Department on Broadband Roll-Out; with Minister

Meeting report

The Chairperson informed Members that the House Chairperson had agreed that the Committee could continue its unfinished meeting with South African Broadcasting Corporation (SABC) on 18 November.

Minister’s overview

Ms Stella Ndabeni-Abrahams, Minister of Communications, provided an overview of the presentation on the broadband roll-out plan.

She said that in line with the 2020/21 annual performance plan (APP), the target for the broadband roll-out in South Africa under phase one was 970 government sites. So far, 951 government sites had been connected, which amounted to 98% of the total target. The 19% under-spending on the project was planned to be completed by the end of October. The technical difficulty was causing the delay.

The Minister emphasised the collaborative working relations with other government sectors, such as the health and education Departments, in order to digitalise service deliveries. The main objective was to provide connectivity for areas that did not have internet access.

She highlighted the negative impact of load shedding, saying that infrastructure capacity was key to providing network connectivity.

For Phase 2, the Department had commissioned the Development Bank of South Africa (DBSA) to conduct a feasibility study looking at the overall connectivity in South Africa. COVID-19 had shown that the current network capacity on public buildings could not provide services to the people of South Africa, so the Department was looking to introduce the fibre option.

The Minister stressed the importance of the state in creating a conducive environment for business and industries to operate. For the roll-out of broadband, it was important to partner with the private sector.

She said she was still engaging with the South African Broadcasting Corporation (SABC) and the Universal Service and Access Agency of South Africa (USAASA), and would provide inputs once those processes had been concluded.

Broadband roll-out plan

Mr Tinyiko Ngobeni, Deputy Director-General: SA Connect and Broadcasting Digital Migration (BDM), Department of Communications, briefed the Committee of the Department’s broadband roll-out plan.

From a global perspective South Africa had seen an overall decline in ranking, from 70 to 72, out of 140 countries in the World Economic Forum (WEF) networked readiness index from 2013 to 2019. A range of issues were used as indicators, such as infrastructure, access to digital content, individual usage, business usage, government usage, economic impact and social impact.

He provided with the Committee an infrastructural gap analysis which had been done in 2011. It showed the geographic distance to fibre distribution points. He pointed out that things had not changed much since 2011, so the Department’s aim was to expand network services outside of metro areas.

There were four key strategic pillars -- digital readiness, digital development, digital future and digital opportunity.

Mr Ngobeni explained South Africa’s two-phased approach to the roll-out of broadband. The Western Cape and Gauteng were the two provinces that had been excluded, because those two provinces had started their own provincial-driven programmes for connection. The set targets for phases 1 and 2 had been provided.

The procurement services to implement SA Connect Phase A had been provided. Telkom was the leading player in the roll-out programme. The implementation model was explained to the Committee. The funding model was provided.

Mr Ngobeni said that the Department was facing challenges of insufficient budget to complete the programme. He reminded the Committee that in 2016/17, the Department had been forced to cut its budget as part of the “Fees Must Fall” intervention. The COVID-19 budget cut hadfurther resulted in the scaling down of its piloting cases.

He explained that network connectivity comprised the broadband infrastructure and the internet service.

He informed the Committee of the Department’s governance framework on monitoring this roll-out process.

Phase 1 implementation challenges, as well as the Department’s mitigation measures, were identified.

Among other key issues explained were the provincial-led initiatives, USAASA initiatives, as well as the private led-initiatives in the roll-out of broadband services.

Discussion

Mr C Mackenzie (DA) said that given the urgent timing, with the Minister needing to leave at 11am, he wanted his question to be responded to first. His first question was not related to the presentation materials on the broadband roll-out, but about the pensioners at the South African Post Office (SAPO). He believed that the government had a duty to take care of those pensioners. Meanwhile, many of them were uncertain about whether or not they would be receiving their next pay cheque and medical aid. Hence, he sought clarity on whether the Department had any statutory obligation towards pensioners’ medical aid contributions.

He expressed his concern with the long period of time that it had taken for SA Connect to implement its vision to bring connectivity to the people. SA Connect had been in the planning stage for at least five years for now. The Committee did not want to hear about its plans and visions anymore -- it wanted to see action being started on the ground and connecting people as quickly as possible.

