Convergence Bill: deliberations

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Communications and Digital Technologies

09 September 2005
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
9 September 2005
CONVERGENCE BILL: DELIBERATIONS

Chairperson:

Mr K Lekgoro (ANC)

Documents handed out:
 

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
The Committee discussed the inserted Chapter 10 that dealt with competition matters. Members considered whether concerns raised by the Competition Commission had been adequately accommodated in the new draft, particularly with respect to concurrent jurisdiction. ICASA felt that there should be more complementary instead of concurrent jurisdiction between the Regulator and the Competition Commission. It was agreed that the problem of forum shopping required more attention.

Members further examined the transitional provisions as outlined in Chapter 15. ICASA requested to extend the time period for the conversion process in terms of Clause 91(4), 92(3) and 94(1). The Committee and the Department agreed to grant ICASA more time with respect to the Clauses 91(4) and 92(3). The importance of a speedy conversion process was however highlighted.

Finally, the Committee considered the amended definitions as proposed by the Department. Members agreed to substitute "communications" for "electronic communications", that the definitions for "election" and "election period" had to be reconsidered, and that broadcasting services should be included in the relevant clauses.

MINUTES
The Chairperson remarked that on 13 September 2005, the Committee would conclude all the clauses of the Convergence Bill that were not affected by the ICASA Amendment Act.

Ms M Smuts (DA) felt that there were also other clauses besides those affected by the ICASA Amendment Act that Members could not yet conclude. The implications of the licence conversion process had to be considered carefully. Moreover, Telkom would probably try to challenge the jurisdiction knowing that their undersea cable contract would be declared null and void after convergence. She suggested getting substantive legal advice on this matter.

The Chairperson agreed that legal advice was required, and asked the legal firm Cheadle Thompson attorneys to investigate those issues. Nevertheless, the Committee should aim to conclude all clauses besides those affected by the ICASA Amendment Act on 13 September.

Ms L Shope-Mafole, Director-General: Communications, reminded Members of the Department’s previous proposal to add "by a date to be determined by the Minister" in Clause 42(10) in order to deal with the Telkom issue.

Chapter 10: Competition matters
Mr J Mjwara, Deputy Director-General: Multimedia, remarked that a separate chapter had been inserted in the Convergence Bill to address competition matters. The Department had taken into account proposals made in various submissions, particularly from the Competition Commission. Definitions and terms addressing competition matters were now consistent. Clause 66(11) had been a special request from the Competition Commission. The Department was also considering inserting a new Clause 66(3) as suggested by the Competition Commission, provided that the Committee agreed. He then presented the document that contained the proposed amendments to Chapter 10.

Mr G Oliphant (ANC) asked whether the reference to paragraph (f) in Clause 7(f) was correct. He queried what the implications were of Clause 10 that read as follows: "The Authority is, for the purposes of the Competition Act, 1998, a regulatory authority defined in section 1 of the Act".

Mr Mjwara answered that Clause 7(f) referred to paragraph (e). He explained that the Competition Act would bind the Competition Commission to act in collaboration with the sector regulator. The Independent Communications Authority of South Africa (ICASA) was the regulator in the telecommunications sector.

Ms Smuts supported to insert the additional clauses as had been suggested by the Competition Commission. The proposal that had been presented by the Department was a vast improvement. She asked to what degree the Competition Commission accepted this draft, particularly with regard to Clause 66(1). The Committee agreed that the Regulator should be allowed to intrude on the terrain of market conduct. Members felt that this was as necessary in the telecommunication sector. The Competition Commission, however, had disagreed with their perspective. According to them, the Regulator should not be allowed to pronounce on a competition matter such as discrimination.

She further queried whether the expression "subject to the provisions of this Act" was necessary in Clause 66(9) (the previous Clause 63(1)). The Competition Commission had expressed great concern about this Clause because it raised the connotation that the Convergence Bill trumps the Competition Act. She expressed concern about the issue of concurrent jurisdiction, and queried whether the distinct responsibilities of the Authority and the Competition Commission were clear. She asked the Department whether the problem of forum shopping had been adequately addressed.

Finally, she suggested amending Clause 66(11) to "the Authority may request and must accept intervention and advice from the Competition Commission" in order to strengthen the role of the Competition Commission.

Mr Mjwara pointed out that the Competition Commission had sent a letter to the Chairperson of the Committee as a response to their proposal. He read the letter to the Committee in order to give Members more information on their position on the present draft of Chapter 10. The Competition Commission was particularly concerned about the concurrency in jurisdiction between the Competition Commission and ICASA on competition matters. They suggested changing the heading of the chapter to "Tariffs, interconnection and dispute resolutions".

