Telecommunications Amendment Bill: deliberations

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
10 October 2001
TELECOMMUNICATIONS AMENDMENT BILL: DELIBERATIONS

 

Chairperson: Mr N Kekana

Relevant documents

Telecommunications Amendment Bill [B65-2001]
Summary of Submissions of Public Hearings

 

SUMMARY
The precise nature and role to be played by Sentech in providing a telecommunication service was discussed. ICASA was reprimanded for not conducting the a feasibility study imposed by the IBA Act into the multimedia service inquiry and, despite voicing its reasons for the inability to conduct this study, it was urged to commence the inquiry as soon as possible.

Problems related to the increased powers to the Minister (afforded by section 8 of the Bill) and the consequent erosion of ICASA’s statutory functions was discussed. The prescribed equity ownership percentage in section 9 was deliberated, and the possible implications on historically disadvantaged groups was discussed.

In their deliberations on licensing the Committee debated whether the Minister should be allowed to reject a recommendation from the Regulator. The Regulator was of the opinion that the Minister should refer such recommendation back to them. The Department however felt that the Minister should be given the power to reject in appropriate circumstances.

The Chair requested the members of industry to provide the Committee with a concise definition for Value Added Network Services. The Committee would then decide on which one to adopt.

The Chair criticised the Authority for the secrecy surrounding the interconnection agreement. He stated that it was vital that its contents be made public, as they directly affect the interests of the consumer.

MINUTES
The Chair commenced proceedings by calling on stakeholders to submit concise definitions of the terms "Internet" and "Value-Added Network Service" (VANS), as the former has not yet been comprehensively defined by South African legislation and the definition of the latter had to be re-evaluated.

The Chair stated that the focus of this session would be the "carrier of carriers" (COC), "multimedia service" and "Sentech" definitions in Clause 1 of the Bill, as well as the proposed section 32C on page 9 of the Bill.

The Chair noted that Chapter 6 of the White Paper on Broadcasting of 1996 dealt with the looming restructuring of this body, and consequently the topic was not a new subject. He reminded members that the African continent needs to be able to switch its own traffic, rather than rely on other countries to provide this service. Sentech was perfectly positioned to do exactly this, but the challenge facing this committee is reducing the legitimate concerns raised by both stakeholders and committee members about the regulation of this body into comprehensive and enforceable law.

Ms M Smuts (DP) advised that a cautious approach be taken in reference to the White Paper as the Bill deals with existing law, whereas the policy and legal considerations in the White Paper deal with technology that is relatively outdated. She suggested that the Committee instead focus exclusively on what amendments can be effected to the Bill - having regard to the current state of the technology industry. She said that it has come to her attention that Sentech has already been granted a VANS licence, and that the best option in these circumstances might be an amendment of the Sentech Act 63 of 1996.

The Chair requested the Director General (DG) to explain precisely what is entailed in the Sentech restructuring process and the Department’s aims in this regard.

Mr A Ncgaba, the DG, replied that this is the key question of the day. The Department had just received a proposal regarding the issue of an "open-window" in terms of the Internet, as well as the matter of a decoder consisting of a proprietary channel. The granting of multimedia access to Sentech is very important for educational purposes, either via the Internet or various other electronic means. It is vital for South African schools today to have access to such educational facilities, commonly referred to as "e-learning". A second issue is the fact that the African continent’s traffic is mainly routed in Europe, and reiterated the Chair’s earlier call for this to be done locally. He supported the proposition that Sentech would play an invaluable role in moving away from reliance on "former colonial powers". Little investment would be needed to effect this as Sentech is already well established. South Africa should take hold of this opportunity with both hands so as to set the pace for self-development for the rest of the continent to follow. However, Sentech would have to exercise this function within the regulatory limitations and obligations imposed upon it by legislation.

