Independent Communications Authority Bill: hearings

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Communications

15 March 2000
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COMMUNICATIONS PORTFOLIO COMMITTEE
15 March 2000
SACRA BILL: HEARINGS
 


Documents Handed Out
:
Orbicom Submission (Appendix 1)
Sentech Submission (Appendix 2)
 

Independent Broadcasting Authority Submission
South African Communications Regulatory Authority Bill (B14-2000)

SUMMARY
The committee heard submissions on the South African Communications Regulatory Authority (SACRA) Bill from Orbicom, Sentech, and the Independent Broadcasting Authority (IBA).

MINUTES
Presentation by Orbicom
Mr Tshepo Rantho, Regulatory Affairs Executive, and Mr Gal Patsri, legal consultant to Orbicom, briefed the committee on their views of the SACRA Bill. (see document)

Discussion
(Q) Mr Maserumule (ANC) asked for an explanation of the relationship between "impartiality" and "independence"?

(A) Mr Patsri replied that the Constitutional Court had made a clear distinction between the two terms. "Impartiality" was a subjective term that referred to state of mind, and "independence" was the objective relationship to the State. He added that "independence" included areas such as financial autonomy.

(Q) Ms Smuts (DP) asked for comment on the idea of establishing separate Councils or vice-Councils for Broadcasting and Telecommunications after the merger had taken place. She asked that their answer take into consideration the fact that the work of the IBA and SATRA were very different and would not be able to be completed under an "umbrella Council".

(A) Mr Rantho responded that they did not support the idea of establishing separate Councils, but rather thought it was essential that all the Councillors had extensive knowledge of and experience in both the telecommunications and broadcasting industries.

(Q) Mr Makunyane (ANC) asked in reference to Sections 3(3) of the Independent Broadcasting Act of 1993, and 5(3) of the SATRA Act, if any other countries guaranteed the same independence to the authority in the Constitution?

(A) Mr Rantho responded that he was unsure of the Constitutions of other countries, but stated the importance of having a robust Regulator, since it acted as the mechanism to ensure disputes over issues of telecommunications and broadcasting were resolved fairly. He added that even without Section 192 of the Constitution, the Authority, as a legal body could not move away from acting impartially in their duties, since their actions were governed by the Courts. It was also important that the SACRA Bill clearly stated that just because the Constitution acts as a legal safeguard, the Courts should not be given the ability to dictate the actions of the Authority, but rather that it should be directed by the policies of Parliament.

(Q) Ms Vos (IFP) asked if Orbicom was satisfied that the three principles of independence, impartiality and fairness were clearly enough defined in Section 2 of the Bill?

(A) Mr Partsri replied that Section 2 was not sufficient, as it did not address impartiality as outlined in 5(3) of the SATRA Act. Even though the Court had made a distinction between the two terms, and impartiality would be imposed through the Bill of Rights, it was thought to raise concerns over the issue of good governance and international perception. It was suggested that the underlying statutes be retained.

The DP supported the view that an additional clause on impartiality be added to the Bill.

The Chair commented that it was impossible to have absolute separation from the State, since the Authority reported to, and received funding from Parliament. What was needed was for a clear separation to be established between administration, policy directives, and the mechanisms for enforcing the rights of the Authority. He stated that these were issues that would be better addressed by the National Association of Broadcasters (NAB).

(Q) Mr Pieterse (ANC) asked if the concern over international perception would be covered under 4(1c) of the Bill?

No answer was given.

(Q) The Chair asked if Orbicom would be willing to pay additional service fees to help fund the operations of the new Authority?

(A) Mr Rantho supported the idea of service fees, stating that it would ensure greater financial independence for the Regulator, and stop the possibility of the industry "capturing the Regulator."

(Q) The Chair followed up by asking about the influence of industry on the independence of the Authority?

(A ) Mr Rantho stated that under-funding would make the new Authority susceptible to the dangers of the industry.

Presentation by Sentech
Dr Sebiletso Mokone-Matabane briefed the committee on Sentech's position of the SACRA Bill.

Discussion
(Q) Mr Mongawaketse (ANC) asked if, after the merger took place, the workload of the Council would drastically increase?

Dr Jassat (ANC) followed by asking if the proposed number of five to seven members would be sufficient to fulfill the role of the Council as outlined in Section 5(3b) (i) and (ii) of the Bill?

(A) Dr Mokone-Matabane replied that the work load of the new Council would be heavy due to the issues that will arise from the merger. She felt the committee would be able to handle the work if highly-qualified senior support staff were hired with similar qualifications as were outlined in the IBA Act and the SATRA Act. Competent staff would ensure the Council worked efficiently, but it was fundamental that they also be knowledgeable about the global telecommunication and broadcasting industries.

