South African Communications Regulatory Authority Bill: hearings (afternoon)

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Communications

15 March 2000
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
15 March 2000
SOUTH AFRICAN COMMUNICATIONS REGULATORY AUTHORITY BILL:
HEARINGS

 

Documents Handed Out.

National Association Of Broadcasters Submission on SACRA Bill.
National Association Of Broadcasters Memorandum on SACRA Bill
National Association Of Broadcasters Proposed Amendments on SACRA Bill
Mobile Telephone Networks Comments On Draft SACRA Bill
Telkom Submission on SACRA Bill

SUMMARY
The necessity for a merging of the two regulatory authorities was generally acknowledged. The shortcomings of a formal merger Bill which simply combined the two existing Bills without properly looking at crucial substantive and constitutional issues, financial viability, institutional independence, operational aspects and "schizophrenic" ministerial involvement in licensing processes, were exposed. It was hoped that the new regulatory authority would be an organ of state and not a business. The issue of licensing fees and service fees was discussed. The inclusion of a restraint of trade clause in the Bill was suggested.

MINUTES
National Association Of Broadcasters submission
This submission was given by Mr Anton Harber, the chairperson of the National Association Of Broadcasters (NAB) together with Randall Abrahams of YFM, the vice chairperson of NAB (see document).

Discussion
Ms S Vos (IFP) noted that the NAB had looked at the IBA Act with regard to the powers and functions of telecoms where the Minister is not involved in licensing and the IBA could sit as ministerial policy directors. This contrasted with the Telecommunications Act. Here the very explicit intentions were for the Minister to be directly involved in many of the licensing processes. She asked what were NAB's suggestions on getting around this in a merged regulatory council?

Ms Justine White, legal advisor for NAB, said that ultimately Parliament would have to make a choice about how it ensured proper regulation of a converged environment. Whilst it was still possible to separate broadcasting and signal distribution from telecommunications, this distinction was becoming more and more blurred. The reasoning for merging the two authorities was to anticipate the possible future difficulties in drawing the distinction. A problem was that the level of independence provided for in the Telecommunications Act was very unlikely to be in accordance with the provisions of Section 192 of the Constitution. Thus if one wanted to reduce all the powers of the merged regulatory authority to all be the same as the Telecommunications Act, this would probably not be constitutional. NAB envisaged a two-step process whereby Parliament first made certain amendments to the Telecommunications Act. Secondly it would put in place substantive convergence legislation, as opposed to trying merely to straddle the two current pieces of legislation.

Ms D Smuts (DP) said that the very notion that one could regulate broadcasting (which was an infringement of free speech and free media rights) rested on the idea of the "scarcity doctrine" which related to the electro-magnetic spectrum and to terrestrials. This was where the key definition would come in. On the day when broadcasting was no longer subject to scarcity constraints, the case for regulation would altogether fall away and one would then not have broadcasting regulation. She agreed with the point that Parliament should first make certain amendments to the Telecommunications Act in order to liberalise the telecoms market.

The representative from the Department said that there were processes, in which it was involved, that would have an impact on the powers and functions of telecoms as well. It would in due course be tabling a bill, which would amend the Telecommunications Act to allow for a second national operator. In addition to this it had looked at convergence and a public discussion on this would start soon. This would lead to policy and legislation on convergence and how it would be treated. These plans were in place already. Thirdly it had been pointed out that there would be four laws which affect the new regulatory authority. The consolidation of these laws into one law had already begun which would make it easier for the regulator to apply the laws. Thus within a reasonable period of time it would be possible to deal with all the issues that were being highlighted.

Mr R Pieterse (ANC) asked for NAB's comments on funding (particularly with regard to the service fee) as suggested by SATRA and supported by IBA.

Mr Harber said that the overriding point which their presentation made was that there had to be adequate funding. They had not been overly concerned with the mechanisms - whether it was directly from the fiscus or charging service fees. This issue would probably fit into much broader policy discussions about how these things were handled.

