Convergence Bill: hearings

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
23 August 2005
CONVERGENCE BILL: HEARINGS

Chairperson:

Mr M Lekgoro (ANC)

Documents handed out:

South African Post Office submission
Internet Service Providers’ Association Submission
Internet Service Providers’ Association PowerPoint Presentation
e.tv Submission
Media Development and Diversity Agency PowerPoint Presentation
Media Development and Diversity Agency Submission on Convergence Bill
Ulwazi E-Learning Project PowePoint Presentation
Ulwazi E-Learning Homepage (www.ulwaziproject.co.za)
Convergence Bill [B9-2005
Scheduled hearing dates on Convergence Bill: 30, 31 August, 6, 7, 9, 12, 13 September

SUMMARY
The Internet Service Providers’ Association (ISPA) noted its concerns with the Bill, emphasising the difficulties created by lack of clarity, particularly in respect of licence conditions and definitions. The lack of capacity of the regulator was cited as a major problem, and the anti-competitive practices currently experienced were noted.

The South African Post Office (SAPO), a Value Added Network Services (VANS) licencee, reiterated the concerns regarding clarity, and identified the areas of application services, provisions relating to content, procedural aspects of licensing, facilities leasing, interconnection and contributions to the USF. Detailed recommendations were submitted to rectify these issues.

A delegation from e.tv emphasised the lack of a comprehensive convergence policy, and the difficulty of considering the Convergence Bill in the absence of the ICASA Amendment Bill. The lack of a clear underlying national policy had caused many of the problems highlighted by other submissions as well. Once again, the capacity of the regulator and the need for clarity in definitions and to prevent forum shopping were raised as concerns.

The Committee was particularly concerned about the issue of forum shopping, and anti-competitive practices. It was agreed that the capacity of ICASA was a serious problem, and Members noted that the poaching of ICASA staff had contributed to this.

The Ulwazi e-learning Project that promotes interactive e-learning through broadband connectivity, stressed that licences should be granted for educational projects. They felt that these licences had to be zero-rated. Access to shared resources in private networks would empower both teachers and learners. The current problem lay with Section 41(2) of the Telecommunications Act, which should be repealed in the Convergence Bill.

The Media Development and Diversity Agency (MDDA), a development agency that assists in creating an enabling environment for media, stressed that Parliament should consider including clauses from the Independent Broadcasting Authority Act dealing with limitation on ownership that had not been carried over to this Bill. Proposed amendments to these clauses had been debated at ICASA hearings. The Convergence Bill should utilise the same definition for community broadcasting as that in the Broadcasting Act. There was a need to strengthen clauses relating to the South African content. They also expressed concern about Section 9(1)(e) of the Bill as it could lead both to delays in licensing and adversely impact on freedom of expression.

The Committee sought clarity on private telecommunications networks (PTN) and the issue of contiguity of land as it appears in Section 41(2) of the Telecommunications Act, and the definition for community broadcasting. The proposed merger between MDDA and the Universal Service Agency was also brought up as was the Broadcasting Monitoring and Complaints Committee.

MINUTES
Internet Service Providers’ Association (ISPA) submission
Mr M Molosiwa (Joint Chairperson) introduced the Committee to the history and membership of ISPA, and detailed its code of conduct and social development programme. A Train the Teachers programme had been launched in 2001, in order to provide basic computer skills to teachers in schools with new computer centres. Rural schools had been particularly targeted, and the project was entirely funded by ISPA’s members.



Anti-competitive practices were difficult to deal with, and complaints took months or years to be dealt with. Other legislative concerns included the e-rate, interception legislation and film and publication legislation. It was clear from this that definitions had to be completely clear, and the framework for issuing licences had to be as simple as possible. The licensing framework had to be implemented and policed in an even-handed way, and strong protection against anti-competitive practices was essential.

Problems with the Convergence Bill were the apparent inclusion of application services, and Clause 7 in particular was very problematic. The Bill should also be more clear on the fact that content would not be regulated by the Bill. In terms of resellers, it was proposed that resellers be included in the section on the terms and conditions applicable to other licences. ISPA also felt that some of the functions currently assigned to the Minister should fall within ICASA’s ambit, namely new technologies and licence fees, and the date from which ICASA could license communications network services should have some deadline.

The class licence process as outlined in Clause 19 seemed repetitive in terms of cancellation, and the requirement for licence holders to inform the authority of material changes was unworkable. Clause 19 should be deleted entirely, and the heading of Clause 14 be amended to accommodate class licences. In terms of competition and dominant operators, ICASA should be able to include fair competition clauses in individual licences, and interconnect rights had to apply to communications service licencees as well. Contributions to the Universal Service Fund (USF) should not be linked to turnover, but to turnover derived from the provision of licensed services. Transitional provisions should be tightened and the definitions clarified. The two most critical issues were that licensing should be as simple as possible, and interconnection rights were key for fair competition.