The DG continued that the rationale behind the proposed incorporation of multimedia here is that Sentech is under an obligation to provide an infrastructure to supply radio, telecommunication and broadcast services, as well as functioning as a signal distributor and provider. He stated that multimedia should be provided to the general population using the already established Sentech infrastructure. He suggested that the proposal from MNet regarding a "pay TV" facility is neither relevant nor feasible here as this option in no way facilitates or assists in broadcasting the service to the general population. The restructuring of the existing Sentech framework is therefore the only viable option in order to successfully bring the (new) multimedia service to all South Africans in a sincere attempt to provide "universal access". Sentech would play an especially vital role in servicing the under-serviced areas. Such public sector intervention was necessary to effect the proposed multimedia restructuring.

Ms Smuts responded to this "meandering discourse", saying it was "highly inappropriate" for the DG to talk about MNet and decoders, as the focus of this discussion is clearly the Bill’s handling of Sentech. The DG had in no way even attempted to answer the question posed to the Department, let alone the highly pertinent issue regarding Parliament allowing a digital broadcasting service to perform a function that does not currently fall within its definition or powers. She claimed that the DG instead had "(ab)used the opportunity to instead talk about the poor and general issues regarding infrastructure".

Ms S Vos (IFP) agreed. She said that universal access to multimedia services is important and the problem is not with the role of Sentech here, per se, but rather whether the specific intention of the drafters of the Bill was to allow Sentech to operate as the sole provider of multimedia services, or whether others are also allowed to provide this service. She continued that the question is not whether Sentech is able to provide this service or whether it already has the infrastructure to do so, but rather whether Parliament should allow Sentech to provide a multimedia service. Section 1 of the Bill defines a multimedia service as a "digital broadcasting service", and requested the state law advisor to clarify whether the Bill will need to be amended in accordance with the Constitution.

The Chair replied that during the public hearings the Sentech delegation proposed a formulation of a "digital broadcasting service", but that it was the decision of this Committee to refuse that proposal. He summarised the issues around Sentech: Sentech will be allowed to provide an international telecommunication service once it has been granted the licence, but there are concerns regarding the content of the COC definition and multimedia licencing process in the Bill.

The Chair stated that the regulator, Independent Communications Authority of South Africa, had been requested to provide input regarding section 7 of the Bill, as this section serves as the backdrop to the current discussion on multimedia.

Mr S Njoka, (CEO: ICASA), replied that as early as October 1999 the committee had been informed by ICASA that the reason for its inability to conduct the inquiry is due to the fact that the Independent Broadcasting Authority Act (IBAA) conflates the terms "broadcasting" and "distribution". He stated that this conflation undermines the very edifice of ICASA and consequently prevents it from effectively executing its functions and duties under the ICASA Act 13 of 2000. He continued that only once the relevant amendments are made to the IBAA to reflect that "broadcasting" refers exclusively to content whereas "distribution" refers only to the carriage of a transmission, would ICASA be able to successfully conduct the inquiry.

The Chair labelled this "disturbing news" as ICASA has allowed two years to pass before deciding to inform Parliament that it has passed a fundamentally unsound law.

The Deputy Director General (DDG), Mr P Pongwana, agreed with the Chair’s remarks, and stated further that the provision of a multi-channel broadcasting service and its distribution is creating problems because it is a new service in the telecommunication market. He strongly asserted, however, that there is currently no legal problem serious enough to preclude ICASA from conducting this inquiry, and it therefore has to begin the inquiry.

The Chair stated that sections 4(1) and (2) of the IBAA are important here in terms of whether in a multi-channel environment channels are licenced or whether authorisation should be issued. He reminded members that during the public hearings DSTV argued that the licensing of channels should not be allowed, and that the present debate involves precisely this issue: whether it is necessary to grant Sentech a licence to provide a multimedia service, or whether authorisation would suffice.

Ms Smuts argued that the issue regarding the granting of a licence to a broadcasting body that will enable it to provide a telecommunication service, is essentially a constitutional problem that also arose during the deliberations stage of the current IBAA. She placed the blame for this problem squarely on Parliament’s shoulders as it failed to table an amendment regarding the convergence process, and stated that consequently ICASA could not be held accountable.

