Convergence Bill: deliberations

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
31 August 2005
CONVERGENCE BILL: DELIBERATIONS

Chairperson:

ANC Proposed Amendments on Chapter 1
ANC Amendments to Clauses 2 & 3 (up to Clause 9)
ANC proposed amendments: Chapters 3 (Clause 10 -19)
ANC Proposed Amendments to Chapter 4: Clauses 20-29
ANC proposed amendments: Chapters 5 - 8
ANC Proposed Amendments of Chapters 9 to 12 (as of 7 September)
ANC Proposed Amendments to Chapter 12 - 14 (as of 9 September)
ANC Proposed Amendments to Chapter 15: Transitional provisions
Convergence Bill [B9-2005]

SUMMARY
In the morning session, the Committee discussed the proposals on Clauses 2 to 9 of the Convergence Bill which had emanated from previous deliberations. The Department suggested changing the term "communications" into "electronic communications" in order to contextualise the Act.

The ANC was opposed to the DA proposal that the authority not be bound by the policies or policy directions of the Minister in terms of Clause 3(2). Members agreed that the expression "significant economic and social impact" as used in Clauses 5(3) (e) and 5(5) (c) was subjective, and needed either to be clearly defined or replaced.

The Committee then discussed Clauses 10 to 19 of the Convergence Bill. Most amendments in Clauses 11, 12, 13, 14, and 15 were technical. The DA recommended deleting Clause 10(f), and stressed that procedural provisions had to be very clear in the Bill. The Committee agreed to consider whether Clause 11(9) should allow the authority to impose penalties in case of late application for renewal of individual licences. Members also agreed that the issue of foreign ownership required further discussion, and particularly whether this issue should rather be dealt with under Chapter 9 instead of Clause 9. The Department proposed to change the time for the application of class licences as outlined in Clause 17 from 60 to 90 days.

After the lunchbreak, the DA proposed that the entire Chapter 4 be reworked. The Department stated that the fundamental problem lay in allowing network operators to build networks, as they would inevitably cross private property. The DA suggested that the MTN submission be adopted as it called for a sharing of facilities by the network operators. The Director-General, as well as the representatives from Sentech, Telkom, Vodacom and Cell C, agreed with the MTN proposal.

MINUTES

Committee Proposal

Clause 2: Object of the Act
Ms J Shope-Mofole, Director-General: Communications, suggested changing the term "communications" into "electronic communications" in order to contextualise the Act.

Ms M Smuts (DA) agreed with the term "electronic communication". The definition of convergence also had to be considered. Various submissions had proposed to change the title of the Bill from "Convergence Bill" into "Communications Act", as in Malaysia and the United Kingdom. The Committee could consider calling the Act, the "Electronic Communications Act".

Mr P Pongwana, Vodacom Managing Executive, remarked that they had to consider related legislation, particularly the Telecommunications Act, before changing any terms. In law terms, it was clear that "communications" referred to "electronic communications".

Clause 3: Ministerial policies and policy directions
Mr Oliphant said that the ANC disagreed with the DA’s proposal of deleting Clause 3(1), but instead proposed an amendment. The ANC agreed to insert Section 13(a), Subsection 5(c) and (d) of the IBA Act, but was opposed to include the third paragraph that read "if it interferes with the independence of the Authority or affects the power or duties of the Authority in terms of this Act or the related legislation." The ANC was also opposed to the DA proposal regarding Clause 3(2) that provided that the authority would not be bound by the policies or policy directions of the Minister.

The Chairperson asked whether the DA’s proposal that the authority should not be bound by policies or policy directions of the Minister, meant that the Regulator could disregard these policies. He asked whether this was the intention.

Ms Smuts answered that this was the intention, and that their proposal related to the constitutional provisions on broadcasting. The convergence of telecommunications and broadcasting into one law raised the following question: How much independence should be given to the Regulator? The latter had been dealt with in the Constitution for broadcasting, but not for telecommunications. The Committee could not conclude deliberations on Clause 3 until they could view the ICASA Amendment Act that addressed the general regulatory powers of the authority.

The Chairperson felt that independence of the Regulator should not mean disregarding the national policies of the Minister. The Regulator’s activities had to be in compliance with the national policy, and whenever they disregarded that policy, the government should have the right to intervene.

Mr R Pieterse (ANC) concurred with the Chairperson. The Minister would issue good policy. The Regulator would be able to comment on the Minister’s policy before it was issued, but had to comply with it thereafter.