South African Post Office (SAPO) submission
Mr T Xiphu (Group Executive, Corporate Services) introduced the SAPO, noting that it held a Value Added Network Services (VANS) licence.

Mr L Perlman (Legal Advisor) gave detailed comment on the issues in the Convergence Bill that were of particular concern to the SAPO. These included application services, provisions relating to content, procedural aspects of licensing, facilities leasing, interconnection and contributions to the USF. See submission for details of the SAPO’s specific recommendations in respect of these concerns.

e.tv submission
Mr M Golding (CEO) introduced the e.tv concerns, and emphasised that the submission was made from the perspective of a broadcaster, and that no comment had been made on areas of the Bill that dealt solely with telecommunications.

Ms B Keene-Young (Channel Director) emphasised the need to ensure that convergence legislation did not create any unintended hardship or ambiguity, and that it was constitutional. It should also ideally be the product of a national convergence policy process. The concerns raised about the Bill stemmed largely from the fact that it did not provide the same regulatory certainty as the IBA Act, and many of the policies and procedures set out in the IBA Act did not appear in the Bill.

The absence of a national convergence policy meant that the Bill conflated two pieces of legislation, rather than creating a single statute regulating convergence. The absence of the ICASA Amendment Bill severely constrained public participation in the process. The Bill contained numerous references to amendments to the ICASA Act, and it was impossible to consider these provisions at present. Numerous crucial provisions in the Independent Broadcasting Authority (IBA) Act did not appear in the Convergence Bill, and it was possible that these provisions were dealt with in the ICASA Amendment Bill. The Minister’s powers were a further concern, and the Minister should not have the power to approve licence conditions and determine the frequency plan. The policy directions issued by the Minister should be of general application on matters of broad policy, and the Minister should be required to consult the regulator prior to making a policy direction. All provisions in the Bill dealing with broadcasting had to be subject to the overriding constitutional principle guaranteeing independent regulation of broadcasting.

In respect of procedural safeguards, Mr D Rosengarten (Legal Counsel) noted that, while the IBA Act had set out detailed procedures in respect of policy inquiries, licence applications, amendments and renewals, for example, the Convergence Bill was silent on most of the issues. There were further difficulties with the transitional provisions, and an unnecessarily lengthy process of licence conversion would distract the authority from more important regulatory imperatives and create industry uncertainty. A number of other concerns were tabled, including the lack of provision for a common carrier, and the requirement for broadcasters to contribute to the USF, which was a telecommunications fund.

Ms Keene-Young concluded that the lack of a national convergence policy process had led to many of the concerns expressed at the hearings, and suggested that the adoption of the Bill would be premature, and that a further draft should be prepared for public comment and debate, once the ICASA Amendment Bill had been published.

Discussion
Mr R Pieterse (ANC) noted the reference to the slow response of the regulator. There had been a problem with staff being poached from the regulator, and this might show a need for a moratorium, as the regulator had to be strengthened.

Mr Molosiwa replied that this was a concern, and ISPA would support any measure to combat it. Mr Brooks added that the person at ICASA who had been working on the VANS licences had been poached by a Voice Over Internet Protocol (VoIP), company, and agreed that poaching was a real problem.

Mr Pieterse asked whether the VANS were now operating illegally.

Mr Molosiwa replied that ISPA had had numerous interactions with ICASA to find out whether the operation was illegal, but had been instructed to continue. It was a very uncomfortable dynamic, and it could be argued that this was another function of capacity.

Mr Pieterse referred to the restrictions on subscription broadcasters, and asked the opinion of the free-to-air station on that. Sports federations were surely autonomous and independent?

Mr Golding replied that there was a policy paper and general agreement on the regulation of sports of national interest. e.tv was satisfied with the current provisions of Clause 57, as this provided for national interest events to be broadcast free of charge.

The Chairperson noted that the SABC had submitted that the provision did not work in their favour.

Mr Golding clarified that there had been a number of meetings before the stage of regulation of sports of national interest. Agreement on these sports had been reached from these meetings. A further issue had arisen of whether it was appropriate for a live event to be broadcast simultaneously on a free-to-air channel and a commercial channel. It had been agreed that free-to-air broadcasting would not be denied, but the question remained of what had been paid for, and whether it could be simultaneous. It was a commercial transaction.

