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COMMUNICATIONS PORTFOLIO COMMITTEE Chairperson: Mr N Kekana
11 September 2001
TELECOMMUNICATIONS AMENDMENT BILL: BRIEFING
COMMUNICATIONS PORTFOLIO COMMITTEE
Chairperson: Mr N Kekana
Telecommunications Amendment Bill [B65-2001]
Committee programme (see Appendix)
Tuesday, 11 September 2001
Wednesday, 12 September 2001
Tuesday , 25 September 2001
Wednesday , 26 September 2001
Thursday, 27 September 2001
Friday , 28 September 2001
Monday 1 October 2001 - 5 October 2001
Tuesday , 9 October 2001
Venue: Old Assembly Chamber APPROVED
Wednesday , 10 October 2001
Thursday, 11 October 2001
Friday, 12 October 2001
Tuesday, 16 October 2001
NB : 12 - 16 November 2001 ITU Telecoms Africa @ Gallagher Estate
Enquiries: Rita Schaafsma Chantal Paulse
Tel: 403-3742 Tel: 403-3874
Fax: 462-2141 Fax: 462-2141
Department of Communications website
The morning session briefing provided by the Director General gave a very broad overview of the Bill. The Department addressed members' concerns as to the way in which the Bill would impact on the lives of ordinary people and how it would ensure universal access. Public hearings will be held on 25 September.
Afternoon session: The chairperson stated that greater depth would be had as to any issues raised at a later stage and that for present purposes basic clarification would suffice. The Director-General clarified that a 'fixed-mobile service' would be restricted to a limited geographical area as opposed to a cellular phone service, which allows the user access anywhere in the country. The Director-General stated that Sentech would fulfil the role of a 'carrier of carriers' and that it would be economically more efficient for much of Africa's traffic to be re-routed through Sentech rather than via Europe. The Director-General stated that there had been clear opposition to the idea of auction for licences and that administrative pricing had been opted for in the interests of securing a bidder with long-term liquidity and sustainability.
Committee Programme regarding Telecommunications Amendment Bill
The Chair stated that the Telecommunications Amendment Bill had been tabled in Parliament amidst many changes taking place in the Information and Communication Technology (ICT) sector such as the Japanese launching the first Third Generation services. He pointed out that one has to look at this Bill within a global context while at the same time it provides the opportunity to improve the quality of life in South Africa.
The Committee has placed advertisements and contacted stakeholders from industry to submit submissions. Public hearings will be held from 25 to 28 September.
The Chair urged stakeholders to be specific with regard to their comments and to make concrete proposals. Stakeholders should also obtain legal opinion upon which to base their submissions. They should indicate in their written submissions whether they are prepared to present an oral submission to Parliament to present. Deliberations would take place from the 9 to 11 October. A debate in the National Assembly would follow. The Select Committee would sit with the Portfolio Committee as from 25 September. He hoped that the Bill would be handed to the President by the end of October. The Committee approved the programme and it was adopted.
Background to the Telecommunications Amendment Bill
The Director General, Mr A Ngcaba, said that it was important to contextualise the Bill. In 1996 the Telecommunications Act had been passed. The Act was very comprehensive as it had replaced the following: Post Office Act (1958), Radio Act (1952) and Postal Services Act (1974). The 1996 Act almost repealed these as that legislation could not take the country forward given the advances in telecommunications that had occurred since their enactment. The White Paper and the Act had stated that there would be a review of parts of the Act after five years. This would allow for managed liberalisation and competition that would be introduced at the end of Telkom's period of exclusivity.
Parallel to the introduction of managed liberalisation and the end of Telkom's exclusivity, were technological advances that were so extensive that it had become necessary to change the way of thinking in this arena. In addition, the Department's objectives of universal service and universal access had remained unchanged and had to be incorporated into the Bill.
The introduction of the Bill had been a long process that had started late last year when the Department had consulted different stakeholders. By January 2001 models had been developed. These looked at the "business case" of the Second National Operator (SNO) that would come into existence after May 2002. Following this, a stakeholders' meeting had been convened. This became known as the Second Colloquium. There had been approximately 350 participants at the colloquium. After the colloquium a small group had been nominated to make recommendations to the Minister. These had then been submitted to Cabinet. They had then introduced the draft Telecommunication Policy Directions after which further discussions had taken place with the industry on these.