The Chair confirmed his earlier reprimanding of ICASA and insisted that it should have conducted the inquiry, because it was a Parliamentary directive that a feasibility study be done on the telecommunication market’s likely reception of a multimedia service. He disagreed with the contention that the need for consideration of the convergence issue was to blame here, as the very purpose of the ICASA inquiry is to inquire as to the feasibility of such convergence. He maintained that in this instance ICASA has failed the legislative process.

The Chair then called for clarity on exactly which constitutional provisions are violated by the granting of a multimedia licence to Sentech, and also requested specific reasons why Sentech should not be allowed entry into the multimedia market.

Ms Vos replied that this is exactly what she had requested from the state law advisor (SLA), and voiced her support of ICASA’s plight as it had informed Parliament as far back as two years ago and in great detail of the legal problems.

Ms N S Mtsweni (ANC) thanked the DG for providing some background to the debate in his earlier statement. She stated that the current wording of the proposed section 32C on page 9 of the Bill (especially subsection 2) does imply that Sentech is the sole provider of the multimedia service. She also inquired of the DG what precisely the department intended to do about the proposed amendments called for by ICASA and consequently suggested that, in terms of the multimedia licence, the Sentech Act 63 of 1996 be amended to afford Sentech a broader mandate in this regard.

The Chair cautioned against heralding any amendment of the convergence issue as the sole solution to the current problem, and instead urged members to look to the particular proposal before the committee for a possible solution to the problem. He then considered the particular provision and stated that the fact of the matter is that Sentech will be granted a telecommunication licence, and the issue now becomes whether there is a need for a common multimedia carrier in South Africa or whether there are any other multimedia service providers in the country that that could be encouraged to participate by the Bill. He noted further that the IBAA acknowledges that the private sector probably forms the "backbone broadcast carrier", but it also recognised the existence and importance of other broadcasting carriers. The Chair then suggested that the telecommunication industry do the same.

Ms Smuts stated that the precise intention of the drafters is not readily apparent from the provision, but fervently supported her earlier contention that Sentech cannot be granted a broadcasting licence in the telecommunications sphere. She also criticised the fact the licence is being issues by Parliament via the Amendment Bill which meant that ICASA would consequently be bypassed completely, as this licencing process falls exclusively within ICASA’s powers. She suggested that the Sentech Act be amended to include a provision requiring Sentech to apply to ICASA for a licence, so that the proper procedure is at least followed, if nothing else.

The Chair then attempted to resolve the issue by stating that any interactivity between a computer and any other electronic device can be defined as a telecommunication.

Ms Smuts conceded that this is possible, but insisted that a new definition is necessary to put any possible confusion to rest.

The DG replied that the emphasis in the multimedia definition is on the interactivity between the two parties involved in the exchange, and agreed that multimedia could indeed refer to services beyond the conventional broadcasting service definition. He suggested that Sentech should be included in the provision of a multimedia service, and acknowledged that the challenge facing the committee is the task of accommodating this into the existing legal framework.

The DDG agreed with the DG’s suggestion that interactivity is indeed a telecommunication activity. He stated that no broadcasting entity (like Sentech) would be allowed to use its own infrastructure to provide this multimedia service, but that it would have to employ the service of one of the other service providers in South Africa, like MTN or Telkom etc.

Ms Vos stated that this then implies that the service providers are obliged to use Sentech’s infrastructure, as it is the only provider of such infrastructure.

The DDG replied that Sentech must first have a licence to provide this infrastructure and that the service providers are therefore not "forced by law" to use it, as they can use any available infrastructure within their financial means. He stated that it just so happens that at the moment Sentech is the only provider of such infrastructure.

The Chair stated that the South African government wants a multimedia infrastructure to be established locally, and it recognises that Sentech, currently the only means available to achieve this goal. He stated that the committee could either choose a licencing procedure or a separate clause could be inserted into the Amendment Bill that creates a distinction between the various categories of multimedia services, such as a private service, an in-house service or even selective and preferential services.

The DDG maintained that the actual licencing would still be done by ICASA and it would therefore not be excluded as suggested earlier, nor would Parliament be determining the terms and conditions of such licences.

