Convergence Bill: deliberations

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
14 September 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 concluded Clauses 63 to 73 of the Convergence Bill. The Committee adopted the vast majority of the proposed amendments of the Department of Communications. Members agreed to substitute "may" for "must" in Clause 67(2). The Committee requested the Department to harmonise the terms of subscriber, consumer and end-user in all relevant clauses of the Convergence Bill. A new provision for the e-rate had been inserted in terms of Clause 73. ICASA proposed an amendment for that clause. The Committee expressed great concern that the e-rate had not been implemented to date, and discussed the reasons with the industry.

In the afternoon session, the Committee concluded Clauses 73 to 98 and the Schedule, adopting most of the proposed Department amendments. The broadcasting services reiterated their unhappiness with the provision that they should contribute to the Universal Service and Access Fund, and the Department confirmed that contributions would be based on licence-related activities. The Committee approved the interim report on the Bill, and noted that adoption would be deferred until the ICASA Amendment Bill had been presented and studied.

MINUTES

CHAPTER 9: BROADCASTING SERVICES

Clause 63: Self provision by broadcasting service licensees
Ms C Mack, MIH Group Executive: Policy and Regulation, proposed to substitute "communications facilities" for "signal distribution" in Clause 63(1).

Mr K Khumalo (ANC) remarked that this proposal had not been made during the deliberations that had taken place the previous day. He asked for clarity on the effect of the clause on both the South African Broadcasting Corporation (SABC) and common carriers with respect to self-provision.

Mr Mjwara, Department Deputy Director-General: Multimedia, explained that all broadcasting services, including the SABC, had had the right to self-provide since 1993 in terms of the Independent Broadcasting Authority (IBA) Act. Section 8(g) of the Broadcasting Act had however limited this right, because it required that SABC television and radio programmes were transmitted and distributed by the common carrier for free-to-air reception. This section would not be repealed.

Ms J White, Mukwevho Mkhabela Adekeye Inc. Attorneys, concurred with the Deputy Director-General that the issue was sufficiently dealt with in the Broadcasting Act. It was not necessary to repeat this provision in the Convergence Bill. Mr S Kholwane (ANC) agreed.

Mr D Dube, Sentech Executive: Regulatory and Governmental Affairs, had no objections to the amendment, provided that Section 8(g) of the Broadcasting Act would not be repealed when the latter would be amended to the SABC Act.

The Committee agreed to adopt Ms Mack’s proposal for Clause 63(1). The Department’s proposed amendments for Clauses 63(2) and (3) were accepted.

Clause 64: Limitations on foreign control of commercial broadcasting services
The Committee agreed to adopt the proposed amendments of the Department.

Clause 65: Limitation on control of commercial broadcasting services
Mr Mjwara recommended extracting those provisions of the IBA Act that defined the limitation on foreign control of commercial broadcasting services.

Members accepted both the proposed insertion and the amendments of the Department.

Clause 66: Limitations on cross-media control of commercial broadcasting services
Ms Mack proposed to insert Sections 31(3) and (4) from the Broadcasting Act. This provision had previously been included in the Convergence Bill as Clause 66(10) and had probably been deleted mistakenly. Clause 66(10) would read as follows: "The Authority must conduct an inquiry, in terms of subsection (1) and make recommendations to the National Assembly as to whether sections 64 and 65 are applicable to broadcasting services carrying more than one channel and the extent and terms upon which such sections must apply".

Mr G Oliphant (ANC) asked about the implications of this insertion.

Ms Mack replied that for all changes regarding ownership and control, the Authority had to go through a process of making recommendations to the Minister and then table them in the National Assembly.

Mr Oliphant asked what in Clause 66 did not satisfy the SABC. The process in terms of Clause 66(10) seemed to be cumbersome.

Mr Mjwara explained that at the time when the recommendations were made, there was no legal basis for these recommendations.

Mr Oliphant remarked that transitional provisions had to deal with such processes.

CHAPTER 10: COMPETITION MATTERS

Clause 67: Competition matters
Mr Mjwara commented that Clauses 67(3), (10), (11), and (12) had been inserted due to previous agreements. Clause 67(5) had been deleted.

