Convergence Bill: public hearings; ICASA Councillor interview shortlist

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Communications and Digital Technologies

24 May 2005
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
24 May 2004
CONVERGENCE BILL: PUBLIC HEARINGS; ICASA COUNCILLOR SHORTLISTING

Chairperson

: Mr K Lekgoro

Documents handed out

ICASA Powerpoint presentation
Competition Commission presentation
Competition Commission submission
ICASA submission
ICASA Councillor shortlist (see Appendix)

SUMMARY
Submissions were heard from the Competition Commission and Independent Communications Authority of South Africa on the Convergence Bill. The interview short list for an ICASA councillor was finalised. Interviews are on 31 May 2005.

MINUTES
The Chairperson welcomed the Deputy Minister of Communications, Mr Roy Padayachie, and the delegation from the Independent Communications Authority of South Africa presentation (ICASA) and the Competition Commission.

Competition Commission submission on Convergence Bill
Mr Fungai Sibanda, the Commission's Senior Analyst, Policy & Research Division, pointed out that issues of interconnection, facilities leasing, number portability, carrier pre-selection were the cornerstone of a competitive communications sector. The Commission expected convergence to stimulate competition and allow flexibility and adaptability. However market boundaries were likely to become blurred posing a challenge for regulators. Thus proper regulation of these activities was paramount. The Competition Commission was the custodian of competition across all sectors. It had powers to investigate abuse of dominance. He warned that this Bill must not allow concurrent jurisdiction by sector regulators of competition matters. He referred to Adam Smith Institute Report on Concurrent Jurisdictions commissioned by the Government which had recommended that the Bill should provide for a clear division of responsibility by leaving competition provisions to the Competition Act. He cited examples of countries where competition authorities are responsible for competition regulation while sector regulators are responsible for technical and economic regulation.

The clause in the Bill that the Commission found to be problematic was Clause 63(1), (3) and (5) which deal with competition matters. The clause gave the connotation that the Bill trumps over the Competition Act. It appeared that the Competition Act would be invoked only if the Bill failed to address a particular competition matter in the sector. The Competition Commission found this unacceptable. It suggested alternative clauses and urged that concurrent jurisdiction of competition matters be removed in the communications sector.

Independent Communications Authority of South Africa (ICASA) submission
The Chairperson of ICASA Mr M Langa was accompanied by Councillors Ms N Bulbulia, Ms T Cohen, Mr P Mashile, Mr Z Masiza, Mr L Mtimde, Ms J Manche (CEO), Mr A Doyle, Ms B Mokhele, Ms N Mbono and Mr P Moleele (Broadcasting Division), Ms Lee Ann Cassie (Telecommunications division).

Mr Langa said that Bill was the most important legislation since the 1996 Telecommunications Act and 1993 Independent Broadcasting Authority Act. The Bill aimed to consolidate legislation governing the Telecommunications Sector and to enable the convergence of technologies in that sector.

He felt that that the timeframes for the Bill were onerous. The Convergence Bill and ICASA Act Amendment Bill were inextricably linked and needed to commence simultaneously. ICASA's submission needed to be considered seriously as it was going to implement the Bill. He outlined ICASA's suggested changes to the objects of the Bill in Chapter 1 and Chapter 2 dealing with policy and regulation, Chapter 3 (Licensing).

Mr Langa said that Chapter 3 was the engine that drives the Convergence Bill and "if the engine did not work, the rest of the Bill would not work". ICASA proposed the Malaysian Model of Regulation which allowed for two types of licences, Class and Individual Licences. Only activities with sufficient economic or social impact were individually licensed.

He noted that Clause 10 of Chapter 3 dealing with the contentious issue of local loop unbundling, currently negated a public process for the amendment of licences. He referred the Committee to ICASA's written submission which made detailed proposals on substantive and procedural issues on all the chapters and schedules of the Bill.

DiscussionMs D Smuts (DA) commented to the Competition Commission that it certainly was the eventual goal to move to straight competition law and Competition Commission regulation. Perhaps they had a more optimistic view of the degree of competition of the sector in the short term than she did. There was a broad view abroad and elsewhere that the ex post regulation that was practised by the regulator was in fact too slow for this sector. The cases the Commission brought were heavily based on evidence so in this sector the damage would have already been inflicted by the time the ruling was made. These were some of the comments that she had heard in the UK. Due to this, it was argued that there was a need for a faster resolution mechanism. The whole idea of forward looking regulation which was based on the idea of significant market power (SMP) where one first had to define your market. Whereas the idea of competition law was based on things that have happened or mergers and acquisitions about to happen where you can clearly see your dominant market power. SMP tries to evaluate where you are going to have a phenomenon that is going to create problems for competition - and we really have those problems. She welcomed the introduction of competition-type powers for ICASA but one thing that seemed to be missing here which was not clearly spelt out - apart from the lack of consonance with the definitions in the Competition Commission law which of course must be the same - is the idea of the market. Since there is concurrency still and she believed they must retain concurrency, she believed that the Competition Commission could help ICASA to define those markets. Then you would have a clear idea of where your SMP lies.

Ms Smuts saw the second big matter as Chapter Three which dealt with the licensing framework. She welcomed ICASA's approach which seemed to be the way the Malaysian Act worked. She believed that for each of the categories of big networks, network service/connectivity and content, the regulator should have the discretion to identify who will have individual licences and for the rest, they are class licences which you should just be able to register. Then there should be whole categories of activity which you do not need to register. The whole idea of convergence is to open it to competition. She also welcomed ICASA's suggestion that they drop the application services category altogether. This is what Malaysia was thinking of doing after four years of its Act being in operation.