Ms Smuts asked whether they rejected the opinion from the legal firm Cheadle Thompson.

The Chairperson queried whether Cheadle Thompson’s legal opinion stated that the independence of the Regulator would go as far as disregarding national policy.

Ms Smuts reiterated her request to wait for the ICASA Amendment Act until they had discussed the issue further. The Chairperson agreed.

Ms Smuts asked whether the Chairperson distinguished between broadcasting and telecommunications. The Chairperson answered that both broadcasting and telecommunications had to function within the framework of national policy.

Ms Smuts remarked that they had to ensure that the issuing of policy by the Minister was not intervention in Regulatory activities. If the government issued a policy direction, the Regulator should have the opportunity to consider it at their own discretion while taking into account public hearings. Broadcasting had been handed over to the Regulator. The government could not be running the Regulator.

Mr Oliphant commented that all Regulators worked within a framework of law and policies. It was unacceptable that any Regulator could disregard national policy.

Mr K Khumalo (ANC) said that the Minister was entitled to make national policy, that ICASA was required to consider that policy, and that the ministerial policy was subject to the Constitution. The Minister could not issue a policy that was in contravention of the Constitution. The Constitution outlined the key issues of independence.

Ms Smuts pointed out that government must make its policy and table the law. They had been waiting for government to make the policy.

Mr Pieterse said that the DA intended to minimise the role of the Minister in the Convergence Bill.

Mr M Mohlalonga (ANC) remarked that Section 85(2) of the Constitution required Members of the Executive to make and implement policy. Government thus had a mandatory responsibility particularly regarding telecommunications. To a certain extent, ICASA was part of the Executive. The Minister should make policies. These policies had to be implemented by ICASA without disregarding national policy. The Minister should not make policies, and the Regulator should not disregard the Minister’s policy. A formulation was needed that minimised these two contradictions.

Ms Shope-Mafole proposed that the first part of the newly inserted Clause 3(3) should be deleted until "issued". The present formulation implied that the Minister could not issue any policy directions that may affect licensing.

Ms Smuts said she did not have a problem with the Director-General’s suggestion.

Mr Mohlalonga proposed to insert "implement" before "policy" in Clause 3(4).

Ms Smuts stressed that the constitutionality of Clause 3(4) hinged on the expression "must consider". Mr Mohlalonga’s proposal was not constitutional for broadcasting. The real challenge was to decide how the Regulator would deal with telecommunications under converged conditions.

Mr Mohlalonga commented that they were talking about policy-making and not regulatory directions by the Minister. The Minister had the power to make policy.

Ms Shope-Mafole accepted the proposal that substituted "may" for "must" in Clause 3(5) (a). However, that would require that Clause 3(2) (d) would be deleted.

Ms Smuts commented that even though the contribution of the Executive was valuable, it was the responsibility of the political parties to table amendments. The required procedure had to be followed. Mr Oliphant agreed that the Director-General’s proposal had to be tabled formally.

Clause 4: Regulations by Authority
Ms Smuts reiterated that Clause 4 could not be concluded without the ICASA Amendment Act.

Clause 5: Licensing
Ms Smuts asked how a subjective interpretation of "significant economic impact" could be avoided in Clauses 5(3) (e) and 5(5) (c). She asked what kind of services had a significant economic impact. She further queried the definition of "significant social impact" mentioned in the same clauses. Cell-C had proposed a different approach regarding this issue, pointing out that the scale of investment required warranted a limitation on the number of licences issued. Their suggestion appeared more logical than justifying special treatment for certain individual licences due to the licensee’s significant social and economic impact.

She further asked for legal opinion on the wording in Clause 5(6) that read as follows: "In consideration of the implementation of the managed liberalisation". She proposed to substitute "per" for "pursuant" in Clause 5(6), and to add the requirement for a market-feasibility study by the authority before the Minster issued licences.

The Chairperson also felt that the definition of "significant social or economic impact" was subjective.

Mr Khumalo remarked that the clauses that referred to the significant economic and social impact had to be read in conjuncture with Clauses 5(1), 5(3), and 5(4) respectively.

Mr Oliphant agreed that it was within the jurisdiction of the authority to conduct economic impact studies in this sector. They would consider Ms Smuts’ proposal regarding the market-feasibility study in Clause 5(6).

