs. It also involves various government departments with the aim of integrating the different sector plans across the spheres of government to create a single plan for the identified districts. The Department is assisting the co-ordination from the Information and Communications Technology (ICT) point of view. 

The Chairperson asked if there were any follow-up questions.

Mr Cloete said it appears if infrastructure is built on the owner’s property, owners may not charge except under certain conditions. He asked if the Minister can indicate these conditions.

Replying, the Department referred to paragraph 2.6 of the directive issued. It shows property owners will not charge fees where the network facilities are not intrusive. For example where cables run underground or where there will be overhead cabling, there is no cost to the property owner. Reasonable excess fees can be charged when networks or facilities are more intrusive and are erected on the property. 

Mr Ngobeni said, on rapid deployment, the basic principle is to balance the rights of the owners and the licensees. Clause 2.8 allows property owners to object where the property owner must be paid a fee. 

Mr Nhanha asked if the Department is involved in rolling out District Models and to what extent the Department is involved.  He asked which checks and balances are put in place to ensure resources invested into municipalities do not get mismanaged. He also asked about the DSTV rates. 

The Chairperson said Mr Nhanha missed the answers which the Minister replied to already, but will allow the Minister to reply again. 

The Chairperson thanked the Minister and the delegation from the Department and asked if the Minister had any closing remarks. 

The Minister thanked Members for allowing the Department to present. She said the Department will return to the Committee with more details on broadband. It is still in the process of engagement with the private sector. Once this is completed and the feedback is received from the feasibility study, the Department will give further details on the roll out strategy. She asked Members to assist in creating awareness on the Digital Migration Programme, and Beneficiaries. A strategy will be given to the Committee for this. 

 

The Chairperson said there is an outstanding issue with Broadband Infraco (BBI). The Committee will inform the Department when it is ready for a briefing on this. 

 

The next Committee meeting takes place on 29 July to deal with outstanding Committee Reports. 

 

The Chairperson made closing remarks and the meeting was adjourned. 

Audio

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