Mr Pieterse noted his concern that the clause could be regarded as anti-competitive.

Ms M Smuts (DA) noted that the issue of self-provisioning had caused a lot of unhappiness. In the course of discussions on the Bill it had become clear that there would be no such thing as a VANS licence, and that anyone could approach the regulator. The interconnection point had accidentally "fallen off the table". Interconnect rights would follow logically under Clause 37, but the clause had failed to note that not everyone would want to put up infrastructure. It was surely the intention that communications services should have interconnection rights.

Mr Brooks replied that the problem was that ADSL was a commercial service for Telkom.

Mr J Mjwara (Deputy Director General: Multi-Media: Department of Communications) said that the ISPA had summarised the issue very succinctly. The intention had been for services to interconnect with networks, but they also needed to interconnect with other services. This was a point to carry forward.

Ms Smuts felt that it should be possible for the USF money to be used for skilling and questioned whether it was fair to ask broadcasters to contribute to the Fund. The ISPA had used the example of ABSA, and this was a good illustration of the reasons not to license content or applications. Great care should be taking in deciding on who would be required to contribute to the USF.

Mr G Oliphant (ANC) referred to the SAPO’s two proposals, that it either be exempt from contributions to the USF or that the levy should be only on licence-related turnover. The same issue had been raised by ISPA. Was this practicable?

Mr Brooks replied that one of the problems was ICASA’s inability to determine what services were licensable, and they were thus unable to determine the contributions. The proposal was, however, more workable than the current proposal in the Convergence Bill.

Mr Perlman replied that the Post Office was obliged to submit its accounts to the Minister. If and when the SAPO entered into the service provider environment, it would not be onerous to separate the different areas of turnover.

Mr Mjwara replied that the Media Development and Diversity Agency (MDDA) would argue that monies were related to content not infrastructure. The line between broadcasting and other networks was becoming less clear. The Department would give the Committee feedback on the issue of "double taxation’ within the next few days. However, the Bill addressed licences, so the contributions related to licence-related turnover.

Ms Smuts concurred with e.tv that broadcasting was not yet fully integrated. The current broadcasting regime would continue as it was for about ten years, mostly because it was not yet digitised. Should Sentech not still be a common carrier?

Ms S Vos (IFP) asked whether it had been the intention that no obligations would be placed on Sentech.

Mr Mjwara replied that the thinking was still there, but the Department was juggling two concepts. A common carrier was required to provide services on the same basis as a "significant market power" (SMP) company. It might be necessary for all network carriers to be common carriers. This would also cover Sentech. It was an issue of semantics.

Ms Smuts suggested that the real challenge was that, after digitisation, frequencies would not be assigned to stations but to signal distributors. In the meantime, the safeguards in the IBA Act should not be lost, and should be written in to the Convergence Bill. Any provisions dealing with the amendment of licences should be written very carefully.

Mr Oliphant asked for clarity on the issue of the advance notice to the authority in Clauses 14 and 19.

Ms Vos noted that the Committee needed to look at the issue of Clause 19 in terms of material changes.

Mr Perlman replied that the SAPO found the clause superfluous. The Bill was very procedure-heavy, and it would be very simple to make it more streamlined by amending the heading of Clause 14. It was a procedural issue, as "material" was not defined, and could be something minor. As Clause 19 stood, it was too bureaucratic.

Mr Brooks noted that, as far as the ISPA could ascertain, Clause 19 allowed the class licence holder to cancel a licence, and obliged them to inform the regulator if something material changed. This latter provision was unworkable, and the former was covered in Clause 14.

Mr Mjwara noted that the Department had taken this point, and the two Clauses might be collapsed into one.

Mr Oliphant noted that ISPA had said that the definition of VANS was not clear, and asked for clarity.

Mr Brooks replied that, for example, the definition of a VANS in the Telecommunications Amendment Bill of 2001 had stipulated that email services were VANS. This was practically not implementable, and the solution would be to ensure that definitions left no doubt.

Mr Oliphant noted the jurisdiction overlap between ICASA and the Competition Commission, and asked whether there were any proposals for dealing with the issue. e.tv’s proposal seemed neat, but everyone was taking their problems to the Competition Commission.

Mr Brooks replied that it might be a good idea to put fair competition clauses in the licences themselves. The biggest problem experienced so far in terms of the Competition Commission, was that as soon as the Competition Commission ruled against Telkom, Telkom wanted to go back to ICASA. It needed to be clear that forum shopping would not be permitted.