He commented on the successful models being practised in the Western Cape and Gauteng provinces. The Western Cape government had partnered with the Skills Education Training Authority (SETA) successfully, and the Gauteng Government had later followed the model, and this approach proved to be working. He therefore wanted the Department to explain what the problems in other provinces were that were stopping the SETA and provincial governments from working together to bring connectivity to the people.

Referring to project management, Mr Mackenzie said he would like to see slides being presented in a format that clearly indicated the name of the site, the beginning date, the planned completion date, the cost of the project, etc, so that Committee Members could do their oversight work.

He asked about the first eight districts and municipalities that had been connected in Limpopo. He wanted the Department to show him how those eight municipalities had been connected and how those schools and governments had been using those municipalities’ networks. Furthermore, he enquired about the maintenance and supporting plan for the connectivity infrastructure. He asked which supplier provided the maintenance, and whether or not there was a coordinator through the SETA that was driving the province-based plans. 

He assumed the broadband forum was the structure that acted as the coordinator between the Department and the provinces, and asked the Department to confirm this. He also asked when and where the forum met, who sat on the forum, as well as the forum’s power.

He commented that the Department had expressed its view that the government did not dictate the types of technology that it used. He therefore asked whether the Department had any measures in place where cybersecurity could threaten national security. He recommended that it conduct a full investigation into the cybersecurity issue in order to protect the South African network.

Ms N Khubheka (ANC) appreciated that at least there was movement, and that other entities were working towards connecting people. She enquired about the regression of South Africa on the networked readiness index, and if the Department thought there was any possibility for the country to move forward.

She commented on the comparatively worse broadband status of the North West and Free State provinces revealed in the feasibility study. She wanted to know if anything could be done to assist those two provinces.

She applauded the fact that the roll-out of network was not only focusing on mainstream schools, but was also tapping into special schools.

Regarding the collaboration between BroadBand Infraco and the SETA, she asked whether there had been some hiccups in their working relationship, and if any measures had been taken to resolve those issues in order to improve connectivity for the people.

Department’s responses

The Minister replied to Mr Mackenzie’s question on the South African Post Office pensioners’ medical aid. She said that the Department was really concerned about the financial state of SAPO, and its effect on employees. She had directed the Department to assist it to turn its financial situation around. The Department had confidence that the Post Office board would ensure that what was due to the Post Office employees and pensioners was not affected by the difficult financial situation.

The Minister also informed the Committee that the Department had recently been litigated by the medical aid administrator of the MEDiPOS Medical Scheme. The outcome was that the SA Post Office had lost the case. The Post office had subsequently approached the medical aid company and since then had been working on an arrangement towards paying its pensioners’ medical aid contributions. She assured the Committee that the Department would intervene as main shareholders when there was a gap.

In response to Mr Mackenzie’s question as to why other provinces could not follow the examples of Gauteng and the Western Cape, she explained that those two provinces were financially more endowed to roll-out their broadband programmes. The other provinces had their own challenges. In the Eastern Cape, there was a tender award that had been challenged in court because of its undue processes. The issue had been resolved, and the project was about to kick-start. She emphasised that all those provincially-driven roll-outs needed to align with the national broadband plan.

Regarding cybersecurity issues which might jeopardise state security, the Minister said that the Department was undertaking an assessment into the issue. As a country, South Africa was technologically neutral, so it could not legally prohibit or ban any organisation from providing its own network. However, the Department did have minimum criteria for the appointment of service providers. Those requirements were there to ensure that sensitive South African information was protected. In addition, there was also the State Security Agency (SSA) that specifically dealt with cybersecurity. The President was also aware of the importance of the cybersecurity matter, and had referred the matter to the National Security Council to look into it.

The Minister reminded Committee members that the very virtual platform on which the meeting was hosted -- ZOOM -- was not a South African product either. None of the network providers was based in South Africa. She pointed out that there was a need to provide a legislative framework to protect South African interests.

She commented on Ms Khubheka’s question on the collaborative relationship between Broadband Infraco and the SETA. She said she had seen an improvement in state entity collaboration. She also emphasised the facilitating role that government had to play in creating an enabling business environment.