Ms Smuts suggested inserting "after conducting market studies" in Clause 5(3) (e) after the word "finds". Mr Khumalo was opposed to her proposal.

Ms Shope-Mafole agreed that the expression "economic and social impact" needed to be defined. She explained that economic and social impact referred to socio-economic development. It had to be taken into account how the new technology improved the lives of South African citizens.

Ms Smuts wondered whether they should change "significant economic and social impact" into "socio-economic development" if that was what it referred to.

Clause 6: Licence exemption
Ms Smuts queried whether Clause 6(2) (c) differed from the September ministerial regulations that had announced that private communications networks could start reselling spare capacity.

The Chairperson replied that Clause 6(2) (c) did not differ from the ministerial regulations, but that private communications networks that were also used for commercial purposes would be subject to additional terms and conditions.

Clause 9: Application for and granting of individual licences
Mr Oliphant remarked with respect to the DA’s proposal that the invitation of the authority as described in Clause 9(1) only referred to individual licenses and not class licenses.

Convergence Bill

Clause 10: Amendment of individual licence
Mr Oliphant said that most amendments in Clause 10 were consequential and not substantive. In the first sentence, it should read "after consultation" instead of "in consultation". In Clause 10(a), "terms and" should be added in front of "conditions", and "category" substituted for "type". He suggested the deletion of "under section 17M of" in Clause 10(d) and the insertion of "issued pursuant to". In Clause 10(e), the last part should be deleted that read "and of the related legislation following an adverse finding by the Competition Tribunal under the Competition Act". In Clause 10(f) (ii), "broadcasting services" should be inserted to provide further clarity. He proposed a new Clause 10(g) that would read "if the amendment is in accordance with the regulations established under Section 67".

Ms Smuts asked whether the cross-reference to carrier pre-selection (Clause 67) in Clause 10(g) was correct. Mr Oliphant answered that he would follow up on that, as it was probably a mistake. A cross-reference to competition matters had been intended.

Ms Smuts remarked that the amendment of individual licenses was a very important subject, particularly in circumstances where the general regime was changed. She was unsure how they would deal with the transitioning. She agreed with Mr Oliphant’s proposed amendments regarding Clauses 10 and 10(a).

With respect to Clause 10(b), the impact on competing licensees had to be taken into account. Ms Smuts thus suggested adding at the end of the phrase "provided it will not militate against orderly frequency management, and provided it will not prejudice other licensees to the extent necessitated by technological change".

She queried why the ANC had proposed deleting the reference to the Competition Tribunal in Clause 10(e).
The amended Clause 10(e) was quite wide, and reference to Clause 9 regarding the procedure might be required. Public hearings had to be taken into account as well. The procedural requirements had to be outlined as clear in this Bill as in the IBA Act. She recommended consulting M-Net’s submission in this regard.

Ms Smuts expressed concern about Clause 10(f) that allowed the authority to amend an individual licence if the amendment related to universal access or universal service. She proposed the deletion of Clause 10(f).

The Chairperson reminded Members that Clause 10 could not be concluded without the ICASA Amendment Act.

Mr J Mjwara, Deputy Director-General, said that the Department would make a proposal regarding the required procedure before individual licences were amended.

Mr Oliphant requested Ms Smuts to give the actual wording of her amended Clause 10(b) to the drafters. He was opposed to the deletion of Clause 10(f).

Mr Pieterse asked how the authority would come to the conclusion to amend licences in terms of Clause 10(f). Ms Smuts agreed that this had to be looked into.

Clause 11: Renewal of individual licence
Mr Oliphant remarked that most amendments to Clause 11 were technical. In Clauses 11(1), (6), (10), (11), and (12), the word "individual" should be inserted before "licence". In Clause 11(7), "Subject to subsection 12" should be inserted at the beginning of the sentence. In Clause 11(12), "stay or equivalent order of the court" should be added.

Ms Smuts asked whether the reference in Clause 11(3) dealt with procedural provisions. The Committee had to consider inserting the procedure into every clause in order to make the law very clear and understandable. It was advisable to take the M-Net submission into account in this regard. M-Net had proposed that people should apply for the renewal of their licence in good time one year beforehand, and not later than six months before expiry. M-Net had recommended the imposition of penalties for people who did not apply in good time. The present Clause 11(9) said that the authority might, on good cause, accept late application for renewal. She wondered whether that clause should include that where no good cause was shown, the authority could impose penalties.