Mr Rosengarten replied that the problem would continue to exist, because the Competition Commission would either be inundated, or ICASA would bear the burden. e.tv proposed that it remain within the parameters of the Competition Commission. The Commission had an investigative arm, and appeals procedures. It was unfortunate that matters were time-consuming. With regard to any dispute in respect of telecommunications, someone from ICASA could sit on the board of the Commission.

Mr Pieterse suggested that all complaints should be directed to the regulator, who would then refer them either to the Competition Commission or the Complaints Committee.

Ms Smuts remarked that, when dealing with telecommunications in particular, ex-post legislation was insufficient, and ex-ante legislation was required. The SABC was an SMP, and its dominance in the market was outrageous.

Mr Oliphant asked e.tv whether they found anything good in the Bill, as they had raised very clear issues of discomfort.

Mr Golding replied that there was a lot of good in the Bill, but e.tv was concerned about the issues raised. Although they were aware of the colloquia, why had no policy paper been issued? It would still be valuable for the Department to write up a document putting the policy together. For one thing, the Bill repealed the entire IBA Act. e.tv was not at all hostile to the Bill, but felt that it was essential to be very cautious on the way in which convergence was approached. A policy paper would state very clearly where the government was going.

Mr Oliphant asked who would approve the frequency plan for the security services, if the Minister was not the person selected. This was a clear governance matter.

Ms Keene-Young replied that this should be considered in relation to constitutional concerns. Certain parts would remain within the Minister’s powers, but other broadcasting frequency restrictions were unconstitutional.

Ms Smuts remarked that the Bill had not acknowledged the two layers of frequency management, where assignment was only the second layer, but allocation occurred at the first layer. Allocation was the province of government. The frequency planning for assignments properly belonged with the regulator.

Mr Mjwara noted that the country was represented by the executive in terms of the International Telecoms Union band plans. The area of the band relating to the security forces should be regulated and managed by government. The regulator could do the other allocations.

The Chairperson asked for confirmation that the Bill did not take away the right of the Minister to approve the band plan.

Ms Vos asked for clarity on the SAPO’s proposals in terms of facilities leasing.

Mr Perlman replied that SAPO would prefer as much clarity as possible. SMPs tended to protect their turf, based on loopholes in the legislation. A simple solution was to tighten up the legislation.

Afternoon session:
Ulwazi E-Learning submission
Mr R Beyers (Ulwazi Project Manager and Director of Technology) outlined the origins, the network and the future vision of Ulwazi, an e-learning project. The Ulwazi project promoted interactive e-learning by means of broadband connectivity. The latter removed barriers of access to learning. The problem of the Telecommunications Act lay in the limitations of Section 41(2). These impediments should thus be repealed in the Convergence Bill. Under the present Act, ICASA had granted Ulwazi only a temporary licence for three month. The processing of the Ulwazi application had taken eight months, while the renewal of the licence three months thereafter had not been guaranteed. This situation was reason for concern.

Broadband wireless connectivity had the potential to be a major aid in solving South Africa’s educational crisis. The Convergence Bill should oblige the regulator to grant licences for educational projects such as Ulwazi. Currently, many schools that were interested in similar e-learning projects were not able to get the required network. Ulwazi felt that the licences had to be zero rated as they served educational purposes.

Media Development and Diversity Agency submission
Mr M Boloka (MDDA Board Member) explained that the Media Development and Diversity Agency (MDDA) was a development agency that assisted in creating an enabling environment for media development and diversity, while taking into account the needs and aspirations of all South Africans. Many communities did not have access to the media, and those who did were often unable to obtain the desired information in their mother tongue.

MDDA made some general comments on the Convergence Bill, noting that it was difficult to assess the Bill without sight of the ICASA Amendment Bill, and expressing the need for easily understandable legislation. It was important that the objects and purpose of different legislation relevant to the sector were distinct and clear. The MDDA noted that the Independent Broadcasting Authority (IBA) Act had been revoked in its entirety. Whilst some clauses of that Act had been included in the Convergence Bill, thoses clauses relating to limitations on ownership had not been included. These clauses had recently been extensively debated in hearings held by ICASA which had led to published proposals. The MDDA believed that these proposed amendments should be considered, rather than revoking such limitations altogether. Further, the implications of the removal of the clauses on categories of signal distribution operators had to be discussed.

The Convergence Bill should utilise the same definition for community broadcasting as the one in the Broadcasting Act. MDDA felt that Section 4(1) might circumscribe the Authority’s powers to develop regulation on issues that could foster diversity. There was also a need to strengthen clauses relating to the South African content. They expressed concern about Section 9(1)(e) that required the Authority to submit to the Minister the proposed licence conditions for approval, after having developed these through a public process. This could both lead to delays in licensing and adversely impact on the rights related to freedom of expression.