The Chairperson, Mr N Kekana, asked whether the NAB would be able to consult its membership and get its official position on service fees at a later stage. He explained that SATRA's proposal was that they were not interested in licence fees. SATRA proposed taxation of the industry in the form of service fees, which would go a long way in helping them to be efficient - since the industry needed an efficient regulator.

Mr Harber said that the NAB would obviously be concerned about paying such fees on top of the licence fees. He undertook to canvass the membership on this issue in the next few weeks and report to the committee.

Mr Pieterse asked in relation to the claim that there was not enough funding for either SATRA or IBA to execute their mandates, how much money did they overspend on their budget? Had they at least used up their full budgets?

The IBA said that it had to operate within the allocated budget. In previous financial years the budget had been exhausted and it was expected that the budget would be exhausted this year as well.

The Department representative said that there had been overspending by the IBA to the extent of about R5 million. This had necessitated the need for the IBA to cut staff in order to subsequently operate within the limit. The point was that the authorities did require resources and Parliament had to pay some attention to this.

The Chairperson said that Parliament would not simply encourage overspending which would result in the authority running back to Parliament for more funding.

Mr William Currie (SATRA councillor) said that licensing was a complex matter in terms of the Telecommunications Act because of the Minister's involvement on key licences and because much of the Act revolved around the position of Telkom and its period of exclusivity in the gradual liberalisation of the sector. He felt that there had to be an equivalence in the making of regulations so that one would not have a different set of provisions in the IBA Act to those in the Telecommunications Act as to how the new Authority would go about making regulations. There should be one method for making regulations so as not to cause confusion when dealing with a broadcasting matter as opposed to a telecommunication matter.

An opposition party committee member agreed with the need for convergence. One uniform Bill which promoted standard procedures was needed since conflicting provisions in legislation which was not inter-operable could result in litigation.

Given that everyone agreed on the need to consolidate the laws, Mr Harber questioned why a law should be passed that amended two others when they would have to be reconsidered in the not too distant future and consolidated. "Why not take a step forward now and in this Bill consolidate and replace…. and remove the contradictions and potential problems".

The Chair said that whilst there was the intention to do this, "the wheels of law moved very slowly". There was an option either to rush into convergence or gradually move into it. The latter had been chosen. Until there was a debate and discussion on the issue of convergence with both industries, it would be difficult to simply throw away the two laws.

Ms Smuts wanted final clarity on the NAB's preference on the matter of independence. She wanted the isolation of the exact elements which they were looking for in an independence clause. She said that impartiality was one of them, and the other was the issue of freedom from interference by other entities.

Ms White agreed with this. She added that the NAB submitted that authorities such as SATRA and the IBA (or SACRA as the new authority would be named) should also be independent and impartial from industry-bias and industry-favour. It was thus trying to ensure, in line with international trends and with the Constitution, that in the regulation of broadcasting in a converged environment it made sense to look at independence and impartiality from industry-bias and industry-favour.

Mobile Telephone Networks (MTN) submission
Mr Graham de Vries, the Legal and Regulatory Advisor for MTN, presented (see document).

Discussion
Ms Smuts asked whether MTN had greater clarity than she had after the previous day's public hearing about what the Cabinet was up to with the 1800 Megahertz frequency issue. This was not answered.

Ms M Magazi asked whether MTN felt uncomfortable about having to be accountable to the Minister and not the President.

Mr de Vries said that what MTN was trying to communicate to the committee was not that they were uncomfortable but that in terms of independence, if a council, as a statutory body of Section 192 of the Constitution, was appointed by the Portfolio Committee, then its reporting should be directly to the Portfolio Committee as well.

A committee member noted that Mr de Vries had just said that the accounting officer had to account to the President via the Portfolio Committee. In companies the CEO accounted to the Board of Directors. In the member's opinion the councillors here would be the de facto Board of Directors of this body. In terms of the Public Finance Management Act, Clause 86 spoke about the appointment of accounting officers. The accounting officer of a department or constitutional institution had to be the CEO of that institution. Why was Mr de Vries therefore arguing that an accounting officer of body A had to be accountable to a separate entity - body B? The accounting officers of SACRA had to account to the councillors of SACRA and not to the President.