Mr Oliphant said that they would consider Ms Smuts’ proposal regarding the procedural provisions. Regarding Clause 11(9), he commented that it would be difficult to determine penalties. All applications should rather be considered on their own merits.

Ms Shope-Mafole felt that penalties had to be considered. The issue of good causes would then become the exception rather than the norm.

Clause 12: Surrender of individual licence
Mr Oliphant reiterated that the word "individual" should be inserted before "licence".

Clause 13: Transfer of individual licence or change of ownership
Mr Oliphant noted that Members had to consider changing the heading of Clause 13. In Clause 13(3), "Subject to Chapter 9" should be inserted. Further, in Clause 13(1) (b), "groups" should be substituted for "persons". The amended Clause 13(4) (b) would read "after the Authority has conducted an inquiry which may include but is not limited to a market study". The reference to Section 17F of the ICASA Act had been deleted.

Mr Mjwara felt that Clause 13(3) should be general and not only refer to foreign ownership.

Ms Smuts followed up by asking whether that clause only addressed foreign control. This difficult subject should be dealt with separately under Chapter 9 and not Clause 13.

Mr Oliphant said that the issue of foreign ownership would be subject to further discussion.

Clause 14: Suspension or cancellation of individual licence
Mr Oliphant again suggested inserting the word "individual" before "licence" in Clauses 14(1), (2) and (3). In Clause 14(1) (b), the reference to Section 17M of the ICASA Act should be deleted. The amended Clause 14(2) would read as follows: "The suspension or cancellation of a licence takes effect when the expiration set forth in a written notice of suspension or cancellation is served on the licensee by the Authority".

Clause 15: Effect of suspension, cancellation, surrender or expiry of individual licence
Mr Oliphant recommended that the word "communications" should be deleted in Clause 15(1) in order to include any services. Clause 15(2) was amended similarly and read as follows: "Despite subsection (1), the Authority may authorise the licensee, in writing, to continue providing any service or any part thereof, in respect of which the licence was granted for the duration as the Authority may specify in the authorisation, for the purpose of winding up the licensee’s affairs and protecting subscribers of such service".

Clause 16: Class licence
Mr Oliphant commented that the amended Clause 16(1) would say that the Authority may, upon receipt of a written registration as prescribed for in Section 5(a), grant a class licence. In Clause 16(2), "an application" would be substituted for "registration". In Clause 16(3), "by category" should be deleted, and instead added "along with the information contemplated in subsection 5".

The amended Clause 16(5) would read as follows: "The Authority must at least once annually update and publish the list of class licensees in the Gazette indicating for each class a) the names of all registered licensees; b) the nature of the services provided; and c) the applicable licence terms and conditions".

The new Clause 16(6) required that no class license could be assigned, ceded or transferred without the prior written approval of the authority in accordance with Clause 16, 17 and 18.

Ms Smuts asked whether it was necessary to have the approval of the authority in Clause 16(6), or whether notification was sufficient. Mr Oliphant felt that the approval of the authority was needed.

Clause 17: Application for class licence
Mr Oliphant recommended the deletion of the reference to subsection (3) in Clause 17(1). In Clause 17(2), "applicant" would be substituted for "registrant". He proposed the deletion of Clause 17(3).

Clause 17(4) would be amended and would read as follows: "Subject to section 18, the Authority must, not more than 60 days after receipt of a registration, grant the class licence and update its internal records with the a) names of the accepted registrant; b) nature of the service that the registrant proposes to provide; and c) licence conditions applicable to the class licence."

The new Clause 17(4) would read as follows: "The Authority may delay the grant of a class licence beyond the 60 day period by written notification to the registrant of the reasons for the delay".

Clause 17(5) was amended and would read: "In the case where a) the Authority has not provided notice to the registrants on the delay and fails to grant the class licence within 60 days required in terms of subsection 4; b) the registrant has complied with the regulations prescribed pursuant to section 5(7) applicable to the class licences; c) the registrant satisfies the conditions as provided for in section 5(8); and d) the Authority has to decline to accept the registration notice for the class licence in accordance with section 18, the class licence shall be deemed to be granted by the Authority on the 61st day after receipt of the registration notice by the Authority".

In Clause 17(6), sub-clauses a) and b) were added.