The Chair then returned to ICASA’s concern with the legality of section 33 of the Telecommunications Act 103 of 1996 (the principal Act), and reiterated his earlier statement that an amendment is not needed to enable ICASA to conduct the prescribed inquiry. He once again called on ICASA to begin the inquiry as soon as possible.

Mr M Markowitz, advisor to the ICASA chairperson, informed the committee that ICASA’s specific problem with section 33(1) of the principal Act lies with its definition of "multi-channel distribution", and noted further that section 4(1) of the IBAA refers to "distribution services" as well. He contended that this resulted in the blurring of the distinction in the usage and meaning of the terms "broadcast" and "distribution", and noted that only once these terms were amended effectively could ICASA proceed. He informed the committee that ICASA has never "shirked away" from performing this task, but was rather prevented from conducting it.

Ms Smuts suggested that parts (a) and (b) of the section 33(1) definition be "reworked" to make it more neutral and to circumscribe the definition of COC in section 1 of the Bill.

The Chair then turned to consider the "carrier of carriers" definition in section 1 of the Bill, and noted that at the moment only mobile cellular telecommunications licencees and public switched telecommunication service (PSTS) licencees are regarded as "carriers" here. He continued that the limitation imposed in part (b) has to be clarified.

Ms Smuts replied that this licence could be granted in other countries to provide the service.

The Chair inquired why Sentech is being denied any involvement in the third generation telecommunication radio frequency spectrum (3G) application.

The DG replied that the section could be formulated so as to prevent any impact by Sentech on the mobile operators but noted that 3G as an infrastructure is not necessarily (mobile) device specific, as it could be linked to any type of device. He stated that consequently Sentech would have the infrastructure but it would not be allowed to compete with the mobile service provider.

Mr Njoka expressed serious concern with the fact that the 3G licence is granted by Parliament in the form of the proposed section 30B of the Bill, and stated that this creates confusion as to who the actual authority on the matter is. He suggested that the best approach here would be for the legislature to provide ICASA with comprehensive and enforceable guidelines detailing under which circumstances the licence should be granted or refused.

The Chair turned to consider the proposed section 8 on page 9 of the Amendment Bill.

Ms Smuts inquired as to what is meant by the phrase "… kinds of services…" in section 8(2)(b)(i) of the Bill.

Mr Smuts, from the office of the state law advisor, replied that its inclusion and meaning is superfluous, because the Interpretations Act of 1953 provides that where the singular has been stipulated the plural also applies. He consequently would not object to its removal from the Bill.

The Chair then questioned the SLA’s decision to include it in the first place.

Mr Smuts replied that the SLA was of the opinion that the inclusion of both forms would provide clarity.

The Chair stated that the proposed section 36A incorporates the provision of a local access service under its public switched telecommunication service (PSTS) definition, and inquired as to how this definition would affect small/medium/micro enterprises (SMME) that are not included in the local access loop.

The DG suggested that it be properly defined so as to avoid the creation any confusion regarding the position of the SMME’s.

The Chair responded that this section has to be re-evaluated, and suggested that the PSTS component be deleted from that provision and be replaced with "local access".

The DG agreed that it should be separately defined.

Ms Vos recommended the proposed ICASA amendment to section 34(2)(c) of the Bill.

The Chair questioned whether this amendment would materially alter the section.

Ms Vos replied that the proposed section 34(2)(c) "expands" the Minister’s authority in extending the invitation, and cautioned that the provision has to be carefully worded in order to prevent the powers of ICASA in this regard being usurped by the Minister. She stated the proposed subsection 3A has to be amended so as to require the authority to "explicitly request" the additional information referred to in the subsection.

Mr S Abram (UDM) suggested that the phrase "… or kinds of services…" be deleted from section 34(2)(b)(i) of the principal Act, and instead be replaced with " of service or services".

Mr Smuts replied that, as stated earlier, the SLA recommends that "or kinds of services" be removed from the Bill.

Mr Abram agreed.

