Department of Communications: Budget and Strategic Plan 2007/8

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Communications and Digital Technologies

27 March 2007
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
27 March 2007
DEPARTMENT OF COMMUNICATIONS: BUDGET AND STRATEGIC PLAN 2007/8

Acting Chairperson:
Mr G Oliphant (ANC)

Documents Handed Out:
Department of Communications Presentation: Part1 & Part2
Department of Communications Budget and Strategic Plan 2007/8

SUMMARY
The Department gave an overview of the presentation where she outlined the department’s staff composition and the key components of the 2007-2010 strategic plan. Priorities for the forthcoming year included the improvement of an integrated infrastructure, fast tracking of broadband infrastructure across the continent, and prioritising the migration towards digital broadcasting. For the 2010 World Cup Cabinet had approved a service provider to provide adequate telecommunications, a second Sentech teleport, and an international broadcast centre. The National Information Society and Development Plan was described, and the institutional mechanism and cluster structure was explained. The Department reported that Sentech would be a state owned and core provider of wireless broadband, that Infraco would be a State owned provider of the national cable broadband backbone network and that there would be digitisation of the signal distribution infrastructure. There was a need to upgrade the Telkom infrastructure, roll out the Neotel infrastructure, have mobile operators to provide 3G services and run the NEPAD Broadband Infrastructure. The broadcasting digital migration was set out and the Cabinet decisions were tabled. The Department would be increasing access, uptake and usage of ICTs. An amount of R1.322 billion had been allocated in the 2006/07 financial year, and there was under expenditure of R692 000. The total allocation for the 2007/08 year was R1.42 billion, and the transfer payments and programmes were described.

Members questioned the Department extensively on unbundling, the progress of the Task team of Operators, Department’s relations with the Independent Communications Authority of South Africa and expressed concern that there was interference by the Department in work falling within the Authority's scope, particularly in regard to policy implementation and the issuing of licences. Sentech also came under the spotlight as members questioned the Department why Sentech had not received its requested allocation, and the current system in regard to its reclassification. Members questioned whether it would remain a state-owned entity. Members also asked the Department to comment on the implementation of the under-serviced area licensees, communication usage in Africa, the issues surrounding the management of the post office, and the current situation on the East African Submarine Cable System (EASSy Cable), and the digital migration strategy.

The Committee still required clarity on the time frames for the implementation action plans in the rural areas, the EASsy Cable. It requested the Department for written reasons for the under expenditure, and to give clear time frames on the implementation of action plans, and to demonstrate that there was full understanding of the implications of the Electronic Communications Act, and that roles and responsibilities were determined and implemented.


MINUTES
Department of Communications (DoC) Strategic Report Briefing
Ms Lyndall Shope-Mafole, Director General, DoC, introduced the structure of the Department and noted the gender and disability ratios. She stated that staff satisfaction was currently at 66%. The Department had completed all of the important work that it had set for itself in the previous financial year.

Priorities for the forthcoming year included the improvement of an integrated infrastructure, fast tracking of broadband infrastructure across the continent, and prioritising the migration towards digital broadcasting. With regard to the FIFA 2010 World Cup, the Cabinet had approved a service provider to provide adequate telecommunications, a second Sentech teleport, and an international broadcast centre. She described the National Information Society and Development Plan (ISAD), which rested on policy and regulatory environment, ICT infrastructure and universal access, local content, digital inclusion, human capital, Research and Development, funding, coordination and integration and measurement of the information society. She tabled the institutional mechanism and explained the cluster.

In respect of a robust, reliable and affordable infrastructure she noted that Cabinet Lekgotla had approved that Sentech be a state owned and core provider of wireless broadband, that Infraco would be a State owned provider of the national cable broadband backbone network and that there would be digitisation of the signal distribution infrastructure. There would also be the need to upgrade the Telkom infrastructure, roll out the Neotel infrastructure, have mobile operators to provide 3G services and run the NEPAD Broadband Infrastructure of the submarine cables.

Ms Shope-Mafole described the broadcasting digital migration, noting that there would be new television channels, that would require content development and more dedicated space for youth, education, health and general information. South Africa was committed to the move, and she noted that there needed to be policy as well as technology development. She described the Cabinet decisions on the type of technology, the set top boxes, and the models, and mentioned that there would be dual illumination period during which both analogue and digital would run. South African performance was measured against comparable countries.