Mr de Vries said that the point was well taken. What MTN was trying to convey to the committee, was that its first prize for the particular body would be for self-funding. The second prize would be for direct appropriation of funds from Parliament. It believed that should money be directly appropriated to this body from Parliament, the chief accounting officer should therefore report to the same body directly on those particular issues.

The member said that Mr de Vries had not addressed himself to the functioning of the council, which in a way has assumed the duties of a board of directors. Why was it that the CEO had to account to Parliament and not to the councillors? He asked whether Mr de Vries was putting an emphasis on something else other than what the members understood to be guidelines from the Public Finance Management Act?

Mr de Vries did not profess to be an expert on the Public Finance Management Act (PFMA). He said that if the notions put to the committee were directly in contrast with those in the PFMA then this was unfortunate.

The next member referred to the issue of funding and the "first prize". He felt that the concerns of the committee and of MTN were different. There was a concern on the one hand for independence from government. There was also a concern about independence from the industry. In relation to the "first prize" that the regulator should be self funded through service fees, if this occurred one would have something like the United Nations where you had the big voice paying big money, calling the shots and subtly controlling the regulator. The regulatory would thus gradually lose its independence in this way. This danger had to be noted.

Mr de Vries said that this was not the intention behind the suggestion of self funding. The suggestion was that the regulator should be adequately funded. He suggested that there were ways and means of adequately funding a regulator. Some of the problems which MTN had at the moment stemmed directly from the regulator not being able to allocate the funds necessary to do a particular project. He said that he understood the member's concern and believed that the concern could be addressed with protection mechanisms.

The chairperson asked whether MTN would be prepared to pay more in terms of service fees as well as licence fees.

MTN would not like to see service fees on top of their current licence fees being paid. This question would be taken to Mr de Vries' principals.

Ms Vos asked what MTN's views were on the universal service fund and the agency in relation to what was laid down in the Act. Was the Universal Service Agency doing what it was supposed to be doing as laid down in law.

This question would also be taken to Mr de Vries' principals.

The chairperson said that the feedback from MTN regarding service fees would be welcomed.

Telkom submission
This was presented by Mr Victor Moche, Group Executive for Telkom (see document).

Discussion
Ms Smuts expressed the view that the regulating authority should not have to report to the Executive but to Parliament and its funding should come from Parliament.

Mr Moche said that there were a plethora of institutions that are independent and intended to deepen our democracy. The tendency was to keep creating more. There is a Public Protector, an Auditor General, and "God knows what else". This process went on and on. These were all fine, necessary and absolutely essential for "a nascent democracy still really in its diapers". The tendency could be to keep adding "icing and colour" to all this. Primarily he felt that if one had a vigorous and strong Parliament and a clear separation of powers, as created in the Constitution, one would be much of the way there. He however said that there was an integrated perspective towards the state and organs of state. Parliament was but one and was not necessarily more circumspect or wiser than the Executive but they had a specific role. If Parliament was vigilant and vigorous enough in exercising that role, there should not be a problem.

Ms Smuts said that she had been immensely unhappy with the Administrative Justice Act that had just been passed. Mr Moche had said in relation to this Act, that there had been an attempt to impose the creation of internal standards. Did this flow from those sections which referred to the exhaustion of internal remedies before people go to court?

Mr Moche said that it did.

Ms Smuts asked in terms of the SACRA Bill or any future amendments made, should the creation of such rules and standards be required by law before anything else was done?

Mr Moche said that it was difficult for him to respond "yes" or "no" to this question because the law was supposed to contain only certain things. In his view the requirement already existed in the Administrative Justice Act. There was also a process under way initiated by the regulator currently, to get exactly to this point. He felt inclined to say that there was no need to actually indicate in the law that such was necessary. He did not know what good governance meant if one did not have these rules in place. Any institution, which was established should undertake to have these rules and standards laid down and published as an initial step.