In terms of the Convergence Bill, broadcasters would have to contribute towards the Universal Service Fund. This additional financial burden could reduce the funds given to MDDA. MDDA was opposed to a merger between the Universal Service Agency (USA) and the MDDA, as their mandates were different. MDDA focused on print and broadcasting, while USA focused on infrastructure.

He then outlined MDDA’s achievements over the last 18 months. MDDA also expressed concern about the transitional provisions, in particular regarding ICASA’s capacity and resources to deal with these efficiently. Convergence was a complex process that had to be cautiously managed, while taking into account the history of South African communications and media.

Discussion
The Chairperson stressed that a c would mean that there was a dual mandate, and not that one part of the mandate would be undermined.

Mr Boloka replied that the reason why they thought that MDDA should continue to exist in its current form was because a merger would result in a cumbersome structure. This would have an adverse effect on accountability and efficiency. The MDDA had a very tight budget and only few staff members. The current licencees had to contribute towards USA. MDDA felt that this was not the best way to go about it. Funding should stay unchanged. The telecommunication operators should continue to contribute towards USA, while broadcasters funded MDDA. He reiterated that convergence was a long-term process that had to be cautiously managed.

Ms Smuts (DA) asked the Department for clarity on the section of the Telecommunications Act that required contiguity of land before people could erect a private telecommunications network (PTN). She queried what the next step was, and whether the Convergence Bill would have a category of exemption. People who were not going to either interconnect or need spectrum should be allowed to simply put up their PTNs. She asked whether Members thought that everyone who wanted to erect a PTN would necessarily have to go to the regulator and apply for a network service licence. This issue had to be looked into.

Ms M Matlala (Senior Manager: Telecommunications Policy) explained that the Telecommunications Act had more than ten licence categories. None of them had been measured in the Convergence Bill. Regarding, PTNs, Section 6 of the Convergence Bill had to be read together with Section 8. It described the rights to issue licences with conditions, namely who could provide to which services and for which class of licence, and whether the service provided was for the public or limited. That was where the PTNs could be licensed into.

Mr Beyers highlighted that e-learning would lead to flourishing educational possibilities. The regulatory issue had to be overcome. The issue at stake was not about regulation, but about being able to deliver quality education where it was needed most in South Africa. Empowering teachers and learners by having access to shared resources in private networks was a great opportunity to address some of the existing problems.

Ms Smuts asked whether the contiguity situation had been the only reason why Ulwazi had merely been able to apply for a temporary three months licence, which they had only received after eight months. Mr Beyers answered that as far as he knew, that had been the only reason. Financial resources had not been the problem. He pointed out that Ulwazi was illegal at this point because of the licence issue.

Ms Smuts then commented that the definitions of community broadcasting in the IBA and the Broadcasting Acts appeared to be identical. She asked if Mr Boloka had referred to the Broadcasting Act's Section 32. This section had been repealed. She queried whether he wanted retention of such an elaborate requirement.

Mr Boloka answered in the affirmative. Ms Smuts suggested that the issue should be left to the broadcasters.

Ms Smuts asked the Department what had happened to the old categorisation of community of interests and geographic community. She was pleased that MDDA had reminded Members of the importance of the Broadcasting Monitoring and Complaints Committee (BMCC). They did not see much work coming from the BMCC, as the Broadcasting Complaints Commission of South Africa (BCCSA) dealt with most of the complaints on broadcasting. BMCC’s place appeared to be taken by the Complaints and Compliance Committee. The Committee had no knowledge of this Committee, as it resided in the ICASA Amendment Act that they had not yet seen.

Ms Vos asked about the Department’s opinion of MDDA’s aim to "grandfather" development media. Mr Beyers remarked that the only way in which they could do that was allowing the agency to continue to exist in their present form.

The meeting was adjourned.

 

Mr A Brooks (Regulatory Chair) gave an overview of the current policy framework of ISPA, emphasising that many Internet Service Providers (ISPs), particularly small ones, felt that the regulatory environment was hostile, prohibiting them from using promising technology and placing significant and costly administrative burdens on them. ISPs were governed by a variety of pieces of legislation, and this did not usually take account of the size of the ISP concerned. Between 1997 and 2005, ICASA had issued "interim" VANS licences, but all existing licencees had had to reapply in July 2004. To date, no ISPs had been awarded licences, and the rights enjoyed by VANS had been subject to sudden changes, for example in respect of self-provisioning. Significant problems were experienced with the existing licensing process, and their supporting regulations were not in place.