Ms M Smuts (DA) agreed to insert Clauses 67(3), (10), (11) and (12). She was however opposed to the deletion of Clause 67(5). The latter read as follows: "Where the Authority imposes pro competitive conditions under this section, such pro competitive conditions must be proportional to address the level of ineffective competition, which the Authority has determined exists, in the relevant markets or market segments".
Proportionality was desirable.

Ms T Cohen, ICASA Councillor, felt that Clause 67(5) was a subjective formulation.

Ms Smuts asked the Independent Communications Authority of South Africa (ICASA) to explain why they thought that the clause was subjective.

Ms Cohen said that the issue of proportionality would be dealt with under Clause 67(7).

Mr Oliphant agreed with ICASA. Further, the phrase in brackets that read "to strengthen section 9 on the matter of forum shopping" in Clause 67(9) had to be deleted. Mr Mjwara replied to the latter that it was merely an explanatory note.

Mr Oliphant remarked that Clauses 67(9), (10), (11) and (12) strengthened the power of the Authority.

Ms Smuts asked whether the issue of proportionality could be dealt with in a separate clause.

Ms L Shope-Mafole, Director-General: Communications commented that the Regulator had to define proportionality in terms of ineffective competition. Ms Smuts agreed with the Director-General.

Mr C Motlana, Cell C Head: Regulatory Affairs remarked that Clauses 67(5) (b) and (c) were tests of dominance and should thus be dealt with under Clause 67(6) (b). He proposed to substitute the word "may" for "must" in Clause 67(2), and "must" for "may" in Clause 67(6) (b). The former would oblige the Authority to set out the framework, while the latter would allow them to take those factors into account deemed necessary.

Mr M Mashisane, MTN Manager: Regulatory Affairs, concurred with the representative of Cell C. He expressed concern about Clauses 67(5) (b) and (c). Particularly 67(5) (c) seemed to be very subjective. The Authority could declare that a licensee had significant market power without having undertaken the procedure required in terms of 67(6)(b) (ii). It would be recommendable that sub-clause (5)(c) made reference to Clause 67(b) in order to assist the Authority in their judgement. Not any vertical relationship resulted in significant market power. The inclusion of Clause 67(5) (b) that addressed the control of essential facilities was not necessary. Furthermore, Clause 67(6) should refer to Clause 67(4) (b) and not (5)(b), as the former addressed the methodology.

Mr P Ponguana, Vodacom Managing Executive, agreed that Clause 67(6) should refer to Clause (4)(b). There was no relationship between the deleted Clause 67(5) that dealt with proportionality and the pro-competitive terms and conditions outlined in Clause 67(7). He thus recommended not deleting Clause 67(5).

Mr Khumalo said that the Committee should consider substituting "must" for "may" in Clause 67(6) (b) as had been proposed by Cell C. This amendment would be in line with Clause 67(7) which also used the word "may".

Mr Oliphant was not against replacing "may" for "must" in Clause 67(2). He was however opposed to substitute "must" for "may" in Clause 67(6).

Mr Khumalo stated that it was the wording "among others" that had to be reconsidered in Clause 67(7).

Mr S Madyibi, Internet Solutions, commented that the effect of retaining the word "must" was that the Authority would have to consider all 11 factors. This would be problematic. The intention was that the Regulator would substantively consider the majority of the factors. The word "may" should thus be used in Clause 67(7).

Ms Shope-Mafole felt that replacing the word "must" with "may" could be problematic because the Regulator could then be persuaded not to consider certain factors. The Regulator should be obliged to take into account at least a minimum of factors.

Mr P Mpapele, Executive HOD: Regulatory Affairs, said that Clauses 67(6) (b) and (7) imposed onerous obligations on those operators found to have significant market power. He concurred with Cell C’s proposal, provided that "on the basis of a market study" was inserted after the word "determines" in Clause 67(4).

Mr Mjwara felt that it was problematic to include another market study in the legislation, as this could lead to confusion and misuse. There should only be one market assessment. It was thus necessary to retain the word "must" in Clause 67(7).

Ms D Tshepe, Cheadle Thompson Attorneys, agreed with the Deputy Director-General.

Mr Kholwane also agreed that the word "must" should not be substituted for "may" in Clause 67(7).

Mr Motlana reiterated that a licensee should only be declared to have significant market power in terms of 67(5) (a), but not with respect to (b) and (c). He proposed to delete Clauses 67(5) (b) and (c) as these factors were dealt with under Clauses 67(6)(b)(ii) (dd) and (jj).