The third issue was Chapter Two which dealt with the matter of where regulatory discretion and power should lie. Once one agreed that one was dealing with only the big network licences in terms of individual licences, then surely that would be all that the Minister was interested in dealing with. The Department had made it clear that market structuring power is political and that is what they want to do, so that is what ministerial policies and policy directions would deal with. However, a lot of what was in this chapter had been inherited from old laws and was no longer apposite here. Once everyone was clear about what the licensing framework ought to be and what the economic goals are, then Chapter Two should fall more easily in place and then they could engage in discussion with the Ministry about what is it that the Minister wants to achieve by retaining so much policy-making power. It will eventually become a very difficult issue because the free speech that underlied broadcasting had begun to underlie lot of things in the era of convergence.

Ms Magazi (ANC) asked what made the Competition think that they were the competent body to regulate competition in the Telecommunications Sector.

Mr F Sibanda replied that the role of the regulator was to look at issues such as licences and related issues, but competition matters were better left to the Competition Commission as guided by the Competition Act of 1999.

Ms Z Ntuli, Manager, Competition Commission Compliance Division, replied that the Competition Commission was competent enough to deal with competition issues, the Commission was established after a broad consultation process.

Mr Maziya (ANC) enquired whether the Competition Commission had the technical understanding of the sector. He noted the Commission suggested that ICASA should not be allowed to investigate competition issues but should wait for a reaction by the Competition Commission. He said that ICASA alleged that there was a problem with Section 192 of the Constitution without outlining the problem. Could ICASA enlighten them. ICASA had suggested restrictions on the minister on certain policy matters and formulation especially Universal Services policies. He needed clarity.

Ms Ntuli replied that the Commission were not experts in the in the Telecommunications, as well as the Motorcar industry and the Agriculture sector, but had they regulated competition in those industries.

Mr Langa replied that ICASA had no problems with Section 192 of the Constitution.

Ms Nkuna (ANC) noted that ICASA had mentioned the separation of powers. She asked which areas overlapped. If the Minister consulted ICASA, was there any obligation on the part of ICASA to consult with the Minister in return.

Mr Langa replied that Chapter 2 , Section 3(1)(a) to (g) dealt with the overlap.

Mr L Mtimde, ICASA Councillor, replied that Section 92 (e) was the area with unintended consequences. ICASA implemented laws as guided by its mandate to work within the law.

Mr K Khumalo (ANC) said that competition was associated with matters such as retail, but ICASA covered the telecommunications sector. He asked at which point did the Commission distinguish if an issue was a competition or a regulation issue. He enquired about the point at which ICASA could say the Minister could not intervene in policy issues that affect telecommunications. He said he was not sure whether the Malaysian model was suitable for South African conditions

Ms Ntuli replied that the Competition Commission received lots of complaints from the telecommunications sector but they had been trying to sort them out with the Regulator. Furthermore, boundaries were not clear-cut. The Commission looked at issues of collusion and price fixing while the regulator dealt with technical issues and licensing. As an example, the Commission was currently dealing with a case involving Telkom.

Mr A Doyle, ICASA Senior Manager, Policy Development, Research Department, replied that ICASA had only used the flexibility of the Malaysian Model but the South African model was totally different from the Malaysian one.

Ms Magazi (ANC) said that the Bill clearly distinguished between the role of the Minister and the role of the Regulator, adding that the two roles were clearly separated.

Mr Sibanda replied that the Commission was guided by Chapter 72 of the of the Competition Act of 1999.

Dr Tracy Cohen, ICASA Councillor, said that ICASA needs an audit of what needs to be done concerning the separation of powers. ICASA needed a formalised review from the Minister on the oversight role of the Minister.

Mr Langa said that the Competition Commission was very important. ICASA would like to sit with the Commission and discuss issues of mutual concern.

Ms Ntuli replied that the Competition Commission would sit down and discuss issues of mutual concern with ICASA.

Shortlisting nominations for ICASA councillor
The Chairperson asked the number of years that the new councillor is expected to serve, adding that the Chairperson serves for five years and the councillors serve four years. He added that asked for Legal advice from the Parliamentary Legal advisor and the state law advisor, he then said that their replies were contradictory to each other. He suggested that the Committee should invite them to the Friday the 27th May, so that the Committee could agree on one interpretation. The Committee then agreed to the Chairperson's suggestion.

Mr R Pieterse (ANC) asked whether the Committee had agreed on how many names would be shortlisted by the Committee.

In reply to the Chairperson asking Members to suggest a ceiling, Mr Pieterse suggested a shortlist of six names.

The Chair asked if it was possible to interview six people in one day.

The Chairperson said that altogether the Committee had short-listed eleven names. They had to eliminate five names, which would leave six.

Ms Smuts suggested that the Committee could shortlist eight names.

The Chairperson asked all parties to reduce their names.

The final shortlist comprised of Ms N Tshabalala, Mr M Zokwe, Ms M Wilson, Mr G Patrick Ms T Mampane and Mr B Ntlha. Interviews will take place in Cape Town from 9 am Tuesday 31st May 2005. Once the interviews have taken place, Parliament would make recommendations to the President on the appointment of a councillor to the Icasa Council.

Appendix:
SHORTLIST: CANDIDATES FOR APPOINTMENT ON THE COUNCIL OF THE INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA (ICASA)

Ms NJ Tshabalala, Mr MM Zokwe, Ms M Wilson, Mr G Petrick, Mrs TC Mampane and Ms BP Ntlha were shortlisted on Tuesday, 24 May 2005 and will be interviewed in Parliament, Cape Town, from 09:00 on Tuesday, 31 May 2005. Once the interviews had taken place, Parliament will make a recommendation to the President on the appointment of one councillor to the Icasa Council.

Enquiries: Rita Schaafsma, tel 021-403-3742 e-mail:

[email protected] or Tyhileka Madubela, tel 021-403-3713; e-mail: [email protected]

 

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