Convergence Bill: Department Response to Submissions; Legal Opinion on Constitutionality

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
25 August 2005
CONVERGENCE BILL: DEPARTMENT RESPONSE TO SUBMISSIONS; LEGAL OPINION ON CONSTITUTIONALITY

Chairperson:

Cheadle Thompson presentation on Constitutionality of Convergence Bill
Cheadle Thompson legal opinion
Department response on contentious issues
Convergence Bill [B9-2005]

SUMMARY
The Committee was briefed on the constitutionality of certain provisions of the Convergence Bill, particularly regarding Section 192 of the Constitution that required an independent authority to regulate broadcasting. With respect to the Minister’s involvement in licensing provisions, the legal opinion stated that Section 5(5) and Section 9(2)(e) contravened Section 192 of the Constitution and should thus be repealed. The Convergence Bill required amendments to clarify both the Minister’s role regarding radio frequency spectrum, and the fact that there was no intention to license content service. After the legal opinion, the Committee was given a brief summary of the substantive issues raised in the Convergence Bill submissions.

The Department outlined the contentious issues in the Convergence Bill, including the separation of powers, definitions, licensing, interconnection, spectrum management, competition issues, Universal Service Fund (USF), and transitional mechanism. The Committee was assured that the Convergence Bill neither intended to licence content service nor applications.

The Committee agreed that they would start the deliberations on the Convergence Bill in the following week, even though certain clauses could not be concluded without the ICASA Amendment Bill.

MINUTES

Cheadle Thompson briefing
Ms Doris Tshepe, a Cheadle Thompson attorney, briefed the Committee on the constitutionality of certain provisions of the Convergence Bill. The following clauses were either likely to contravene or contravened Section 192 of the Constitution that required an independent authority to regulate broadcasting:
- Clause 3 that entitled the Minister to make policy and policy directions;
- Clause 5 and 9 that described the Minister’s involvement in licensing provisions;
- Clause 34 that dealt with the Radio Frequency Spectrum, and
- Clause 81(2)(a) that gave the Minister the power to determine the maximum percentage for contribution to the Universal Service Agency (USA).

Clause 3 of the Convergence Bill entitled the Minister to determine policies and policy directions. According to Section 85 of the Constitution, the President exercised the executive authority together with other Members of the Cabinet by developing and implementing national policy. The Constitution thus entitled the Minister to make national policy. The determination of policy by the Minister was not a regulatory function but an executive power. Hence, Clause (3) was not in contravention with Section 192 of the Constitution.

Clause 5(4) and 5(5) required the Minister to determine the date and geographic area within which communications network services may be granted. This created an avenue for interference with the Independent Communications Authority of South Africa’s (ICASA’s) performance of its regulatory function. Section 5(5) should thus be repealed.

Clause 9(2)(e) obliged ICASA to submit the conditions of individual licences to the Minister for approval. The determination of licence conditions was a regulatory function, and the approval of conditions by the Minister hence interfered with ICASA’s independence. Section 9(2)(e) should be deleted as it was a contravention of Section 192 of the Constitution.

Regarding the radio frequency spectrum, two clauses were problematic: Clause 34(7) that required the Authority to forward the radio frequency plan to the Minister for approval, and Clause 34(14)(a) that entitled the Minister to allocate radio frequency spectrum for the exclusive use of security services. Clause 34(7) constituted the Minister’s fulfilment of her International Telecommunication Union (ITU) obligations and was thus not regarded as a regulatory function. Although the assignment of radio frequency spectrum to government security services in Clause 34(1)(e) was a regulatory function, it did not interfere with the Authority’s regulatory powers. According to Cheadle Thompson, both Clause 34(7) and Clause 34(14)(a) were not a contravention of Section 192 of the Constitution. However, Clause 34 may need to be amended in order to draw a clear distinction between the allocation of a frequency spectrum band and the assignment of radio frequency spectrum for usage. Further, the Minister’s role regarding radio frequency spectrum had to be clarified.

Cheadle Thompson felt that Clause 81(2)(a) which entitled the Minister to determine the maximum percentage for contribution to the Universal Service Agency (USA) was not in contravention with Section 192 of the Constitution.

There was no Clause in the Convergence Bill that contravened with the right of freedom of expression in terms of Section 16 of the Constitution. However, definitions relating to content and particularly Section 5 may have to be amended in order to clarify that there was no intention in the Bill to licence content service.

The Convergence Bill had to be amended in order to clarify that existing licences would be converted at no less favourable terms and conditions than those contained in existing licences. Provided that this guarantee was given in the Bill, there was no contravention with Section 25 of the Constitution that outlined the right to property.

After having given legal opinion on the constitutionality of the Bill, substantive issues raised on the Convergence Bill in submissions were discussed. General concerns included that there was no national convergence policy; that the Bill referred to sections in the ICASA Amendment Act; that some of the definitions were either not clear or unnecessary, and that the Minister must (as opposed to may) consult ICASA when making policy directions in terms of Clause 3(4).

Concern had particularly been voiced about Chapter 3 of the Convergence Bill. There were no criteria to distinguish between individual and class licences. The categories of licensing were confusing either. Clarity should further be given that neither content services nor resellers should be licensed. It had been proposed that the ministerial involvement in licensing provision should be removed. The duration of licences was thought to be too long (25 years), particularly regarding class licenses. The Bill should also provide for private telecommunication network licensing.