Ms Smuts pointed out that a licensee would only be declared to have significant market power in terms of Clause 67(6) (c) if the Authority determined that the vertical relationship could harm competition. A licensee had significant market power if the latter controlled the essential facilities in terms of Clause 67(6) (b).

Mr Khumalo said that Clause 67(5) defined the factors that determined a licensee to have significant market power. In contrast, Clause 67(6) stated which factors had to be taken into account in analysing the effectiveness of competition. Deleting Clauses 67(5) (b) and (c) would mean that a licensee would only be found to have significant market power if that particular licensee was found to be dominant.

Ms Shope-Mafole felt that the problem of Clause 67(5) was that it read "a licensee has significant market power". She proposed to replace "has" with "could be considered to have". She further suggested to add: "that the Authority determines could harm competition in the market or market segments applicable to the particular category of licence" at the end of Clause 67(5) (b). The fact that a licensee had control of essential facilities did not necessarily mean that the particular licensee had significant market power. Clause 67(5) would then indicate which licensees could be considered to have significant market power.

Ms Smuts remarked that the wording "where the Authority finds" had to be taken into account in Clause 67(5).

Ms K Pillay, Cell C Manager: Government and Parliamentary Affairs, stated that the definition of "dominance" in terms of the Competition Act required that the Authority had to take into account both the percentage of market share and an assessment of the market power. The latter included looking at the control of essential facilities and vertical relationships. It was thus not problematic to delete Clauses 67(5) (b) and (c), as those two factors were included in Clause 67(5) (a).

Mr Oliphant said the difficulty was that Cell C was not contesting that the control of essential facilities and vertical relationships were problematic. Cell C only stated that these factors were dealt with under Clause 67(6) (b). In terms of Clause 67(5), a licensee had significant market power when paragraphs (a) and (b) or (c) were prevalent. He asked what the implications were of the Director-General’s proposal.

Mr Z Mthembu, SABC Group Manager: Strategy Planning, suggested to change paragraph (b) and (c) to subsets of (a) in Clause 67(5), provided that it was agreed that dominance entailed control of essential facilities and vertical relationships.

Mr Mashisane suggested referring to the criteria defined in Clause 67(6) (b) and in Clause 67(5) (c).

Mr P Mashile, ICASA Chairperson, said that deciding which factors were relevant for conducting an analysis of the effectiveness of competition should be at the discretion of ICASA. Some of the factors mentioned in Clause 67(6) (b) were vague and subjective. The list of factors should be narrowed down, as it could otherwise be subject to an ‘escape mechanism’ for dominant players. Substituting the word "must" for "may" could thus be relevant.

Mr Madyibi was opposed to MTN’s proposal that Clause 67(5) that dealt with the determination of significant market power should refer to the analysis of the effectiveness of competition in terms of Clause 67(6). These were two completely separate issues. He agreed with the Chairperson of ICASA that if the word "must" was retained in Clause 67(7), then the 11 factors to be considered had to be reduced to a minimum.

The Committee agreed to substitute the word "may" for "must" in Clause 67(2).

Ms Smuts asked for legal advice on the term "taking into account" as used in Clause 67(6) (b). She requested the Deputy Director-General to give more information on Clause 67(5) (c).

Ms Tshepe answered that the word "must" meant that all the factors had to be taken into account. The regulator had to consider at least the 11 factors described. If ICASA felt that it was necessary to take into account other factors, they could. The word "must" had to be retained in Clause 67(6) (b).

Mr Mjwara explained with respect to Clause 67(5) (c) that the Authority would only act upon those vertical relationships that could harm competition. The Authority had to give substantial reasons when it found that a vertical relationship was harmful. Both the control of essential facilities and vertical relationships should not be part of paragraph (a). The Director-General’s proposal for Clause 67(5) (b) should be considered.

The Committee agreed that paragraphs (a), (b) and (c) should be kept separate.

Ms Smuts suggested inserting "after conducting the analysis referred to in section 67(6) (b)" in Clause 67(5).

Mr Oliphant said that essential facilities and vertical relationships were not a subset of "dominance" in terms of the Competition Act. Clause 67(5) should not be amended.

Mr Khumalo was opposed to Ms Smuts’ proposed insertion. Clause 67(5) should not be amended.