He reiterated that two clauses proposed by the Competition Commission had been inserted in the new draft. The Department felt that it was not necessary to rename the chapter, as it was an issue that related to form rather than substance. The Competition Commission had accepted that ICASA would also deal with competition matters. The Competition Act would still apply, but the definition of markets and the imposition of regulations, amongst others, were the responsibilities of ICASA. In essence, the Department had taken all the concerns of the Competition Commission into account besides the changing of the heading.

Ms Smuts felt Members should consider changing the heading of the chapter as the Competition Commission had proposed. Renaming the heading was probably more than just a matter of form, taking into account the problems that they had encountered due to concurrent jurisdiction. The Committee would not necessarily have to adapt the Competition Commission’s proposal for the heading, but could also come up with an alternative suggestion. The Competition Commission was probably not satisfied with the current draft, as their main concern had not been addressed adequately.

The Chairperson asked whether the problem of forum shopping received sufficient attention in Chapter 10.

Ms Smuts asked for legal advice on the current jurisdiction issue.

Ms Shope-Mafole felt that the issue of forum shopping had to be better addressed in this chapter. Forum shopping was not a legal but a policy issue. Globally, the sector regulator had competition responsibilities in the ICT sector. The sector regulator had to ensure fair competition, for instance. The Competition Commission had expertise with regard to general competition matters, but not necessarily to those areas related specifically to the ICT sector. The Regulator and the Competition Commission had different objectives with respect to competition matters. She was opposed to Ms Smuts’ proposal regarding Clause 66(11).

Mr S Kholwane (ANC) concurred with the Director-General that Clause 66(11) should not be amended. More co-ordination between the Regulator and the Competition Commission was needed.

Mr Mjwara stressed that the Competition Act could not be limited by the Convergence Bill. It was difficult to eliminate forum shopping. Both the Regulator and the Competition Commission should be able to pursue transgressors of the ICASA regulations. Clause 66(9) or (11) should be amended in order to enforce the co-ordination between the Regulator and the Competition Commission.

Ms T Cohen, ICASA Councillor, said ICASA strongly supported the response of the Director-General and the Deputy Director-General with respect to the different objectives that the Regulator and the Competition Commission had regarding competition matters. She expressed concern about Ms Smuts’ proposal to amend the Clause 66(11). There should be more complementary instead of concurrent jurisdiction between the two authorities. This could be strengthened through an existing Memorandum of Understanding (MOU) or a new one. ICASA was concerned that Clause 66(5) that referred to proportionality of pro-competitive conditions could be subject to subjective reviews. She asked whether it was necessary to include this clause, taking into account that Clause 66(7) already provided a list of examples of pro-competitive terms and conditions.

Mr Mjwara also felt that Clause 5 was not necessary. The issue could be dealt with under Clause 66(7).

Ms Smuts stressed that the principle of proportionality was just.

Chapter 15: Transitional provisions
Mr Oliphant presented the document that contained the ANC proposed amendments to Chapter 15. Due to previous amendments, Chapter 15 started with Clause 91 and not like previously with Clause 84.

Clause 91: Existing licences and type approval
Ms Smuts said that the ANC had proposed to change the time period for the conversion of existing licences from 12 to 18 months in terms of Clause 91(4). Further, an extension period of an additional six months had been granted. She asked what would happen if this time period would not be enough either.

Mr Oliphant felt that the proposed time period was sufficient. They had taken into account proposals made in various submissions in this regard.

Ms Cohen requested to extend the time period for converting licences to 24 months with an extension period of an additional six months. The credibility of the Regulator would be affected if deadlines were not met.

Mr Oliphant replied that the Committee would consider their request. Extending the time period for an additional six months should not be a problem. It was crucial that ICASA started to address the conversion process before the Convergence Bill would come into effect.

Ms Cohen remarked that ICASA had already started to compile what needed to be done as a result of the conversion process.

Ms Shope-Mafole said that the President had met with the International Advisory Council this month. The latter had complaint that South Africa was taking too long with many transitional processes. ICASA had requested the Department for more financial support. Taking this into account, she felt that a maximum of 24 months should be sufficient. The provision in the Convergence Bill should show the intention to complete this process as soon as possible.

Clause 92: Licence conversion
Ms Smuts asked whether the conversion process as described under Clause 92(4) (c) was intended to take place within 18 months in terms of Clause 91(4). The process of determining those licensees that had significant market power or dominance and control over essential facilities would only start after the Convergence Bill came into effect. This would be a long process that could not be finalised within 24 months. She asked for more information on this matter.

Mr K Khumalo (ANC) explained that after the conversion process, the conditions of existing licenses would still apply. Existing licenses had to conform to the Convergence Bill.