(Q) Ms Smuts (DP) asked if the Darling Report which recommended nine members was a better composition for the Council to begin with?

(A) Dr Mokene-Matabane responded that they were already experiencing some problems over convergence, and that as long as the new Council had broad knowledge of both telecommunications and broadcasting, one Council would be sufficient.

(Q) Ms Magazi (ANC) asked why they did not want the involvement of the Minister in terms of designating terms of office?

(A) Dr Mokone-Matabane felt that it was preferable to maintain the existing system in which the "lot" process was determined by Parliament.

(Q) Mr Pieterse (ANC) asked for comment on the Council's support staff being paid market-related salaries, and if the combined Budget for IBA and SATRA would be sufficient?

(A) Dr Mokene-Metabene replied that the salaries must be within the range of the private sector to ensure that the staff could be retained. On the Budget, she felt that the allocated money would clearly be insufficient.

Presentation by IBA
The IBA Chairperson, Mr Mandla Langa, with various other councillors and IBA representatives briefed the committee on their views of the SACRA Bill.

Discussion
(Q) Ms Smuts asked if consultations had occurred with those employees who would be facing dismissal as a result of the merger, according to Section 189 of the Labor Relations Act.

(A) Mr Mjwara, from the Department of Communications stated that Department was dealing with the matter of the Labor Relations Act, and that negotiations were currently under way.

(Q) The Chair asked if the inclusion of "impartiality" in the Objects of the Act clause would suffice the IBA?

(A) Mr Langa felt that the Objects of the Act needed to be expanded, and suggested that they use either Section 3(3) of the IBA Act, or the definition of impartiality as recommended by the Competition Committee.

(Q) Mr Nel (ANC) asked for clarification of the term "adequate finances" as outlined in their report pertaining to the remuneration of staff?

(A) Mr Langa gave no specific definition, but said that there must be adequate financial resources for the Authority to perform the tasks that it would be mandated, to pay the councillors and staff market-related salaries

(Q) Mr Nel (ANC) asked why they favoured giving the power of determining the contents of annual reports to the portfolio committee instead of the Minister?

Ms Smuts (DP) supported the suggestion of the IBA, stating that the Minister must not be the conduit through which this power was exercised. The Constitution was clear in giving separate powers to the Executive and Legislative branches of Government, and the role of determining the contents of annual reports was a role specific to Parliament.

(Q) The Chair asked if they were in favour of councillors receiving remuneration from positions other than the Council, and what about the conflict of interests that could arise?

(A) Mr Langa referred to Section 39(6) of the Competitions Act that dealt with remuneration. He felt the issue was whether it would allow the councillors enough time to properly perform the functions of the Council. It was thought Councillors must disclose any directorships or involvement's in other companies that they held. This would ensure that no conflicts of interest would arise, and create a more transparent selection process. He added that some responsibility must be placed on the councillor to exercise honesty about their involvement's.

The Chair noted that the exercise of honesty was not a sufficient measure, and stronger mechanisms were needed to address the issue of conflicting interests.

The meeting was adjourned.

Appendix 1:
SUBMISSION OF ORBICOM (PROPRIETARY) LIMITED ('Orbicom') TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATIONS ON THE SOUTH AFRICAN COMMUNICATIONS REGULATORY AUTHORITY BILL, 2000Thank you for the opportunity to make both written and oral submissions on the Bill before this Portfolio Committee.


('The Bill')


Introduction

1. Orbicom is a licensed broadcast signal distributor in terms of the Independent Broadcasting Authority Act, 1993 ("the IBA Act") as amended by the Broadcasting Act, 1999 ("the Broadcasting Act"), and is a member of the National Association of Broadcasters ("the NAB"). Due to the nature of our business and the extensive telecommunication processes which comprise broadcasting signal distribution, Orbicom has been exposed to regulation under both the Independent Broadcasting Authority ("the IBA") and the South African Telecommunications Regulatory Authority ("SATRA"). Orbicom accordingly has a vital interest in the regulation of broadcasting and telecommunications in the Republic.

2. At the outset, it must be emphasised that Orbicom broadly supports the main objective of the Bill, that is, to merge the IBA and SATRA, and replace them with a single regulatory authority in respect of both broadcasting and telecommunications to be known as the South African Communications Regulatory Authority ("SACRA"). This objective is desirable given the increasing convergence of broadcasting and telecommunications technologies and related services as well as the operational efficiencies that may flow from the merging of the BA and SATRA.