Mr Mjwara pointed out that Clause 67(4) (b) had to be considered, as it required that regulations must set forth the methodology to be used to determine the effectiveness of competition.

The Chairperson concluded that Clause 67(5) (c) would not be amended.

Ms Smuts requested the Committee to reconsider changing the title of Chapter 10 as had been proposed by the Competition Commission.

Ms Shope-Mafole suggested the following title for Chapter 10 "Promoting competition in the ICT sector". Promoting competition in the sector was an objective of the Convergence Bill.

Ms Smuts commented that an argument had been made that the title "Competition matter" could create difficulties with respect to concurrent jurisdiction. The Competition Commission had recommended the following heading for the chapter: ""Tariffs, interconnection and dispute resolutions". She wondered whether the Committee should consider their request.

The Chairperson said that the name of Chapter 10 should not be changed.

Mr Kholwane remarked that many cross-references in Chapter 10 were not correct and had to be looked into.

CHAPTER 11: NUMBERING

Clause 68: Numbering plans and number portability
Mr Mjwara said that there were no new amendments in Chapter 11.

Mr K Motlana said that in the 2001 amendments of the Telecommunications Act, a commitment had been made to introduce number portability in 2005. According to the present Clause 68(1) (b), it was not known when number portability between operators of a similar class would be introduced. He thus proposed to amend Clause 68(1) (b) as follows: "measures to ensure that number portability between similarly licensed operators as contemplated in the amended Telecommunications Act is introduced in 2005, and number portability as envisaged in this Act is introduced as soon as practicably possible thereafter".

Mr Dube remarked that the current number portability was very restrictive as it only related to service providers of the same category. Therefore, the present number portability should not be continued, but instead number portability should be introduced that related to all the services. Clause 68(1) (b) should not be amended.

Ms L Marthinus, Vodacom Manager: Regulatory Affairs stressed that they had not yet received ICASA’s regulations regarding this matter. Hence, number portability should only be introduced in 2006.

Ms Shope-Mafole commented that the Department had already signed the ICASA regulations. Number portability in terms of the amended Telecommunications Act would be introduced in 2005.

Ms M Matlala, Department Senior Manager: Telecommunications Policy remarked that number portability between mobile operators could not be catered for in the Convergence Bill. Mr Madyibi agreed.

The Committee agreed to adopt Clause 68 as had been proposed by the Department.

CHAPTER 12: CONSUMER ISSUES

Clause 69: Code of conduct and subscriber service charter
Mr Doyle stressed that Clause 69(4) and (5) should also include end-users.

Mr Mjwara said that the terms subscriber, consumer and end-user had to be clearly defined. During previous deliberations, they had substituted "consumer" for "subscriber".

The Chairperson felt that the term "consumer" would be the right term in Clause 69.

Ms Shope-Mafole remarked that the use of the term "consumer" was inappropriate in the telecommunications sector, and that "end-user" should be referred to instead.

The Chairperson requested the Department to harmonise these terms in all relevant clauses of the Convergence Bill.

Clause 69: Consumer Advisory Panel
Mr Oliphant reminded Members that ICASA had to follow up on the issue of locked handsets.

CHAPTER 13: GENERAL

Clause 72: Establishment of Communications and ICT Museum, information communication technology for government and other related services
The Committee agreed to adopt the proposed amendments of the Department.

Clause 73: E-rate
Mr Mjwara said that Clause 73 had been extracted from the Telecommunications Act and read as follows: "All public schools as defined in the South African Schools Act 1996 (Act No. 84 of 1996), and all public further education and training institutions as defined in the Further Education and Training Act, 1998 (Act No. 98 of 1998) shall be entitled to a fifty percent discount on (a) all telecommunications calls to an internet service provider; and (b) any connection, including any equipment used for or in association with such connections, or similar fees or charges, levied by an internet service provider for accessing the internet or transmitting and receiving any signals via the internet or for such access, transmission and reception".

Ms Matlala remarked that "telecommunications calls" in Clause 73(1) (a) should be substituted for "connections to internet".

Ms Smuts proposed to delete the word "public" in Clause 73. She reminded Members of the submission they had received form the National Alliance of Independent School Associations. The vast majority of the 17 associations of independent schools were poor. The e-rate provision in the Convergence Bill should thus not only refer to public, but also to private schools.