Ms Shope-Mafole remarked that the issue of exception as outlined in Clause 17(5) was actually empowering the Regulator, because the licence would be granted unless there was a problem. It removed the burden from the Regulator.

Mr Oliphant stressed that further discussion with the Department was needed on this matter, as their views were different. The authority had to respond to applications, and the licences could not simply be granted after 61 days had passed.

The Chairperson added that the authority had to go through the applications and keep an updated register.

Mr Pongwana commented that the purpose of the change from an application into a registration was to simplify the process.

Mr P Mashile, ICASA Chairperson, highlighted that there would be constant communication between the applicant and the authority during the 60 days after the application. The authority should not wait until the 61st day to address any problems encountered.

Ms Shope-Mafole said that class licenses had the potential of disrupting the sector if they were not properly managed. She proposed to change the time period for the renewal of individual licences from 60 to 90 days.

Mr Pieterse stressed that the main problem occurred when the authority did not respond to the registrants. Changing the time period from 60 to 90 days would not tackle this problem. The authority needed to be informed about their failure to respond.

Ms Smuts noted that community broadcasters had expressed their frustrations because the authority had not responded to them. The Committee had not been able to address their concerns properly. The community broadcasters should not be held back only because the Regulator was carrying huge burdens.

Mr Mashile said that somebody had to assist the applicants within the 60-day period. Applications would be rejected if they were not complete. Extending the time period to 90 days might be helpful. Fruitful engagement between the applicant and the Regulator was crucial.

Mr Oliphant commented that the ANC would consider the Director-General’s proposal.

Ms Smuts remarked that she was not opposed to a 90-day period. She suggested amending the first part of the proposed Clause 17(5) as follows: "In cases where the authority has not provided notice to the registrant of a delay or is not engaged in correspondence". This would ensure that Clause 17(5) did not apply when an application was being attended to but had not been completed after 60 days.

Mr S Kholwane concurred with Ms Smuts on her proposed amendment.

Mr Mohlalonga said that the 60-day period would only start when there was no communication between the applicant and the Regulator.

Ms Shope-Mafole remarked that more obligations were needed for applicants. Otherwise some of the applicants would deliberately not comply.

Clause 18: Refusal of application for class licence
Mr Oliphant proposed to change the heading of Clause 18 to "Denial of registration for class licence". In Clause 18(1) and (2), the word "application" was substituted for "registration", and "applicant" for "registrant".

Clause 19: Advance notice to Authority
Mr Oliphant proposed a complete amendment of Clause 19 that would henceforth address the renewal of class licences.

Chapter 4: Communications Networks and Communications Facilities
After the lunchbreak, Ms M Smuts (DA) proposed that the entire chapter be redrafted as several submissions received during the public hearings had contended that the chapter was written for a country with a single telecommunications utility, whereas South Africa had multiple telecommunications utilities.

She stated that nearly every clause in the Chapter needed to be rethought. Clause 23(2) for example stipulated that the costs would be borne by the owner of the property and not the State, which cannot be right. Surely the municipality must at least be required to give the owner of the property sufficient notice. The precise meaning of the term "due regard" in Clause 22(2) was not clear. She questioned whether Clause 21 should be allowed as she was not sure whether those functions could be required of the Ministers in that Chapter. Clause 25 should be amended to require the owner of the property to inform the licensee of his intention to build on the land, as the onus should not fall on the licensee.

Mr J Mjware, Department Deputy Director-General: Multi-Media, replied that the Department would consider Ms Smuts’ proposal for a reworking of the Chapter, and a new version would be provided to the Committee at its next meeting. He stated that the fundamental problem was in allowing network operators to build networks, as they would inevitably cross private property. This issue needed to be resolved, perhaps by specifically stipulating the rights for each licence in the legislation.

Ms Smuts stated that the Department had to consider this matter in collaboration with local government. She proposed that the MTN submission on Clause 29 be adopted in the Bill, which called for a sharing of facilities by the network operators. She suggested that the public would be in favour of the MTN proposal.

Mr G Oliphant (ANC) presented the document that contained the ANC’s proposed amendments to Clauses 21, 22, 24, 25 and 29.

Ms Shope-Mafole approved of the MTN proposal, as did the representatives from Vodacom, Sentech, Cell C and Telkom. Cell C and Telkom stated that they might have concerns with the conditions for the individual and class licences, but the matter would be discussed at a later stage of the deliberations.

The meeting was adjourned.