Independent Communications Authority of South Africa (ICASA): Annual Report 2006 briefing

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Communications and Digital Technologies

03 November 2006
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
3 November 2006
INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA (ICASA): ANNUAL REPORT 2006 BRIEFING

Acting Chairperson
: Mr G Oliphant (ANC)

Documents handed out:
ICASA 2006 Annual Report [available later at www.icasa.org.za]
ICASA presentation on 2006 Annual Report

SUMMARY
The Committee was advised that Mr Barendse had declined the offer of appointment to the ICASA Council. Although the Committee was informed of this at a late stage, the information would be conveyed to the Speaker and in due course the Committee would need to consider the matter of a replacement to fill the vacant Council post.

ICASA then briefed the Committee on their Annual Report and financial statements. It highlighted policy objectives, the achievements of the year 2005/2006, monitoring and enforcement, consumer protection, international participation, stakeholder management, and corporate governance. An analysis was given of the financial statements. Several members expressed their concern that the qualified report, the granting of performance bonuses without performance appraisals and the number of vacancies were indicative of problems in the systems. Furthermore the issue of salaries needed to be discussed to avoid continued losses of Councillors. A member was cautioned against raising issues that appeared to emanate from leaked sources inside ICASA. Questions were asked about disciplinary procedures in place, what had been done to address the numerous unfilled posts, benchmarking for salaries and bonuses, the rollovers in funding requested, clarity on insurance premiums, costs and funding of litigation, and the consumer complaints. Further questions were asked on the status of the proposed SABC Television channels 4 and 5, and the lack of coverage of some areas for SABC 2 and 3, the problems of different broadbands, and the different technologies used that attracted different pricing, and the delay in the rollout of technology to schools. ICASA assured the Committee that the mobile number transfer would be effected on 10 November.

MINUTES
The Acting Chairperson informed the committee that Mr Barendse had declined the offer of appointment to the ICASA Council and his position needed to be filled.

Briefing by Independent Communications Authority of South Africa
Mr Paris Mashile, Chairman, Independent Communications Authority of South Africa (ICASA) stated that despite Mr Barendse not taking up the offer of appointment to the Council, this would not stop ICASA in its endeavours. Mr van Rooyen would head the Council and the team was looking forward to working together.

He announced that on 10 November ICASA would be introducing mobile number portability.

Mr S Mamaragane, Acting General Manager, Telecommunications: ICASA, tabled the Annual Report of ICASA. He highlighted policy objectives, the achievements of the year 2005/2006, monitoring and enforcement, consumer protection, international participation, stakeholder management, and corporate governance.

Ms Nokuthula Ngubeni, Senior Manager: Finance, ICASA, provided the analysis of the financial statements.

Discussion
Ms D Smuts (DA) complained that she was not happy that the Members had not earlier been informed that Mr Barendse had declined the appointment. The Committee was the governing body for appointments.

The Acting Chairperson replied that he also had heard of this very late. Apparently Mr Barendse had declined because an uncompetitive salary was being offered. ICASA salaries would have to be revised to prevent staff losses, especially since this industry survived by poaching experienced people.

Mr K Khumalo (ANC) said that although the Committee had just completed the interview process, this was not that serious. He proposed that the new vacancy be filled from the three others on the shortlist submitted to the Minister who had not been finally appointed.

Ms Smuts disagreed, stating that a highly skilled and specialised person must fill the vacancy, and the appointment should not be made from the bottom up.

The Acting Chairperson stopped the heated debate on how to fill the recently vacated spot by informing the committee that they could not decide on this issue now. The Committee would have to formally convey the refusal of appointment to Parliament. The Speaker would then in due course bring back the issue to the committee and only then could the Committee discuss the way forward.

Ms Smuts asked ICASA what it was doing to rectify the picture of chaos depicted by the Auditor General. There were several serious qualifications, including bonus payments equally across the board, without performance appraisals, loss of pay slips and the like. She then said that there was an independent report that had highlighted severe problems in the institution.