The briefing also noted the steps the Department would take to increase access, uptake and usage of ICTs through Thusong Post Offices, attending to priorities, and increasing usage by government, the public and Small, Micro and Medium Enterprises (SMMEs). 2010 would act as a focal point for accelerating development of the ICT sector.

The Department had been allocated R1.322 billion for the 2006/07 financial year, and would be spending R1 321, resulting in under expenditure of R692 000. Details were given of the transfer payments to various entities. The Medium Term Expenditure Framework (MTEF) programmes were listed with their allocations. The total allocations were R1.42 billion in 2007/08 rising to R1.51 billion in 2009/10.

Discussion
The Acting Chairperson stated that clarity still needed to be provided on the time frames for the implementation action plans in the rural areas.

Ms
Shope-Mafole responded that part of the action plan required unbundling in certain areas, Unbundling, however, was a task given to the Independent Communications Authority of South Africa (ICASA), and it would take many years before the process would be complete.

Mr Norman Munzhelele, Acting DDG: Policy Development, DoC, added that a local unbundling committee had been established, and the process was already underway. The unbundling process was a very complex one, and the local unbundling committee presenting a model to the Minister, in which a time frame for the unbundling would be provided.

Mr R Pieterse (ANC) asked the Department to comment on the implementation of the Under Serviced Area Licences (USALs). The Department should also comment on its role in ensuring that the South African Broadcasting Corporation (SABC) acquired its licence for the regional channels as soon as possible.

Ms Shope-Mafole responded that not all infrastructures for the USALs were in place. The Department needed to look into the implementation of cable and wireless infrastructure in areas that were under serviced, and also in areas where the private sector found it unprofitable or unsustainable to offer services.

Ms Shope-Mafole stated that the Department’s has prioritised the migration to digital broadcasting, and as a result of this migration, there had been a proposal by the SABC for a licence for three channels that would cater for three provinces. Sentech had been tasked with ensuring that there was coverage, but it was still important to note that some areas may not be covered due to geographical difficulty.

Mr R Mohlalonga (ANC) pointed out that the President had made mention of a task team of operators to investigate the cost of telecommunications during the State of The Nation address. The Department was asked to give an indication of the Task Team's progress, and also state whether or not ICASA was part of the task team.

Ms Shope-Mafole replied that with respect to the Task Team of operators, the Department was still investigating the cost of telecommunications, while ICASA was in the process of trying to address the cost termination rates. The Department accepted that the cost of telecommunications was high, and had been in talks with various stakeholders in order to determine the way forward.

Mr Mohlalonga noted that with regard to the EASsy Cable system there needed to be information regarding the status of the project.

Ms Shope Mafole replied that there had already been specific policy framework networks that had been agreed and signed to. So far twelve countries, in which infrastructure would be provided, had agreed to these frameworks.

Mr Mohlalonga asked the Department to give clarity on the Sentech situation and digital migration, as there had been questions raised by various sectors as to why Sentech was not being disposed of.

Ms Shope Mafole replied that because of the upcoming digital migration, Sentech was an attractive asset that many people would like to own, and that is why Cabinet had decided to keep Sentech as fully state owned.

Mr Mohlalonga asked the Department to comment on the issue of ICASA and the television licences, and on the current issues surrounding the management of the Post Office. He also requested the Department to state, from a shareholders perspective, whether there was any value derived from the exclusivity given to the Post Office and Telkom.

Ms Shope Mafole replied that in regard to ICASA, the Department’s priority was the move towards digital broadcasting. However, the Department was prepared to provide support to ICASA when necessary. The issue of television licences remained a controversial one, as the SABC needed money to improve local content. With the digitisation of South African television, SABC would have to look into new ways of acquiring licence fees. With regard to the Post Office, the Department was currently awaiting a briefing from the Minister, as she was still investigating and considering the report that she had received on the South African Post Office (SAPO). The issues at SAPO arose from the investigation into the Board, but others arose from management level. Despite the various issues at SAPO, it was important to note that the Department planned to build post offices in 150 communities across the country, through the Extended Public Works Programme (EPWP). The Department, through its 38% shareholding of Telkom, was looking at ways in which Telkom can reduce costs and improve service delivery.