Ms Smuts stated that by passing section 8(c) of the Bill transparency under the Bill would also be removed, because the proposed subsection 3A provides that the authority "may" require additional information, whereas the previous provision included the stricter test of "shall". She continued that the granting of this discretion to the authority cannot be accepted. She stated further that section 4(b) of the Bill also seeks to prevent ICASA from holding a hearing, and consequently supported the ICASA proposal requesting at least a discretion to hold such hearings. She suggested that the discretion afforded to the authority via "may" under section 8(b) of the Bill regarding the furnishing of notice of representation or applications received by the authority has to be replaced with "shall". She continued that this would remove the discretion and replace transparency.

The Chair agreed with granting a "discretionary hearing".

Ms Smuts suggested that proposed omission of information "…that is commercially sensitive…" by section 8(e) of the Bill is probably due to the fact that it is difficult to interpret or to ascertain exactly what it "commercially sensitive information". She then called for subsection (f) to be deleted.

The Chair agreed, and turned the committee’s attention to section 9 of the Amendment Bill.

Mr R D Pieterse (ANC) questioned whether a/the group mentioned in section 9(5) would be allowed to exceed the 30% limit imposed in the section. He also inquired as to whether any measures were set in place to ensure that the black empowerment enterprises (BEE) are not merely used as a "front" for the big businesses.

The Chair asked who exactly is responsible for prescribing the equity ownership percentage in section 9(5).

The DG replied that ICASA is the only body vested with this power.

Mr Pieterse called for the 30% equity ownership to be prescribed as the minimum and not maximum quota.

Mr Abrams agreed with this suggestion.

The Chair replied that the policy directives on the Bill clearly state "up to 30%", and that this committee will not deviate from those directives.

The DG informed the committee that this amount was arrived at after due consideration of the reality of the financial markets and the availability of capital, and postulated that this percentage would probably increase with the proportional growth of the black bourgeoisie. He stated that the South African government is very clearly committed to granting the control of a corner of the market to historically disadvantaged groups, but noted that the reality of the situation is that the major problem here is the availability of capital.

Mr A M Maziya (ANC) suggested that a different formulation of this provision be adopted to either increase the 30% equity ownership quota and then identify the historically disadvantaged areas to which the DG referred, or allow the SMME’s to invest as much capital as they see fit if they possess the necessary financial resources.

The Chair disagreed and suggested that a group making an investment in excess of the prescribed 30% would increase its chances of receiving the licence from ICASA. He stated here that flexibility would be allowed in terms of setting the minimum amount, but stated in no uncertain terms that 30% would not be made the minimum amount. He suggested that the extension of the (local) equity ownership beyond 30% would only succeed in warding off much needed foreign investment, and stated further that members have to be realistic about whether finances in excess of the 30% could be acquired.

Ms Vos voiced her concern that black women would not be afforded a sufficient opportunity as far as the SMME’s are concerned, especially in the under-serviced areas. She further noted the ICASA concern with the wording of the proposed section 35(5), as the phrase "… historically disadvantaged groups or women…" implies that the two are mutually-exclusive and that a choice has to be made between the two. She consequently suggested that "or" be replaced by "and" in order to correct this fault.

The DG agreed with this suggestion and called for SMME’s to be dealt with in a separate section.

Ms Vos concurred and suggested further that the equity ownership level be raised to enable SMME equity ownership to specifically include women.

Mr Pieterse stated that a bolder position regarding the incorporation of BEE’s, historically disadvantaged groups and especially women was expected from the Bill.

Mr Maziya supported the DG proposal and called for the enactment of concise and explicit law. He then insisted on the inclusion of "at least 30%".

The Chair dismissed this proposal and postponed further discussion of this issue until a study has been conducted and formulations of a revised provision have been moulded.

Ms Smuts cautioned against the proposed formulation as it would further disadvantage the presently disadvantaged by jeopardising (foreign) investment and job creation. She then drew the committee’s attention to the fact that the proposed section 35(3)(d) now provides that only the Minister may refuse an application for a licence, and that consequently ICASA is being bypassed completely. She noted that this function has never before been vested with the Minister, and that the ICASA Act expressly states that only the constitution can remove this function from the ICASA mandate. She continued that this section also allows the Minister alone to prescribe the terms and conditions of the licence, a function that the ICASA Act bestows exclusively on ICASA itself. She suggested that all these inconsistencies erode the state’s confidence in ICASA, and furthermore blurs the distinction between the functions of the Minister and ICASA. She suggested further that the section be amended so as to require the Minister to "consult" with ICASA before issuing the licence to prevent more and more power being shifted to the Minister and away from ICASA. She recommended that the current unamended section 35 in the principal Act should remain, and that the respective section in the Amendment Bill be deleted.