The final proposal had gone to the Minister after which it was published. However, the question then arose as to amending the policy directions to include the introduction of a third national operator (TNO). However it had then been decided to revert to the initial draft policy directions.
Overview of the Bill
Clause I: The definition clause must be able to withstand changes in technology. However there will be instances that the definitions will be affected by certain changes.
Clause 2: The clause dealing with the objects of the Act was amended to include a further object, i.e. to promote and facilitate the convergence of telecommunication, broadcasting and information technology. This is because telecommunications and broadcasting are coming together as ICT. Next year the Convergence Act will be championed.
Clause 4: This deals with Frequency Band Plans and amends S29. Oral hearings have been excluded from the application procedure, bringing it in line with international best practice.
Clause 5: One of the biggest problems internationally is the way Third Generation (3G) licences are issued. There is now a statutory mechanism for the award of radio frequency spectrum and 3G licences to the different operators.
Clause 6: This deals with managed liberalisation, which will come about as a result of the end of Telkom's exclusivity. This deals with the introduction of the SNO. There will be a "set-aside" for the purposes of black economic empowerment and will therefore allow for the entry of Esi-tel and Transtel. The Department hopes to introduce another operator by 2005, but this is subject to a feasibility study. Sentech will now be awarded an international and multimedia licence. The SNO will be able to use Telkom's infrastructure for two years.
Clause 8: The Minister may invite applications for a combination of telecommunication licences for the SNO and TNO so that it mirrors Telkom's licence.
Clause 10: This clause allows for alternative licencing methods. There is a need to streamline the licencing process so that decisions can take place faster. There must, however still be openness.
Clause 11: This confirms the licences of MTN, Vodacom and Cell C.
Clause 14: As of 7 May 2002, the SNO and under-serviced area licencees are entitled to provide voice-over services over Internet protocol.
Clause 15: The introduction of under-serviced area licences in areas with a teledensity of less than 5% will serve to increase economic activity in these areas by creating a new tier of businesses.
Clause 17: This clause introduces price regulation. Telkom's most recent price determination remains valid until the Independent Communication Authority of SA (ICASA) determines the next price determination.
Clause 22: This deals with the establishment of 112 Emergency Centres. A budget of R80m has been made available for this.
Clause 26: Some of the past and present technologies need to be preserved for learning purposes.
Ms D Smuts (DP) stated that one of the objects of the Bill is to promote and facilitate convergence. The Bill however does not deal with convergence.
The DG stated that the department is in the process of drafting a Bill dealing with convergence. They hope to present the Bill to Parliament in 2002.
Ms Smuts asked if the Department has taken into account legal opinion on the constitutionality of giving Sentech a multimedia licence. This decision is in the constitutional ambit of ICASA and not of the Minister. She asked what happens if members of the private sector wished to provide these services.
The DG replied that they had obtained legal opinion. Their decision had been based on the fact that Sentech has the infrastructure to provide the services. It was important to ensure that the licence was given to the organisation that is best suited to the job. Sentech had introduced digital terrestrial broadcasting infrastructure in preparation. However it does not mean that Sentech will do all the work. They will just assist with the infrastructure and therefore provide the backbone for delivering the services. It is important that managed liberalisation (and the introduction of private companies) is not introduced in a 'big bang' fashion.
Ms Smuts doubted the constitutional 'cleanness' of the fact that Parliament no longer appoints the ICASA Regulator. She referred the Committee to the process followed by the Independent Electoral Commission where they select candidates and then submit these names to Parliament.
Ms N Mtsweni (ANC) asked what the introduction of the SNO would mean to the consumer.
The DG responded that the customer would get a choice as to who would provide their basic services. They can also now choose to have an SMME provide services in small towns.
Ms Mtsweni asked how the introduction of the SNO would contribute to universal access.
The DG stated that the licences came with certain obligations, i.e. where and how they will be able to provide services. The same applies to Sentech as the government will be able to tell them to put a certain amount of telephones in certain villages.
The Chair asked how one could avoid the situation where the big players (by virtue of the tender process) are able to make money in Graaff Reinett and then take their money back to Johannesburg.
The DG said that the 'Invitation to Apply' (ITA) could specify that a certain percentage of the shareholders must come from Graaff Reinett.
Ms M Magazi (ANC) asked what the term 'pre-selection' means.