Ms N Mokoto (ANC) commented that it was difficult to determine which school qualified for the e-rate. Certain schools could afford to pay for the internet connections. The ANC had requested the Department to engage with the Department of Education on this issue.

Ms Matlala answered that the current Clause 73 was based on the position of the Department of Education.

Mr Oliphant recommended inserting a paragraph (c) that allowed any school not covered under Clause 73 to make a request to be considered. Public schools had however to be prioritised.

Ms Smuts was pleased about Mr Oliphant’s proposal. She asked whether both the e-rate and the subsidy under the universal service were dealt with when the Department had engaged with the Department of Education.

Ms Matlatla answered that they had only requested advice on the issue of the special e-rate.

Ms Shope-Mafole reminded Members that the objective of the Department differed from that of the Department of Education. The Department of Communications focused on universal service. She agreed with Mr Oliphant’s proposed insertion of a paragraph (c).

Mr Khumalo agreed that the Department had an obligation in terms of access to services. It was however difficult to entitle both public and private schools to a 50% discount on all internet connections because there was a lack of capacity. The government had a direct responsibility towards public schools. Clause 73 should be restricted to public schools.

Ms Smuts stressed that the internet sector was forced by law to charge only 50%, and that it was not the government who financed the discount. The e-rate issue should be addressed in the chapter on the Universal Service Agency. The money in the Universal Service and Access Fund had to be utilised, amongst other, for the payment of subsidies to public schools. She asked whether the internet sector should not receive some of the Universal Service Fund money to subsidise the e-rate.

Ms L Cassie, ICASA Senior Manager: Enforcement, proposed to amend Clause 73(1) as follows: "Electronic communications services provided to all public schools as defined in the South African Schools Act, 1996 (Act No. 84 of 1996) and all public further education and training institutions as defined in the Further Education and Training Act, 1998 (Act No. 98 of 1998) shall be provided at a discounted rate of 50% off the total charge levied by the licensee providing internet services to such institutions".

The new Clause 73(2) would read as follows: "The discount shall be applicable off the total charge levied by the licensee which includes but is not limited to the following a) any connectivity charges for access to the internet; b) charges for any equipment used for or in association with connectivity to the internet; and c) all calls made to an internet service provider".

Clause 73(3) would read as follows: ""Where the licensee, who provides internet services to the institutions as contemplated in subsection (1), obtains its communications facilities for the provision of internet services from a communication network service licensee, it shall be entitled to a minimum of 50% off the retail rate charged to it by the communications network service licensee for the facilities in question".

Finally, Clause 73(4) would read as follows: "A licensee obliged to provide services subject to the e-rate may suspend or restrict such services only temporarily on account of essential requirements conforming to the guidelines to be published by the Authority from time to time. Such guideline shall have overall regard to the state of connectivity of institutions as contemplated in subsection (1)".

Mr Madyibi asked what the intention was of ICASA’s proposed amendment to Clause 73.

Ms Cassie replied that the current provisions in the Telecommunications Act were very problematic with respect to interpretation and implementation. The e-rate had not been implemented to date.

Mr Ponguana queried what the problem was with the implementation of the e-rate.

Mr Madyibi commented that the unclear provision in the Telecommunications Act had been the reason for the delay of the e-rate implementation. The problem was that ISPs that provided internet to schools had to obtain underlying access circuits from Telkom or other facilities providers. The Telecommunications Act did not stipulate whether the 50% discount also referred this. This was one of the key issues. An amendment of the e-rate provision was welcomed, but he wondered whether the proposal of ICASA addressed the current problems.

Ms Cassie replied that the amended Clause 73(4) requested ICASA to formulate guidelines in this regard.

Mr Z Masiza, ICASA Councillor, said that the problem was that operators were refusing to give e-rates to schools. The current formulation did not give enough power to ICASA to ensure that the operators provided those services. Telkom had argued for instance that the e-rate was only applicable to calls to the internet.

Mr Mvunelwa remarked that the problem was that internet service providers expected Telkom to give the 50% discount.

Mr Ponguana said it was difficult to identify the schools that both required and wanted internet. Clarity was also needed on the 50% discount.

Mr Madyibi stressed that internet service providers had not refused to give the 50% discount to schools. Internet provision consisted of two components. The first part was an underlying circuit. Internet service providers had no control over that access. The second part of internet provision was the actual access to the internet. The latter was the responsibility of internet service providers.