The Acting Chairperson cautioned Ms Smuts that she should stop presenting information and reports that were privy only to her but had not been given to the rest of the Members. He further cautioned that whoever it was at ICASA that was supplying Ms Smuts with information must stop. It was unfair that Ms Smuts should know about issues while others did not, and this created an atmosphere where the real issues were diverted in favour of rumours and matters that were not on the table.

Mr M Kholwane (ANC) and Mr Khumalo agreed. They said this had the effect of disrupting the meeting.

Mr R Pieterse (ANC) stressed that the Annual Report was the reason for the meeting.

Ms Smuts asked whether there were procedures in place to dealt with employees who had acted contrary to the rules. She cited the example of the Chief Executive Officer, who was reported to have been responsible for substantial losses.

Mr Mashile replied that ICASA was well aware of all the problems and the concerns raised, and assured the Committee that ICASA was working on the issue. Disciplinary action had already been taken and the former CEO’s case was still ongoing. These disciplinary measures were in place for everyone who violated work ethics.

Mr Khumalo and the Acting Chairperson asked what was being done to rectify the issue of vacancies and Acting appointments.

Mr Mashile replied that there were still vacant posts that needed to be filled, such as the Human Resources manager. He further said that ICASA had not ever had a General Manager because of the problem of non-competitive salaries. Many staff would move to better paid positions. The current Councillors were doing a sterling job.

The Acting Chairperson agreed with Ms Smuts’ concern on the issue of bonuses. He said that this indicated major administrative problems at ICASA. He asked if ICASA had any benchmark salaries and bonuses.

Mr Mashile replied that it was true that the bonuses were handed out equally, but the reasoning was that all people worked as a team and the ones who achieved the most did so because of the support of other people. ICASA had also obtained agreement from the high performers on the decision to award bonuses equally. He added that at the moment ICASA was working on evaluating the position and investigating the monetary value given to managers from other similar organisations. From this ICASA would be able to work out a gradation.

Ms Tracy Cohen, Councillor, ICASA, added that there was a benchmark but adjustments had not yet been incorporated. ICASA was putting together a report, and without the figures that would be isolated by that report it would be difficult to establish a suitable benchmark

Ms Smuts stated that such an environment did not foster competitiveness in a sector that was in itself highly competitive. The rationale behind paying everyone the same bonus was wrong, because a manager should not have the same salary as a person in a lower position.

Ms S Vos (IFP) asked whether ICASA had received approvals for the rollovers they indicated in the report.

Ms Ngubeni replied that ICASA had a rollover of about R12.1 million, which was approved. ICASA had applied for another R12 million rollover for the PES tender but this was not approved. As a result ICASA had sent a letter to National Treasury asking that should it need the funds they should be made available.

Mr Mamaregane added that the issue had proceeded to court action because ICASA wanted the tender set aside, but the successful parties of the tender disputed their entitlement. The decision could go either way. ICASA’s call to National Treasury had indicated that should ICASA reach the point where it had to settle, the funds should be made available.

Ms Vos asked where the money for litigation came from and how much ICASA had spent on litigation this year alone.

Mr Mamaregane replied that the funds came from the budget as regrettably there was no separate source for the litigation funds. He added that he had not brought the figure with him, but calculated that this year ICASA had spent approximately R5illion in legal fees. This included both the costs of litigation and obtaining legal advice.

Ms Vos asked about the nature of the consumer complaints received, and how they were being dealt with. There was mention of 69 complaints..

Ms Cohen replied that ICASA had compiled a report that outlined the nature of the complaints it had received and how they had been dealt with them. If Committee Members did not already have this report, ICASA would send it through.

Mr Mihloti Edmund Baloyi (Advisor to the Chair, ICASA) emphasised that although the report was in summary format, it did detail how the complaints had been handled.