The DG explained the concept of carrier pre-selection with the following example: A subscriber to the SNO wishes to take advantage of a special offer by Telkom for a particular weekend. Pre-selection will enable the person to do this if he has a mechanism installed in his telephone. The mechanism would enable the subscriber to select the operator (e.g. Telkom) who will route his/her call.
Ms Smuts said that the sections of the Bill dealing with licencing are removing the powers of ICASA and increasing those of the Minister.
The DG denied this. The Minister cannot write out the ITA without consulting ICASA.
The Chair stated that many people who had been employed by the industry had been retrenched. He asked if the Department had considered enabling these people to be absorbed by the Small, Medium, Micro Enterprises (SMME's) since they have the necessary experience.
The DG stated that the Department had been taking steps to locate these people and have conducted seminars in small towns. Where ex-employees were found in small towns they were encouraged to contact SMMEs.
Clause-by-clause run-through of the Bill
The Chairperson noted that this should provide an opportunity to simplify concepts even though it may result in a more drawn-out process. Greater depth would be given to these issues at a later stage but for present purposes, basic clarification would suffice.
The Director-General ran through the definitions and highlighted 'interconnect' 'resale', and 'value-added network service' as needing further clarification at a later stage.
Ms Smuts (DP) asked for greater clarification from the Director-General as regards the definition of 'fixed-mobile service', which was followed by a request from Ms Magazi (ANC) to further clarify the meaning of 'carrier of carriers' without any unnecessary use of technical language.
The Director-General stated that the term 'wireless' could not be equated to the term 'mobile'. It was then made clear by the Director-General that a 'fixed-mobile service' would be restricted to a limited geographical area, which he contrasted with a cellular phone service, which allows the user access anywhere in the country.
In explaining the term 'carrier of carriers', he said that Sentech would, in fulfilling this role, carry the signal of an operator out of South Africa to a call destination instead of the operator having to create their own links to all parts of the world which would be prohibitively expensive. Sentech could perform this role for other African countries that wished to have their calls carried to other parts of the world. Thus, the function of Sentech would be carry the traffic of other carriers beyond a certain point. Sentech's services would not be available directly to consumers but rather to operators who wished to have their traffic carried to certain destinations. He stated his belief that this sort of licence would be good for both consumers and the country.
Mr Maziya (ANC) asked that the function of ESI-TEL be clarified.
The Director-General explained that Eskom had for a long time had a private telecommunications licence to remotely control some of their power plants. He stated that this entity had now been packaged as ESI-TEL. It would not be a complicated process to install fibre optic cables into electricity pylons and utilise this infrastructure in establishing a second national operator.
Mr Mongwaketse (ANC) inquired as to how limited in geographical terms a 'fixed-mobile service' would be.
The Director-General stated that engineers were currently researching the issue of exact mobility as regards 'fixed mobile service' and that the conclusions would be written into the licence agreements.
The issue of whether competition should be introduced at the level of Sentech was raised by the Committee and also whether this Bill fitted in with the greater goals of South Africa.
The Director-General replied that corporate needs and consumer needs would have to be balanced and this Bill did indeed fit in with the greater goals of South Africa. The Director-General qualified his latter statement by saying that as a legacy of colonialism often a call from one African country to another would have to be routed via London, Paris or Brussels and that Sentech would be the more economically efficient route in the African context.
The Chairperson stated that the committee should move on to consider other sections of the Bill.
Clauses 2, 3 and 4
There were no comments on these clauses of the Bill.
The Director-General highlighted that the 1800Mhz frequency would be offered to all the mobile operators for a fee as determined by the Minister in the Gazette. The Director-General stated that this frequency was currently in use by the SAPS and Department of Defence amongst others and that the process of taking back this frequency was under way.
Ms Smuts (DP) questioned the Director-General as to why the method of administrative pricing had been opted for over that of auction for licences.
The Director-General replied that there had been clear opposition to auctioning from many sectors. He argued that it would be better not to suck investors dry through a once-off auction but to rather allow them to pay off the costs over a long period of time in the interests of sustainability.
Ms Smuts commented that she did not have the sense that this law was being written to open the industry up to future competition but rather that it felt as if it dealt only with the contemporary situation.
The meeting was adjourned until the following day.
*SUBJECT TO CHANGE *
PORTFOLIO COMMITTEE ON COMMUNICATIONS
PROGRAMME - THIRD QUARTER 2001
AS AT 6 SEPTEMBER 2001
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