Mr Ngobeni explained that because of the budget cuts and the lack of funding, SA Connect would continue to have this issue of not being able to kick start, and remaining in the planning phase. Currently, the Department was exploring all the cost-effective options.

On the cybersecurity issue, the DDG explained that SETA was working with Broadband Infraco to monitor connectivity at all the facilities. There were minimum criteria that facilities needed to satisfy to ensure that facilities were operational. SETA was also working with Broadband Infraco to inspect facilities monthly, and would produce a service level report monthly, which the Department would use as the basis for payments.

Responding to Mr Mackenzie’s question, he said that with the exception of the Western Cape and Gauteng, the other provinces had a large percentage of rural areas with limited infrastructure to provide connectivity. He asked Members to look at the infrastructural gap analysis in the presentation slides again. The Western Cape and Gauteng had multiple network service providers to choose from, but unfortunately not the same could be said of those rural provinces. He said the feasibility study had been helpful in identifying those challenges so that plans could be devised to address them. 

The Department had planned to conclude the project management by October, but the completion dates for each facility differed. As each facility had its own challenges, the project to connect people could get running once all the technical issues had been resolved.

For facility support and maintenance services, Broadband Infraco worked with service providers who were responsible for the maintenance work. SETA would also provide information to assist with maintenance on a faulty issue.

The broadband forum was a standing committee which every province had, that coordinated between the Department and the provinces. The forum had the power to take decisions. However, he was unable to give a definitive answer on when and where those forums met, as each province differed.

Regarding South Africa’s regression on the networked readiness index, he believed that the Department had taken measures to ensure the country’s infrastructural capacity. Various initiatives had been undertaken to improve connectivity. With these measures in place, he was optimistic that the ranking would move forward again.

Regarding the hiccups in the working relationship between the Broadbank Infraco and the SETA, he admitted that the working relationship between them had not started off well, but as time passed, it was gradually getting better. Both understood that the challenge that one of them faced now would inevitably affect the other partner, so both organisations were now more understanding of each another. The collaboration had become more efficient and conducive. 

Follow-up questions

Mr Mackenzie enquired about the spectrum auction, and if the Department anticipated any service obligation on auction conditions.

He said that the Committee had visited some schools in Limpopo which were in deep rural areas with almost no network connectivity, and had to rely on satellite dishes. He asked the Department whether or not the Department saw satellite connectivity playing a part in providing network coverage for rural areas, given that this option was doable and cost-effective.

Ms Khubheka emphasised the importance of having proper monitoring and evaluation measures in place to evaluate those site projects.

She asked whether the Department had any plan to provide network coverage in rural areas, stressing the importance of accommodating those areas and not leaving them out.

The Chairperson made reference to the targets contained in the presentation, and reminded the Department that now it was 2020 -- which was seven years from 2013. Given the slow progress, he asked how the Department planned to achieve its set targets for 2030.

He said that between 2013 and 2017, the Department had spent more time on the procurement of service providers. Even as he spoke, Broadband Infraco and SETA were still dealing with this prolonged procurement issue. He asked if the Department had any plans to avoid an unnecessary prolonged time for procurement.

The Chairperson referred to slide 27, and asked whether local government representation was included in those decision-making forums. For two years, the Department had been battling to secure wayleaves from landowners, which had raised frustration levels among investors. This could cause South Africa to lose more investors and subsequently more job losses. More than that, it unnecessarily delayed the objective of providing connectivity to the people. He asked if the Department had had any progress on obtaining wayleaves.

Regarding foreign investors, he wanted to know if there was standard assurance in place. 

The Chairperson emphasised the importance of the telecommunication sector transforming. He reminded the Committee that the government should be the policy driver behind the transformation. For those service providers that helped in providing network coverage, he was happy to hear that 80 to 90 percent of the infrastructural funding was provisioned to assist small to medium businesses. He wanted the Department to clarify the percentage of transformation, especially in respect of women and youth, and people with disabilities who had participated.

Department’s response

Mr Ngobeni informed Mr Mackenzie that there was a service obligation for spectrum licensing, as Independent Communications Authority of South Africa (ICASA) provided policy directions for service obligations.

He confirmed that satellite was one of the options which the Department was contemplating to provide connectivity. It was also taking cost-effectiveness into consideration. He said that using satellite proved to be cheaper in some areas. The Ka band which was being used globally was a cost effective way for satellite connection. He recognised the satellite as an ideal way for rural area connectivity.