Ms Vos asked about the status of SABC 4 and 5.

Mr Baloyi replied that there was some government money allocated for the two channels, and ICASA had left the matter totally in the hands of SABC. He could not comment how far SABC had gone with the matter.

The Acting Chairperson asked about the special events, and whether the special licenses were still in existence.

Mr Baloyi replied that the special licenses were still in existence and there were a number of people who held them.

Mr Khumalo stated that the Committee needed to question the allegation that ICASA did not have the proper broadband. Moreover there was the problem of people using different technologies so that there would be two different prices fixed for the same service.

Mr Mashile replied that the bytes that comprised broadband were quite varied but the minimum threshold was generally 500 bytes. ISDN would provide 250. On the question of the varied technologies he said that ICASA welcomed any form of technology as most were imported from well-advanced countries. However, ICASA would stay abreast by researching and evaluating the technologies. This also made it easier to regulate the various technologies. The import was increasingly important as South Africa was known as the African hub of technology. Moreover, this should help ICASA to prepare for the 2010 World Cup implications.

Mr Khumalo asked about why there were delays in providing technologies in schools, especially those in rural areas.

Mr Philemon Molefe, Acting General Manager, Engineering and Technology, ICASA replied that the transporting of technologies to schools was delayed because of the structure of the model used, where the providers connecting to a school needed facilities from Telkom, which was not a partner. ICASA was working on correcting this model and also hoped that the Ministry of Education would partner with it to make technology a reality in schools.

Mr Khumalo remarked that it was dangerous to make statements relating to mobile number portability. It would be very unfortunate if the technology was not up and running by 10 November, and it would be a real shame if people had to resign over premature announcements.

Mr Kholwane expressed total agreement with Mr Khumalo.

Mr Mashile replied that everything was in place and 10 November would indeed herald the day of mobile number portability.

The Acting Chairperson asked whether there were systems in place at ICASA. Issues such as the bonus fiasco were worrying as they showed that the administration system was in tatters. He asked if ICASA had a performance management system in place and whether they were going to implement performance-based bonuses in future.

Mr Mashile replied that ICASA was working on a system that aimed at evaluating and rewarding performance.

Ms Vos asked whether Councillors had an input in the procurement of service providers.

Mr Molefe replied that there was a single incident where this had happened and disciplinary action was taken, but on the whole no councillor would make the decision on which service provider would be hired.

Ms Smuts asked what insurance cover was represented by the stated figure of R250 000.
 
Mr Mamaregane replied that the R250 000 was for insurance of the specialised equipment ICASA used. They were insuring against all unforeseen risks as something like a lightning strike could inflict severe damage. National Treasury had been asked to give permission for the insurance, and the premium would be repaid.

Ms Vos asked what was being done to rectify the issue where SABC2 and SABC 3 did not provide universal coverage.

Mr Sipho Tsotetsi, Acting General Manager, Broadcasting, ICASA, replied that SABC had an obligation to provide universal coverage and when it did not fulfill its obligation people in the areas not receiving coverage would then have to make an application for an increase in coverage. If this failed they would then resort to self help, whereby they must go to SABC and buy their own transmitters to get signals. The matter was entirely in the hands of the SABC.
 
Ms Smuts asked why ICASA had not forwarded the exit reports as they had promised to do.

Mr Mashile replied that although at first ICASA was told to submit the exit reports to the Committee, it had later received information that there was no need for them, hence they were not submitted. He stated that the exit reports were prepared primarily so to bring improvement to ICASA.

The Acting Chairperson again warned Ms Smuts that she should not table matters where only she was privy to the information. The issue of exit reports was not being discussed.

The Acting Chairperson stated that he believed the issue of salaries must be reviewed, even if it meant increasing the salaries of Councillors, in order to prevent any further resignations or loss of  Councillors.

Mr Khumalo and Mr Pieterse said that the Councillors should be supported in the hard work they were doing

The meeting was adjourned.


 

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