The Chair requested Ms Smuts to detail the specific portions of the section that are the cause of concern.

Ms Smuts replied that in line 5 on page 10 the phrase "…to be used by…" should be deleted and "intends to use" should be inserted after "Authority" in the same line, and that the proposed section 35(3)(d) be removed. She suggested further that the proposed subsection 6 conflicts with the current section 35(4) of the principal Act in that the former allows the Minister alone to prescribe terms and conditions of the licence, whereas the latter provides that ICASA and the Minister should together create the conditions.

Mr Smuts informed the committee that the decision to afford the Minister a more active role in this regard is not a concern with the drafting of the provision, but is rather a policy decision espoused by Parliament.

The Chair then questioned the rationale behind the many references to both the Minister and ICASA in the principal Act, especially the reasoning behind the inclusion of the phrase "as the case may be" in section 35(4) of the principal Act.

Ms Smuts replied that the apparent intention behind this might be that the Minister prescribes the terms and conditions of the PSTS licence, whereas ICASA deals with the rest.

Mr Njoka confirmed Ms Smuts’ reasoning, and stated further that to render the process more efficient the requirement in the principal Act that ICASA make an "intended recommendation" should be reduced to simply "a recommendation".

Mr Markowitz then stated that sections 35(1)(a)(i) and (ii) of the principal Act deal with "intended recommendation" and suggested that this affords applicants two chances to take the decision by ICASA on review, whereas ordinary procedure only allows one opportunity. He called for this phrase to be deleted so as to prevent this abuse of process and to provide an efficient procedure.
 

Afternoon session
 

The Chair recapped on input given by members previously regarding Clauses 8 and 9. The issues, which had arisen, were:

Clause 8
-The DA had wanted the word 'used' in subsection (c), line 5 to be replaced. The Chair had suggested that this would have to be tested against legal opinion.

Clause 9
-The ANC had raised the question on what could be achieved by the Black Economic Empowerment process.
-The DA had argued that the Minister should not be allowed to reject the recommendation, as she had previously never had this right.

The Chair pointed out that neither S35 (3) (c) nor S35 (5) had been deleted yet. These were merely proposals on the table.

Discussion
Ms S Vos (IFP) suggested that the Minister's criteria should be inserted in S35 after subsection (b). This would be the logical place to put such criteria.

The Chair said that this would be difficult, as this clause dealt only with Public Switched Telecommunications Services (PSTS's) and could not apply to any other type of license.

Ms M Smuts (DP) argued that this was not the case, as the clause applied to all categories of licenses.

The Chair conceded that this was the case and agreed to shift and paste the clause.

Ms Smuts argued that the word 'intended' should be removed from S35 (1)(a)(i).

The Chair stated that the Regulator should reflect on this question.

Mr E Magashule (ANC) asked what had been decided regarding S35 (3)(d).

The Chair said that the principal Act contained the word 'refused'.

Mr S Nyoka, the CEO of the Independent Communications Authority of SA suggested that subsection (d) should be omitted. Instead the Minister should refer the recommendation back the Regulator should she have a problem with it. If she rejects the recommendation the whole process would have to start over.

Mr P Pongwana, the Deputy Director General (DDG) argued that the Minister referring the recommendations back would have the same implications as if she refused it. She would have to provide reasons for her decision irrespective of whether she refers it or rejects it.

The Chair distinguished between the situation where the Minister refers it back for further information and where she refers it back for further consideration. He asked what the difference was.

Ms Smuts said that in the latter case it could be a bona fide request by the Minister to see if ICASA applied its mind. ICASA could then re-recommend that applicant or they could recommend someone else.