Ms Smuts asked whether that included obligations of existing licenses that were the result of previous monopoly status or exclusivity. She asked whether this meant that the exclusive rights of Telkom, for instance, would continue.

Mr Khumalo commented that existing conditions and obligations would be reviewed at a later stage under Chapter 10 that dealt with competition matters.

Ms Smuts said that fact that they were using the old terms was confusing. The Authority still had to determine significant market power, dominance or control over essential facilities and designation as a common carrier of licensees.

Mr Oliphant stressed that both the discretion of the Authority and previous determination would be part of the conversion process. The latter would remain in force until the review process would have been completed. Therefore, no pressure was put on the Authority with regard to timeframes.

Ms Shope-Mafole suggested deleting the four examples of previous determination such as significant market power in Clause 92(4) (c) in order to avoid confusion.

Ms Smuts was concerned about Clause 91(7) which stated that radio frequency spectrum assigned by the Authority to a licence holder on an exclusive basis such as 900 MHz GSM would not be considered as monopoly or exclusionary rights. It further said that no existing licensee could have any claim against the Authority or any other person asserting such monopoly or exclusionary rights. She asked what the reasons were for this strong provision. Cell C, for instance, would like to acquire 900 MHz GSM. The fact that Cell C or other new operators could not get 900 MHz GSM was not equitable. Clause 91(7) also stated that any monopoly or exclusive rights existing under the present legislation would be declared null and void. She agreed that monopoly rights had to be curtailed, but wondered whether declaring such arrangements null and void was the right way to deal with the matter.

Mr D Dube, Sentech Executive: Regulatory and Governmental Affairs, noted that all exclusionary rights given under the Telecommunications Act, the IBA Act and Sentech Act would be declared null and void in terms of Clause 91(7). There was an exception in the Telecommunications Act. He asked whether there were any other exceptions. Ms Shope-Mafole replied that this issue would be look into.

Ms Shope-Mafole proposed that instead of ICASA having to identify the holders of existing licences in terms of Clause 92(3), the notice in the Gazette should call for licensees to confirm that they were holders of such licences. This would facilitate the administrative work of the Regulator.

Ms Cohen requested that the 30-day period in Clause 92(3) be extended to 60 days due to the fact that there was a response time from the industry that would have to be taken into account. The days in this clause would preferably refer to working and not calendar days.

Ms Shope-Mafole said that the Department would consider changing the definition of "days" in the Convergence Bill, referring to working days instead of calendar days. She proposed to extend the additional six months to 12 months in Clause 91(4), instead of changing the 18 months to 24 months. The clause would then provide more flexibility, while the aim of having the process completed within 18 months would remain unchanged. She agreed to extend the 30-day period in Clause 92(3) to 60 days as had been requested by ICASA.

Clause 94: Existing regulations
Ms Smuts remarked that the Authority also had to repeal or amend all regulations within 18 months in terms of Clause 94(1). This time period was not sufficient. Realistic expectations were necessary.

Ms Cohen requested an extension of the time period within which the Authority had to repeal or amend the regulations made under the Telecommunications Act, the Broadcasting Act, the IBA Act, the Radio Act, the Sentech Act, and Section 199A of the Post Office Act. There was an enormous list that ICASA had compiled which would have to be dealt with.

Mr Oliphant stressed that the ANC was not vehemently opposed to ICASA’s request regarding timeframes with respect to Clause 91(4) and 94(1). He reiterated that ICASA had to start the work related to the conversion process before the President signed the Bill.

Mr Khumalo asked what the implications were of changing the timeframes in the Clauses 91(4) and 94(1). He asked whether there was no contradiction, as it seemed as more time was granted to licensees than to ICASA.

Ms Shope-Mafole explained that both Clause 91(4) and 94(1) referred to ICASA, and none of them to the licensee. ICASA was responsible for the conversion process.

The Chairperson queried whether the two different timeframes did not adversely affect the operations.

Ms Cohen felt that the different timeframes would not be a problem.

Chapter 1: Introductory provisions

Definitions

Mr Mjwara presented the proposed amendments for the definitions to the Committee.

Ms Shope-Mafole stressed that the Department ensured that the definitions in the Convergence Bill would be in conformity with international definitions. She asked whether the Committee agreed to substitute "communications" for "electronic communications".

The Chairperson replied that the Committee was not opposed to this proposal.

Mr Khumalo asked whether a definition for "common carrier" would be included. Mr Mjwara answered in the affirmative.

Mr Mjwara proposed to define "days" in terms of working days instead of calendar days.

Mr Oliphant felt that "market power" could not be defined by simply referring to the Competition Act. The Convergence Bill had to provide a definition. Further, to define "days" in terms of calendar days would be clearer. The definition of "days" had to be reconsidered, taking into account that ICASA had now been granted an extension period for the conversion process.