The access layer was the most expensive part of the internet connection fee. Telkom had been able to charge what they pleased because of a lack of competition. Internet service providers were only willing to contribute in those areas where they had control. This was the reason for the delay in the implementation of the e-rate. He asked whether ICASA’s amended formulation of Clause 73 addressed this problem.

Mr Oliphant said that the proposal of ICASA had to be strengthened, particularly the guidelines. He suggested that a minimum of 50% discount would have to be given.

Ms Smuts expressed great concern that the e-rate had not been implemented to date. There was obviously a problem with the model. Telkom had a monopoly, while the burden was laid on the internet service providers. Broadband education had to be rolled out to all pupils. She reiterated that this issue should be dealt with under the Universal Service Agency chapter. The Universal Service Agency had to create a model for network and communications service licenses that worked.

Mr Kholwane commented that ICASA had to insure that they were able to enforce the provisions under Clause 73.

The Chairperson asked how ICASA’s proposed amendment of Clause 73 addressed the concerns raised.

Mr Masiza highlighted that any connectivity should be subject to 50% discount. He asked for guidance as to how to deal with the underlying circuits that were outside the control of internet service providers.

Mr Mjwara stressed that the Regulator had to make and enforce regulations with regard to this matter. All public schools were entitled to a 50% discount. Clarity was needed as to how this 50% were calculated. The Committee could consider addressing this issue under the conditions of licenses.

The Chairperson asked ICASA what had enabled them to enforce the implementation of the e-rate.

Mr Masiza explained that Telkom was both a connection and infrastructure provider. Telkom had believed that the 50% discount only referred to internet access, and had been reluctant to give 50% to broadband connections in schools. The problem of the internet service providers stemmed from the fact that Telkom was unwilling to give them the 50% discount. Regulations would not be able to tackle this problem.

Mr Mjwara said that the problem had to be rectified through regulations. The Regulator should be empowered to enforce these obligations. The issue of splitting costs, for instance, had to be subject to regulations. The Chairperson agreed.

Ms Mokoto remarked that both the ANC and the DA had agreed to insert paragraph (c) that Mr Oliphant had suggested. She wondered whether this provision would be adopted.

Ms Smuts said that she had agreed with Mr Oliphant’s proposal until she had realised that no school was receiving the e-rate. The present Clause had to be reconsidered. The question was which service providers were responsible for which school.

The Chairperson asked whether the Committee accepted ICASA’s proposal, or whether Members requested that the Regulator would reconsider this issue.

Mr Khumalo felt that the e-rate should not be dealt with under the Universal Service Agency chapter.

Ms Shope-Mafole said that it was important to consider ICASA’s proposed amendment because it was the responsibility of ICASA to enforce the provisions.

Clause 73: E-rate
The Committee confirmed its acceptance of the proposed ICASA wording for the Clause.

Clause 74: Offences and penalties
Mr Mjwara noted that the issue of the Regulator had been raised during a previous discussion. This Clause should be prefaced, by saying that ICASA should publish guidelines, so that these could be enforced.

Mr Mohlalonga requested assistance from the legal advisors in order to interpret the Clause. The way subclauses (1) and (2) were crafted appeared to read that, if the Minister or ICASA failed to meet the deadline, this could be viewed as an offence, leading to a penalty or conviction.

It was noted that Clause 74 stated that the contravention of any Section of the Act (which by definition included the Regulations) would be a criminal offence to be dealt with by the criminal courts.

The ICASA delegation noted that this had been highlighted in the ICASA May submission as a grave concern. Because it made contravention of the Act a criminal offence, it removed the powers of the Authority. The Chairperson queried whether ICASA was motivating that the Clause be deleted, and the reply was in the affirmative.

Ms Smuts suggested that the legislature should be specific and not leave the power to ICASA. It would be an excellent idea to deal with the issue in the ICASA Amendment Act, and delete the Clause from this Bill.

Mr Mohlalonga asked ICASA for suggestions on the way in which offences and penalties could be dealt with.

Mr Oliphant asked what would happen if the law were contravened, and how ICASA dealt with offenders.

Ms Smuts reiterated that this would be best dealt with in the ICASA Act.

The Chairperson asked whether there was anything in this Bill that would not fall within the ambit of ICASA.