3. Orbicom also wishes to record its support and endorsement of the NAB memorandum on the Bill to this Portfolio Committee dated 11 March 2000 ("the NAB memorandum"), subject to the comments which follow. In particular, we agree that the main issues of concern in the Bill are the lack of certainty regarding questions of SACRA's impartiality, the adequacy of the provisions for the autonomous financial and administrative capacity of SACRA, and related legal and operational aspects of the Bill which are raised in the NAB memorandum. So as not to overburden this Committee with submissions already well set out by the NAB, we do not wish to repeat the submissions contained in the NAB memorandum. Orbicom rather wishes to make a separate and supplementary submission as a growing South African company with expanding interests in both telecommunications and broadcasting, domestically, internationally and on the African continent in particular.


4. We wish to stress that Orbicom is only one of the many major South African telecommunication and broadcasting network operators who are expanding their operations and services internationally by extending their networks into the African continent (including for example, Sentech, MTN, Vodacom, M-Net, the MIH group, Transtel and Eskom). As a developing domestic and international network operator, Orbicom is particularly concerned about the impact the Bill will have on South Africa's ability to integrate effectively in the global telecommunications market.


5. We believe that it should be an essential component of government telecommunications and broadcasting policy to promote South Africa as the central communications hub for Africa, and the gateway through which telecommunication and broadcast operators are able to gain access to the African continent and visa versa. We believe further that such a policy will have a dramatic positive effect on the domestic communications sector and on South African economy as a whole, given the growing scale and significance of the telecommunications and broadcasting industry globally, as well as the fact that all other major sectors of the economy are dependent upon efficient and developed telecommunication infrastructure.


6. In order to realise this critical policy goal, we believe that it is of the utmost importance that the South African communications regulator (for both telecommunications and broadcasting) is perceived and experienced by South Africans and the international community to be effective, responsive to industry developments and, not least, independent and impartial in the regulation of this critical sector of the economy. It is also vital that South Africa is seen as a leader in the developing world, on the African continent and in the global community at large. The creation of the new regulator, with effective administrative capacity to oversee the growth and development of South African operators provides us with an opportunity to realise these broader objectives.


Repeal of section 3(3) of the IBA Act and section 5(3) of the Telecommunications Act7. Orbicom opposes the proposed repeal of section 3(3) of the IBA Act1 and section 5(3) of the Telecommunications Act, 19962 ("the Telecommunications Act").3 Our opposition to the proposed repeal of these sections is primarily motivated by the potential adverse perception that may result from any legislation which appears to derogate from the independence and impartiality of the new regulating body in the communications sector. The importance of sustaining a robust independent and impartial regulator cannot be over-stated in the development and promotion of a dynamic and globally competitive telecommunication sector in the Republic.




8. Aside from the practical importance of sustaining a fair and impartial regulatory body in this sector, it is clear that this principle is underscored both in terms of the South African Constitution and in applicable international treaty obligations.


9. In addition to those directly related provisions of the Constitution guaranteeing the IBA's institutional independence and the related freedom of expression provisions contained in section 16 of the Bill of Rights, section 33 provides for "the right to administrative action that is lawful reasonable and procedurally fair" Similarly, section 34 of the Constitution provides specifically for the right to have disputes resolved by independent, impartial tribunals and forums, where this is appropriate.


10. The need for a functionally independent and impartial telecommunications regulatory authority is further evidenced by the fact that, under the present telecommunications regime of Telkom's exclusivity, the regulatory authority (currently SATRA) is regularly called upon to decide on highly contentious and sensitive issues relating to Telkom's statutory exclusivity. Failure to resolve such disputes fairly, efficiently and in accordance with applicable law impacts negatively on the development and access to critical new telecommunication services. The importance of a strong regulator is further increased by the general unsuitability of the ordinary courts of law in reaching quick decisions on difficult and technically complex issues that generally characterise the regulation of broadcasting and telecommunication.


11. No less important from a global perspective, any failure to ensure effective and impartial regulation of the telecommunications market carries the danger of placing South Africa in breach of our international obligations under the World Trade Organisation's General Agreement on Trade and Service ("GATS"). Following South Africa's re-integration into the world economy, South African became a committed member of the WTO and is accordingly bound by the General Agreement on Tariffs and Trade ("GATT") as well as GATS referred to above. South Africa has made specific commitments in respect of telecommunication services in terms of GATS.