Mr T Makunyane (ANC) referred to the critical processes mentioned in the Telkom submission. Mr Moche had noted that there was a time when SATRA was operating without having clearly defined procedures. This was before the established committee within SATRA decided to come up with those rules and procedures. He asked whether Mr Moche was now suggesting that it be included in the Act that one of the first things which needed to be embarked on was "defining the standards".

Mr Moche said that given that there was a process under way already, it would probably be redundant to put this in the law. Perhaps via an administrative Act of Parliament, the regulator should be required to complete that process by a given date.

Mr Currie referred to the points around the rules and procedures committee. He wanted to reinforce what Telkom was saying. He said that an amendment to the regulatory section of the Telecommunications Act was required for Telkom's suggestion on the drafting of administrative rules and procedures. There was no point in proceeding with these rules and procedures unless it was certain that they would have a legally binding effect. These could take the form of "a code of federal regulations". SATRA was looking at this. In the IBA Act this was catered for in section 78(d) where it spoke about "any matter, procedure or form". This was proposed to be included as an amendment to section 96 of the Telecommunications Act. Issues such as having a registrar within SATRA to deal with documentation would not fall within such rules and would be a purely internal rule. However with an example like section 53 which has been a source of conflict between Telkom and the regulators, it would be useful to have a set of proceedings prescribed there as regulations that everyone knew of and which had some legal force.

Mr Moche said that there was no need to amend the law. He believed that it was possible under current legislation to achieve what was necessary.

A Departmental representative said that one had to be careful when deciding to put these rules and processes into law since there were administrative justice processes and the constitutionality aspect of just administrative action which also had to be taken into consideration.

Mr Moche felt that the participants in the discussion were missing the point. What Telkom in essence was asking for was an internal management system. The question was whether to include some kind of time frame within the legislation or not.

Mr Currie felt that one had to distinguish between three levels of rules and procedures. The one was internal rules - what Mr Moche was referring to as internal systems and management. For example the procedure where a registrar received documents which were handled in a certain way or distributed to the relevant departments or if confidential would be dealt with in another way. These rules were only required to be communicated to the industry and govern the internal operations and do not have to become regulations.

Secondly there are proceedings which the individual provisions of the Act require to be prescribed. Thus for example certain proceedings relating to licensing have to be prescribed as regulations. Many of these have been prescribed and some still need prescription. These would be done under section 96.

Thirdly there are proceedings which are not adequately dealt with in a particular section such as section 53 where it would be useful to have a set of proceedings prescribed as regulations. Nothing in section 53 said that one had to prescribe regulations on these matters. Related to this, in terms of the Administrative Justice Act, there were in any case elements which needed to be covered. SATRA was simply saying that it would be helpful in terms of getting the job done that one did not always have to wonder whether or not it could do certain things. It would thus be useful for section 96 to be amended by including what the IBA Act already had in terms of section 78(d).

The chairperson said that this issue would be revisited but wanted an indication from IBA and SATRA as to whether these rules of procedure did exist. He felt that there would be a need at some stage to sit with the regulator
and invited players in both the broadcasting and telecoms industry to discuss specifically whether the regulator was effective in realising its mandate. This had never been done before and as a result, some of the matters being picked up between Telkom and SATRA now were issues that the committee was completely in the dark about. It was only after hearing from Vodacom that the committee found out that the 1800 megahertz issue had been on the SATRA agenda for almost a year without any action being taken.

 


As Parliament, playing an oversight role, these were some of the things, which needed to be looked at closely since it seemed that there might be deep-seated problems and arguments which were taking place in the corridors of operators and the regulator which no one was really aware of. When the committee had held a discussion with SATRA in the past, two new councillors had been given the task to come up with rules on very simple procedures. The committee took it for granted that this would happen. After three years the committee was alarmed to hear that there were no internal rules or procedures on how things got done.

The meeting was adjourned.

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