Ms Shope-Mafole commented that usually days referred to working days. Calendar days would be the exception rather than the norm in this legislation. It would thus be easier to define "days" in terms of working days. Otherwise "working days" would have to be included in almost every Clause that referred to days. The Department proposed to substitute "communication" for "information and communication technologies" in the definition for the "Director-General" and the "Minister". Rather than referring to the name of the Department, the definitions should refer to the responsibilities of the Director-General and the Minister.

Mr Khumalo concurred with the Director-General that working days would be clearer than calendar days. He was concerned that changing the definition for "Director-General" and "Minister" would have a consequential impact on the clauses where these terms were used.

Mr M Mohlaloga (ANC) noted that the definition for "ICT" should be inserted before the definition for "licence area".

Ms J White, Mukwevho Mkhabela Adekeye Inc Attorneys, suggested amending the definition of "broadcasting service frequency radio bands". The last part of the definition would then read "taking into account the ITU table of allotments as agreed to and adopted by the Republic". The International Telecommunications Union (ITU) table referred to allotment and not allocation. In paragraph (b) of the definition for "harmful interference", "he" had to be changed to "the".

Ms Smuts felt that changing the definition for "broadcasting service frequency radio bands" did not make a substantive difference. The Chairperson disagreed. Ms Shope-Mafole said that the Department would look into this issue.

Ms Smuts wondered whether the definition for "election" was appropriate. The IBA Act defined "election" as any election of the National Assembly or any other legislature contemplated in the Constitution and conducted in terms of the Electorate Act 1993. She suggested deleting "for any legislature", and instead adding "as contemplated in the Electorate Act". This would take into account the specific features of local government and municipal elections.

Ms Shope-Mafole said that the definitions for "election" and "election period" had to be reconsidered with respect to the Electorate Act. Ms Smuts agreed and pointed out that the electoral period was always the key issue.

Mr P Nkhereanye, Transtel Senior Manager: Regulatory Affairs, felt that the reference to broadcasting services should be deleted in the definition for "interconnection". Ms Smuts agreed.

Mr Khumalo said that Members had agreed in an earlier discussion that interconnection in terms of broadcasting services would be possible if it was financially feasible and could be implemented technically. He agreed, however, that it was probably inappropriate to refer to broadcasting services in this definition.

Ms Shope-Mafole suggested deleting the last part in the "interconnection" definition that read "broadcasting services, services provided pursuant to a licence exemption or any combination thereof". Further, "communication services" would be substituted for "electronic communication networks".

Ms Smuts was opposed to the Director-General’s proposal because this would exclude internet service providers and others that had a communication service licences. The Committee had agreed to refer to all licences outlined in Chapter 3. Alternatively, the definition could be amended as follows: "Interconnection means the physical or logical linking of all licences dealt with in Chapter 3".

Mr Nkhereanye stressed that there was no interconnection with broadcasting services, either among themselves or between telecommunication operators and broadcasting services. The ITU definition for interconnection did not refer to broadcasting services either.

Mr K Motlana, Cell C (Head: Regulatory Affairs), said that interconnection occurred between networks and not between services. Hence, communication services would not have to be referred to in the definition of interconnection either.

Mr Mjwara remarked that broadcasting services would probably interconnect if it was physically possible. Including broadcasting services in the definition of interconnection did not cause any harm.

Mr S Madyibi, Internet Solutions, highlighted that interconnection should not be exclusive at network levels only but be inclusive of services as well. Interconnection could take place at service levels. He was strongly opposed to Cell C’s statement that said interconnection could not occur between services. Ms Smuts concurred with Mr Madyibi on this issue.

Ms Smuts asked why it was necessary to add "and having a frequency below 3000 GHz" in the definition for "radio".

Ms Shope-Mafole explained that there were different frequency bands rights defined by the ITU.

Ms White expressed concern that the definitions for "retail", "subscriber" and "subscriber equipment" excluded broadcasting. The definitions of "universal access" and "universal service" should also refer to broadcasting services and not only to communication services.

Mr Kholwane commented that the definition of "universal service" should refer to Clause 81(3) and not to Clause 80 due to the amendments that had been undertaken. He further felt that this definition was limiting.

Mr Khumalo explained that the definition of "retail" did not include broadcasting services because otherwise the viewers of free-to-air programmes would be classified as subscribers.

Ms White reiterated that broadcasting services were not included in the "retail" definition, as the latter referred to communication services.

Ms Shope-Mafole agreed to add broadcasting services in the relevant definitions. Electronic communication also included broadcasting services. The Committee had to take into account converged conditions.

The meeting was adjourned.

 

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