Ms D Smuts (DA) stated that Sentech requested R900 million for the roll out of infrastructure over a three year period. However they were only granted R175 million, which fell far short of their target. She asked the Department to state why his had happened.

Mr Harry Mathabathe, Deputy Director General: Finance and ICT Development, DoC, replied that the Department was working within the Medium Term Expenditure Framework (MTEF), and Sentech had been issued R400 million for the next year. The Department was quite confident that within the next two MTEF allocations, Sentech would have received their required target.

Ms Smuts expressed her concern that it appeared that government was interfering with the work of ICASA, with regard to the issuing of broadcasting services licences.

Mr Mathabathe responded that the Department would always work with and support ICASA in all their endeavours. The Department set policies with respect to a number of mattes, and it was the responsibility of government to ensure that there was a policy framework. The Department’s core mandate was to ensure that there was robust infrastructure, and for this purpose it had at times advised ICASA on he speedy unbundling of complex processes.
 
Ms Smuts asked the Department to provide clarity whether the Minister would release SAPO’s report.

Mr Mathabathe stated that he could not answer this question as the Department was currently also awaiting a report from the Minister.

Ms Smuts asked the Committee why there was a committee being put together to investigate broadband services. The establishment of the committee would stand in the way of ICASA’s implementation of the Electronic Communications Act (ECA).

Mr K Khumalo (ANC) asked the Department to comment on the general communication usage of African countries, and also on the broadband services available to rural areas. With regards to the
NEPAD ICT Broadband Infrastructure Network [EASSy Cable], the Department should state what programmes were available for other African Countries.

Ms Shope-Mafole responded that in terms of communication usage, South Africa had a good relationship with Korea, Malaysia, India and Brazil, hence the comparison with those countries.  Most African countries could not be used for comparative purposes, due to the fact that they had low communication usage, which was largely attributed to lack of education. With regard to making broadband services available to rural areas, she mentioned that there needed to be a broader awareness and education campaign before services were rolled out. She confirmed that in respect of the NEPAD ICT Broadband Infrastructure Network [EASSy Cable], there were a number of projects that had been implemented in various countries.

The Acting Chairperson stated further details needed to be provided on the NEPAD ICT Broadband Infrastructure Network [EASSy Cable], at the next briefing.

Mr Khumalo indicated that the presentation had outlined the allocation of funds to various stakeholders. He asked the Department whether it was possible to integrate all the various entities into one entity.


Ms Shope-Mafole replied that the Department was looking into the options and ways of uplifting the various entities in order to grow their resources.


Mr M Kholwane (ANC) asked the Department to comment on the issue of Sentech’s classification, and provide clarity on the reasons why National Treasury also could not provide
the Universal Service and Access Agency of South Africa (USAASA) with its requested budget amount.

Mr Mathabathe replied that there had been numerous interactions with various stakeholders regarding the reclassification of Sentech. Talks had also been held with Treasury regarding the issue, and it had been discovered that the reclassification of Sentech would require the amendment of the Public Finance Management Act (PFMA). The issues surrounding USAASA were unpredictable and the Department was still looking into the matter.

Mr Kholwane sought clarity why the Department had projected an under spend at the end of the financial year, and also on whether there were any policies in place to monitor and evaluate the performance of the various Boards.

Mr Mathabathe replied that the projected under expenditure was the result of unfortunate timing, and the Department planned on correcting the matter in the future. In terms of monitoring and evaluation of the Boards, the Minister held regular meetings in order to discuss the various issues.

Mr Mohlalonga asked the Department to comment on its digital migration strategy.

Ms Shope-Mafole stated that the digital migration strategy covered a vast area, and that proposals still needed to be taken to Cabinet.

The Acting Chairperson stated that the answer regarding expenditure was insufficient, and asked the Department to provide a written response. He noted that the unfortunate situation of SAPO was but one example of the lack of monitoring of Boards. He noted that the Department also needed to provide clear time frames regarding the implementation of its action plans, and there must be a clear understanding of the ECA within the Department, so that the roles and responsibilities under that legislation could be determined and implemented.

The meeting was adjourned


 

 

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