Regarding interconnection and facilities leasing, concern had been raised that the obligation to interconnect excluded communications service licences; that Clause 41 and 47 did not provide a process for the authority to define a relevant market, and that the Bill should provide for equitable and non-discrimination and non-preferential wholesales rates by outlawing price discrimination by Significant Market Powers (SMPs).

Substantial issues had been raised on broadcasting services. The limitation of ownership should be provided for in the Bill and not, as the Bill currently required, in regulations. The Bill should allow ICASA to regulate local content requirements not only in licenses, but also in terms of regulations. Concerns had also been raised about the non-provision for common carrier in the Bill, and the licence fees for SABC.

Jurisdiction was needed to deal with competition matters in the communication industry. It had to be decided whether competition matters should be dealt with by the Competition Commission or by ICASA, or whether the two should have concurrent jurisdiction. Competition law terms were not consistent in the Bill.

Broadcasters should not be required to contribute to the Universal Service Fund (USF), as they contributed to the Media Development and Diversity Agency (MDDA). The usage of USF money should be expanded and include issues such as skill development and take into account a converged environment. Private independent skills should also be included in the category of Clause 80(1)(b).

ICASA had raised concern that the period of 12 months to convert licences was too short, and that the authority should thus be allowed to determine the time period for conversion.

Lastly, the Bill did not provide for enforcement and monitoring provisions. It appeared that these provisions were dealt with in the ICASA Amendment Bill.

Discussion
The Chairperson remarked that Cheadle Thompson had given a legal opinion, and that Members did not have to agree with their recommendations.

Ms M Smuts (DA) raised concern about the impact that the intended amendment regarding conversion of licences could have on property rights. It had to be clear in the Bill that there was no intention to licence content services. The approval of the Minister of the radio frequency plan was a regulatory function and thus seemed to be in contravention of Section 192 of the Constitution. There was need for a clear definition of the radio frequency plan. She agreed that Clause 5(5) and Clause 9(2)(e) should be repealed. Clause 3 required further discussion.

Mr G Oliphant (ANC) asked for clarity on Clause 34(14)(a). He voiced concern about allowing ICASA to determine the time period for conversion. It was important to determine a time period. If 12 months were considered to be too short, than another period had to be agreed upon. The Department should provide information regarding the ICASA Amendment Bill, and clarify the distinction between allocation and assignment regarding radio frequency spectrum.

Mr K Khumalo (ANC) agreed that the Minister must (as opposed to may) consult ICASA when making policy direction in terms of Clause 3(4). He raised concern that regarding the Radio Frequency Spectrum, the role of the Minister had only been related to the International Telecommunication Union (ITU) obligations. The history of South Africa had to be taken into account.

Department briefing
Mr J Mjwara, Deputy Director-General, outlined the challenges facing the communications sector in South Africa. Action had to be taken against a widening of the digital gap. The aim was to reduce tariffs and prices in the telecommunication sector. The Convergence Bill provided a legal framework that enabled the realisation of other policy objectives, and further liberalised the market.

The aim of the Convergence Bill was to provide clarity regarding the interaction between the Minister and ICASA, and not to undermine ICASA or interfere with licensing. The Department concurred with the proposals that the Minister must consult when issuing policy directives, as well as that ICASA must consult when making regulations.

The Department agreed that certain definitions in the Convergence Bill had to be refined.

Licensing needed further clarity. There was broad acceptance of the principles outlined by ICASA that the four areas of network services (networks, services, broadcasting and spectrum) needed to be licensed. The categories of individual, class and exemption would be applicable for these four areas of network services. There was no intention to licence content services or applications.

There would be a right to lease and interconnect for networks, broadcasting and communications services. Communications services would interconnect with networks and other communications services. Broadcasters would be able to interconnect with networks and other communications services.

Ex-ante regulation and ex-post remedies had to be balanced. The Department agreed that there was a need to align the competition terminology. The outstanding report from discussions between ICASA and the Competition Commission would help to finalise this process.

Licensees would contribute to the USF in relation to their licensed activities. Broadcasters would contribute equitable in relation to their turnover. Their MDDA contributions would be taken into account.

The Department agreed that the transitional period must allow for an extension if needed. The mapping of the transition and licence conversion had to be clarified. Terms and condition would take into consideration the establishment of a convergent regulatory environment.

Discussion
The Chairperson raised concern that the deliberations regarding the Convergence Bill could not be finalised without the ICASA Amendment Bill. The public had to be informed and given the opportunity to comment on the Bill as soon as it was tabled to Parliament. He asked how the Department would meet Parliament’s demand.

Ms M Matlala, Senior Manager: Telecommunications Policy, relied that the ICASA Amendment Bill would be available by 2 September 2005.

Ms S Vos (IFP) noted that they could not perceive without having public hearings on the ICASA Amendment Bill.

The Chairperson queried whether they could finish the Convergence Bill without the ICASA Amendment Bill.

Ms Vos answered that she did not think that Members could conclude the Convergence Bill and attend to the ICASA Amendment Bill only thereafter. The Committee had to consider this legislation.

Ms Smuts agreed that they could not conclude the Bill without the ICASA Amendment Bill, but that they could continue to work on the redrafting in those areas possible. There were six working days left for the Committee in this session. The Constitution required public participation. The submissions regarding the Convergence Bill had been very useful. They should follow the same process for the ICASA Amendment Bill.

Mr Oliphant felt that the process of deliberations had to start. Clauses that referred to the ICASA Amendment Bill should be suspended. He was confident that the Committee would have completed everything besides those Clauses relating to the ICASA Amendment Bill by 16 September.

The meeting was adjourned.