Ms Smuts emphasised the need for the ICASA Amendment Bill to be debated, before contraventions and penalties could be prescribed.

ICASA proposed an alternative that the amounts could be stipulated by Regulations, as proposed in their May submission. Mr Oliphant proposed that this be referred to and made part of the Schedule.

Mr Oliphant noted that the principle should be debated, rather than the process. The Schedule could be amended if necessary.

Ms Marthinus noted that ICASA’s proposed wording would only apply to individual licences, and requested that this be checked.

Clause 75: Directory services
The Committee agreed to adopt the proposed amendments of the Department.

Clause 76: Establishment of public emergency communications centres
The Committee agreed to adopt the proposed amendments of the Department.

Clause 77: Duties of 112 Emergency Centres and licensees
The Committee agreed to adopt the proposed amendments of the Department.

Clause 78: National Public emergency number
The Committee agreed to adopt the proposed amendments of the Department.

Clause 79: Standards, capabilities and operating procedures of 112 Emergency Centres
The Committee agreed to adopt the proposed amendments of the Department.

CHAPTER 14: UNIVERSAL SERVICE AGENCY

Clause 80: Continued existence of Universal Service Agency
The Committee agreed to adopt the proposed amendments of the Department.

Clause 81: Functions of the Board
The Committee agreed to adopt the proposed amendments of the Department.

Clause 82: Functions of Agency
The Committee agreed to adopt the proposed amendments of the Department.

Clause 83: CEO and staff of Agency
Ms Shope-Mafole proposed the insertion of Clause 83(4)(b) as "set measurable performance targets".

Mr Oliphant proposed that "staff" should be removed from Clause 83(10).

Mr Mjwara explained that the tenure of the Agency was five years, renewable, and that all contracts were thus limited to five years.

Mr Oliphant expressed concern that staff would be constrained by this, as it was a condition of employment to be determined elsewhere.

Mr Mjwara noted that the Public Finance Management Act (PFMA) dictated that the Department could not have contracts that extended beyond the five-year review.

The Chairperson asked the location of the provision stipulating that the USA was a five-year project.

Mr Mjwara proposed the insertion of "subject to a five-yearly review". Conditions of employment also had to be negotiated, and the Agency might be exposed to problems if the contracts were not aligned.

Ms Shope-Mafole proposed leaving the Clause without a time limit, and deleting "staff". The Committee concurred.

Clause 84: Financing of Agency
The Committee agreed to adopt the proposed amendments of the Department.

Clause 85: Banking account
The Committee agreed to adopt the proposed amendments of the Department.

Clause 86: Annual and other reports
The Committee agreed to adopt the proposed amendments of the Department.

Clause 87: Continued existence and control of Universal Service Fund
The Committee agreed to adopt the proposed amendments of the Department.

Clause 88: Application of money in Universal Service and Access Fund
Ms Smuts proposed that the submission of the National Alliance of Independent Schools Associations be adopted.

Mr Khumalo disputed whether independent schools were relevant. The earlier suggestion where the Authority was to put in place Regulations for people to apply, should apply in this respect as well.

Mr Mjwara noted that the problem of the e-rate still had to be sorted out.

Mr Oliphant proposed that the two options be kept provisionally.

Ms Mokoto noted the need for Clause 88(1)(b) to capture broadcasting services as well.

Ms Shope-Mafole proposed amending Clause 88(1)(d) with the insertion of "and allowances for", to allow young people to be brought into e-awareness.

The SABC, ETV, Multichoice and M-Net requested the Committee to give serious consideration to the fact that broadcasters were required to contribute to the USF, given the number of additional payments they were already making. Even non-profit licensees were required to contribute to the USF, and these should be exempt. If broadcasters were to be required to contribute, broadcasting services should be included in all categories.

Ms Smuts concurred, and noted the issues of broadcasting viability.

Mr Kholwane concurred that the definitions should cover both broadcasting and communications network services, and whatever was inserted in this Clause should be harmonised with the definitions. He supported the submission from the Director-General.

Ms Mokoto reiterated that certain licences would get different obligations, and community broadcasters would not be expected to pay that contribution.

The Committee accepted the amendment as proposed by the Director-General, and the explicit inclusion of broadcasting.

Clause 89: Contributions to Universal Service and Access Fund
The SABC requested that it be specifically stated that the annual turnover referred to was that related to licence activity. It would seem to make sense to change the title of the Chapter to reflect the new name.