He assured Ms Khubheka that the Department was trying its best to communicate with service providers about enhancing capacity. It was cognisant of the population that stayed in rural areas, and strived to provide network connection for them.

He identified the challenge of infrastructure availability in rural areas as the main deterrent for the lack of connectivity, so it was working towards broadening connectivity by expanding capacity. The Department had adopted a government-driven focus so that other sectors could leverage that connectivity. For instance, other sectors could leverage the connectivity in government buildings for connectivity. 

Mr Ngobeni commented on the Chairperson’s remark about the seven-year gap during which the Department had not achieved much. He said he was cognisant of the delays in all the programmes. The Department had just concluded its feasibility study to identify all the challenges in order to expedite the process. The institutional framework would assist in the rolling out of programmes faster. There had already been multiple implementations of broadband roll-out in different areas. The Department also envisages the future, which was why it was in the planning process to consider a cost-effective measure, but which could also increase connectivity speed.

He explained to Members why there were procurement delays. It was an issue that had emerged during phase 1, where a panel of service providers had indicated that many small emerging operators were lacking the financial capacity to kick start the project on the ground. The Department had listened to the challenges that those small operators faced, and had projected the probable risks of the roll-out of connectivity. In some cases, financial capacity had been a challenge for small-scale service providers. He believed that having multiple panels of service providers would be helpful to address procurement delays.

The Department recognised the lack of financial, as well as technical, capacity for small, medium and micro enterprises (SMMEs) to participate in the project. Those SMMEs should pool their resources together in order to drive transformative in the sector. The sector needed people from historically disadvantaged communities to participate to deliver targets, but they needed to be helped. He also reminded the Committee that part of the spectrum licensing requirement included driving transformation.

As the provincial slides in the presentation had indicated, local government was part of the forum. The forum included provinces and districts. Due to lack of a capacity in some local municipalities, there were also small technical teams that were working with them. The representation of local government often came from a technical point of view, and sought technical expertise.

Mr Ngobeni acknowledged the challenge of wayleaves and their negative effect on the sector as a whole. The Department had established a rapid deployment centre, working with other government structures such as with Department of Cooperative Governance and Traditional Affairs, to address the wayleaves issue. Some municipalities lacked the capacity to deal with applications, so there was a need to address that capacity building issue. In some municipalities, if the infrastructure was paper-based and not digitalised, the application for wayleaves would take longer, so the prolonged waiting time might risk losing investors’ funding for the programme. In those cases, the Department was planning to involve municipalities to try to address some of those capacity challenges.

He gave an assurance that there were standards in place for foreign direct investment. One of the key standards was the alignment with SA Connect. He explained that project owners that had been appointed must check their work against the provided standards upon completion of projects. The SETA was also involved in issuing completion certificates, which the Department reviewed to make payments.

Chairperson’s summary

The Chairperson thanked the Department for its presentation and commended the Department for the progress shown in the presentation.

Regarding the targets set after the budget reduction, the presentation showed that there was still great progress in the presented numbers for those sites in the different districts. The work had been done whilst there were sites remaining to be completed. The Committee appreciated the Department for its willingness to learn from its past experience. This had fed into its remodelling that guided the feasibility study which was yet to conclude, and an implementation plan which would answer questions on the project management approach, to help the Committee do its oversight work.

He said the Committee needed the Department to put in all its efforts to achieve its set goals for 2030. 

He stressed the importance of expanding connectivity in the rural and other areas with limited of infrastructure. One lesson that had been learnt from COVID-19 was the necessity to drive technological change, and connectivity was key to achieving that.

The Chairperson said that the re-modelling would be looking at all the provinces once again. He emphasised that the Department needed to pay attention to the different levels of infrastructural capacity and investment, and its interventions should aim to assist those areas that were struggling to realign to the plan.

The Committee appreciated the great working relationship between Broadband Infraco and the SETA.

The Committee agreed that the Department would return to the Committee to re-table its APP and strategic plan.

Adoption of minutes

The minutes of Committee meetings held on 6, 13, 20 and 27 October 2020 were adopted.

The meeting was adjourned.