12. We refer specifically to Article VI of CATS, which stipulates that in sectors where specific commitments are undertaken (which, in the case of South Africa, includes telecommunication services):


"Each member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner"13. In addition, paragraph 5 of South Africa's specific additional commitments for telecommunications in terms of CATS ("the additional commitments") provides that:




"The regulatory body [must be] separate from, and not accountable to, any supplier of basic telecommunication services. The decisions of any procedures used by regulators shall be impartial with respect to all market participants."14. While the State is not itself a supplier of basic telecommunication services in South Africa, through the executive arm of government, it has retained a significant stake in Telkom SA Limited ("Telkom"). It is accordingly submitted that the effect of paragraph 5 of the additional commitments is that the telecommunications regulator must be reasonably autonomous from the executive arm of the State in practice and in law. If SACRA is not able to sustain its functional autonomy from the executive arm of government, South Africa risks being perceived by the international community as contravening these important international commitments.




15. In sum, South Africa's international commitments under the CATS treaty require a functionally and legally independent and impartial telecommunications regulatory authority. On this basis alone Orbicom respectfully proposes reconsideration of the repeal of sections 3(3) and 5(3) of the IBA and Telecommunications Acts respectively.


16. We are aware that the requirements of legal independence and impartiality in the performance of its administrative functions will be imposed on SACRA by ordinary operation of law in terms of the constitutional and administrative principles and international obligations referred to above. Orbicom however submits that in the drafting of this important administrative legislation, Parliament should ensure that the substantive rights and duties of affected bodies are given content and direction in the express language of the legislation. It should not be left to the courts to fill in the gaps that are likely to be created if these guiding sections are repealed in the creation of the new communications regulatory body.


Separate Directorates for Broadcasting and Telecommunications17. Orbicom supports the establishment of separate directorates or sub-committees under the new SACRA Council for the regulation of broadcasting and telecommunications respectively. This position is motivated both by important legal and practical concerns based on our present experience. The respective areas of broadcasting and telecommunications have developed into highly complex activities requiring specific expertise both in relation to the differential regulatory framework of the respective underlying statutes as well as the rapidly developing technological changes. This approach appears to be consistent with the findings and conclusions contained in the recently commissioned report by Allan Darling, the former secretary general of the Canadian Radio-television and Telecommunications Commission, financed by the Canadian International Development Agency ("the Darling Report").




18. By virtue of section 192 of the Constitution, broadcasting will continue to enjoy a greater level of autonomy and independence from the executive and legislative branches of government than telecommunications. This is reflected in the differential obligations in relation to the policy directions of the Minister of Communications under the IBA and Telecommunications Act respectively. Essentially the telecommunications regulator is obliged to act in accordance with the Minister's policy directives from time to time while the broadcasting regulator need only consider such policy directives in the performance of its statutory powers. The greater relative autonomy of the IBA derives ultimately from its jurisdiction and powers to regulate content (such as language programming, local content in production and music etc.) while SATRA's jurisdiction is essentially limited to the means of communication (such as frequency management, radio and telecommunications equipment and the provision of related services).


19. For these reasons, Orbicom accepts that the asymmetric policy role of the Minister in relation to broadcasting and telecommunications implicit in the Bill, read together with the underlying statutes, is justifiable in the present circumstances. Orbicom believes that the most practical way of managing these distinct and different regulatory frameworks is through the establishment of separate directorates or sub-committees to be responsible for these respective areas of regulation. Accordingly we submit that the Bill should provide for distinct telecommunication and broadcasting sub-directorates falling under the general authority of the SACRA Council.


Conclusion

Orbicom believes that the advent of the Bill and the establishment of a single regulatory authority for the entire communications sector affords South Africa an important opportunity to embrace a regulatory structure based high levels of efficiency, robust independence and impartiality. In so doing, the regulatory structure will not only assist the growth and development of a strong domestic communication industry but will also go a long way in assisting the global integration of the domestic telecommunications

In summary, our submissions are accordingly as follows:


1. Orbicom agrees with the submissions on the Bill made in the NAB memorandum, subject to 3 below


2. Orbicom opposes the repeal of sections 3(3) and 5(3) of the IBA Act and Telecommunications Act;


3. Orbicom believes that the Bill should provide for separate directorates or subcommittees within SACRA in respect of broadcasting and telecommunications; and


4. Orbicom wishes to emphasise the vital importance of South Africa establishing a regulatory framework in relation to communications, which enables us to occupy a leadership position in the global context. Operationally, this means the promotion of South Africa as a communications hub in Africa and effective regulation of this sector by a robust regulatory authority. In this regard, it is crucial that South Africa complies with both international commitments as well as the applicable constitutional imperatives of independence, impartiality and fairness.