Mr Mashisane submitted that the contribution percentage be reduced to 0.5%, and asked whether a company holding two licences would be required to contribute off both licences.

Mr Kholwane emphasised that the percentage was 1% of licence specific activity.

Mr Oliphant proposed the insertion of "acts relating to the licence" in Clause 89(2)(a). The issue of contributions was captured in Clause 89(3), and the change of name would come in on the promulgation of the Act.

The SABC raised a concern that constitutional problems might be raised by the use of "other percentage" in subclause (2)(a), and proposed that it should read "1% or such lower percentage as determined …".

Mr Mjwara explained that the intention had not been to exceed 1%, but that, if the Minister found the 1% onerous, she could lower the rate.

Mr Khumalo concurred that it was simply an assumption that it would be lower, and proposed saying a maximum of 1%.

Mr Kholweni proposed the insertion of "lower" after "other".

Ms Shope-Mafole emphasised that it was not intended to be lower. The Authority had to prescribe, and the basis for this was 1%.

Mr Oliphant proposed "by the Minister after consultation with affected parties".

Mr Mpapele requested clarity on Clause 89(1), as the wording did not seem to take into account the implications of convergence. Was the intention that all licensees should contribute to the Fund, and would contributions be based on category?

Mr Oliphant replied that contributions were related to licence activities.

Ms Smuts felt that it seemed unfair to impose a double obligation on an operator who happened to have two licences.

Mr Oliphant disagreed, as the tax was on licensed activities.

The Committee agreed to adopt the Clause as amended.

Clause 90: Competitive tender for universal service and access projects
The Committee agreed to adopt the proposed amendments of the Department.

Clause 91: Accounts of Universal Service and Access Fund
The Committee agreed to adopt the proposed amendments of the Department.

CHAPTER 15: TRANSITIONAL PROVISIONS

Clause 92: Existing licences
Mr Mjwara proposed that, with respect to those services that were not affected by relevant or related legislation, a new subclause (3) be inserted.

Ms Shope-Mafole noted that this was a good provision, but that it might have unintended consequences.

Mr Mjwara proposed that the licences be continued on the same conditions to avoid potential negative effects. The Committee concurred.

Clause 93: Licence conversion
Telkom proposed the insertion of "and conditions that were applicable prior to conversion" in subclause 93)(1).

The Committee agreed to adopt only the proposed amendments of the Department.

Clause 94: Conflicts
Ms Smuts queried whether the Clause could be construed to include the Constitution. The legal representatives replied in the negative, noting that the Constitution was the supreme law.

The Committee agreed to the Clause.

Clause 95: Existing regulations
It was pointed out that no Regulations had been passed in terms of the Sentech Act, and the Committee agreed to delete Clause 95(1)(f).

The Committee agreed to adopt the proposed amendments of the Department.

Clause 96: Repeal and amendment of laws
The Committee agreed to the Clause.

Clause 97: Short title and commencement
Ms Smuts proposed that the Act be titled the "Electronic Communications Act 2005".

Ms Shope-Mafole concurred that this would be consistent and revolutionary and would accurately reflect the content of the Bill.

Mr Oliphant proposed that both proposals be accepted, for later confirmation. The Chairperson concurred.

Clause 98: Application of this Act
The Committee agreed to adopt the proposed amendment of the Department.

SCHEDULE 1
The SABC noted that under the sections of the Broadcasting Act to be repealed, Section 8 set out the functions and objects of the SABC. Section 40 was also to be repealed, but it was essential that subsection 40(c) be retained, as this gave the Minister the power to set regulations in relation to television licences.

Mr Oliphant proposed retaining only subsection 40(1)(c). The Chairperson concurred.

Ms Smuts asked whether Section 5 should be deleted. Mr Mjwara noted that people held licences according to those categories, and the Section could be deleted once conversion had taken place.

Sentech proposed that the definition of broadcasting signal distribution licence be retained as defined in the Broadcasting Act. The Committee concurred and it was agreed that the definition of "common carrier" in the Sentech Act would be retained.

The Chairperson read the interim report of the Committee on the Bill, pending consideration of the ICASA Amendment Bill. The Bill would be formally adopted after the constituency break (from 19 September to 7 October).

The meeting was adjourned.