ORBICOM (PTY) LIMITED


Telecommunications Act.

15 MARCH 2000
Appendix 2:


PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATIONS by Dr. Sebiletso Mokone-Matabane

SENTECH
15 March 2000

1. Introduction

Sentech thanks the Committee for the opportunity to make a representation in respect of the South African Communications Regulatory Authority (SACRA) Bill. The issue of convergence of digital technologies is no longer in question and the regulatory regime in the country must reflect and anticipate future developments not only in broadcasting and telecommunications but also in the broader CT sector. South Africa can no longer afford regulatory regimes that are fragmented, tedious and the very antithesis of growth and development. Sentech firmly believes that a knowledgeable, stable predictable regulatory regime is essential to the development of the information society in our country.
The submission by Sentech on the various issues it wishes to table before the committee is set out below:

2. Constitution of and appointment of councillors to Council

5 (1) Sentech supports the proposed number of councillors for the Authority. Should the number be increased, it must not exceed nine. Sentech believes that a large number of councillors will be cumbersome and will not necessarily improve the work of the Authority. Sentech supports an adequate competently qualified and trained support staff at all levels that will assist the Council in its work.

3. Disqualification

6 (f) Sentech proposes that greater clarity must be provided for what is meant by "controlling interest or any substantial financial interest". It is generally acknowledged that in some cases controlling interest does not necessarily correlate with the highest percentage of interest in a venture. It is also not clear what should or could be considered "significant" interest by parliament or the Council.

4. Terms of Office
7 (1) (b) and (c) Sentech proposes that parliament must prescribe the manner in which the Council must designate how its members are to determine its terms of office. Sentech believes that in so doing, it will not be necessary for the Minister to do so. Sentech proposes that Section 7 (1) (b) and (c) should be deleted and replaced with provisions on the same issue as set out in the BA Act section 6 (1) (c) and the Telecommunications Act section 10 (2) (c) (i). The appointment of Council members is the task of the President on advice from parliament. The involvement of the Minister in the designation of terms of office would violate this important principle.

5. Remuneration

10. Sentech has no difficulty in this except to say that the remuneration must be consistent with the tasks and responsibilities of the Council.

6. Staff

14 (3) Sentech proposes that the committee should change this section to allow the Council to pay its employees salaries and benefits consistent with that of the private sector. This flexibility is needed because SACRA can hardly expect to retain its staff for long if the remuneration is far lower than that paid in the private sector. Without this flexibility, SACRA will, like its predecessors, IBA and SATRA, remain largely a training ground for the sector and never reaching optimal productivity levels due to the transient nature of its staff. The cost of training staff both locally and internationally is very high and every effort must be made to retain the expertise within SACRA.

7. Financing of and accounting by Authority

15 (1) Sentech is very concerned about the level of funding of the Authority. The tasks to be undertaken by the Authority and the manner in which they are to be carried out are set-out in both the BA Act and the Telecommunications Act. The transparent and participative processes that are in the public interest do have financial implications. The monitoring of broadcasting licensees is also costly if it is to be done correctly. It is imperative that the Authority is adequately funded so as to undertake its tasks professionally and efficiently. Undue delays by the regulator in taking decisions often cause irreparable financial damage to the sector members thus discouraging investment in the industry. Most of the delays have been caused by inadequate staffing and lack of adequate expertise in some areas of international policies and regulations that South Africa is obliged to comply with as a signatory to multilateral protocols

SACRA operates within a framework that is in part internationally regulated. It is Imperative that members of Council and staff attend for examples. meetings of the International Telecommunications Union, WTO. WIPO, Commonwealth Broadcasters Association, African Telecommunications Union, and regional and continental meetings of regulators. Without the necessary participation in policy and regulatory development at a global or continental level, the sector in South Africa will be negatively affected.


Sentech urges parliament to approve adequate funding for the Authority because the Authority cannot possibly undertake the work it is tasked to do without adequate staff And with the ever present threat of the staff leaving to join the private sector This transient nature of staff is also made easy because there is no provision that prohibits Council members and senior staff to observe a period of time after leaving the Authority before they could join the private sector in the same industry.

If parliament is unable to approve an adequate budget for SACRA, Sentech proposes that the Authority should then be allowed the use of the monies from license fees it collects to defray its operating costs.

8. Conclusion

Sentech again wishes to thank the Committee for the opportunity to make an oral representation. We hope that the issues presented will be duly considered before a recommendation is made to parliament in respect of the SACRA bill.

 

SOUTH AFRICAN COMMUNICATIONS REGULATORY AUTHORITY BILL

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