Mr A Maziya (ANC) suggested that if the Minister wished to know how a decision was arrived at she could refer to supporting documents and notes, which should be provided by the Regulator. If the entire recommendation does not make sense it would be appropriate to include the option of a rejection in the Bill (especially since it is in the Act).

Mr De Klerk (the advisor to the Minister) stated that in S35 (3)(b) the Minister would be seeking clarification. In S 35(3)(c) she would be querying something.

The Chair suggested that the Minister should be able to reject a recommendation where it is clear that the Regulator did not apply its mind to any of the criteria.

Mr S Nyoka the CEO of ICASA argued that the Minister referring the recommendation back could achieve the same result. One has to consider what this would mean in terms of investment. Would the process have to start afresh? Will the Minister have to issue a new Invitation to Apply (ITA)?

Ms Vos agreed, saying that one should consider the message that would be sent out to investors and industry. One would be telling investors that although they are investing in ICASA it is the Minister who finally gets to make the decisions.

Ms Smuts said that the DA position is that the Minister should play absolutely no role in the process. There cannot be administrative review by the Minister, especially since she is a shareholder in the SNO.

Mr Magashule argued that if the Minister is allowed to accept a recommendation, she should be allowed to reject it. In addition there is no fundamental difference between 'refuse' (which is used in the principal Act) and 'reject'. Also, it is a question of governing. No reasonable Minister will not apply his/her mind in a case where billions of rands are about to be spent.

The DDG agreed with Mr Magashule. With regard to the issue of the investors, one should look at the other side of the coin. Investors are much more interested in knowing that the body in which they are investing will at all times apply its mind to decisions.

The Chair stated that Cell C had had experience with S35. He asked Cell C to comment on their understanding of the provision and whether they had understood it to mean that the Minister had the right to reject the recommendation.

Cell C had been of the opinion that the Minister could reject the recommendation. This view had emerged in court as well.

Mr R Pieterse (ANC) argued that just as ICASA needs to apply its mind there needs to be a mechanism of ensuring that the Minster applied her mind.

The Chair referred to the situation where the Regulator has recommended an applicant with ties to a terrorist group. Such an instance could be dealt with via the State's security apparatus. The reason which the Minister provides for her rejection would have to be able to withstand any test. If the Minister invokes subsection (d) in this case she would be able to provide a very compelling reason. This provision should always be her last resort.

Mr Nyoka stated that the Minister should not only provide the applicant with reasons for the rejection. Since it is ICASA's decision that is being rejected they, too should be given such reasons.

Ms Vos argued that when it comes to the Minister's attention that the applicant has terrorist links the Minister could then pass on this information to ICASA. They can then reject the applicant.

The Chair believed that the Minister should have a right to reject. If members wished they could include a provision requiring the Minister to provide reasons.

Mr Magashule said that one cannot equate the Authority with government. If the Minister has a role to play she should be able to reject recommendations. He pointed out that the Committee had spent too much time on this provision since it was clear that there would be no agreement on this issue. The Committee should therefore just accept that there would be no agreement on this issue.

Ms Vos responded that she would have no problem with the provision if it stated that 'compelling reasons' would have to be provided by the Minister. This would exclude the possibility of political factors coming into play.

The Chair replied that this could be examined when the State Law advisor is present.

Clause 10
Ms Smuts said that this had been included in case government wanted to leave the door open.

The Chair argued that the objective of the clause was merely to introduce auctions and not to remove rights.

Ms Smuts argued that the door should not be left wide open.

The Chair argued that this was not the case.

Clause 15
The Chair asked if the Committee agreed that the term 'electronic transaction services' should be frozen. He asked if the Committee was satisfied with the use of the term Value Added Network Services (VANS). He asked for a response from the different parties.

The ANC wanted a definition for VANS. The Chair wanted a definition, which was no longer than three lines.

Mr M Van den Bergh (SA VANS Association) appreciated the Chair's need for brevity but asked the Committee to recognise how the problems had arisen in the first place, i.e. in the Act the definition had been too short in an attempt to cut corners. They had previously included terminology that had been relevant at the time. This time they had opted for creating a set of rules according to which one could determine if value has been added or not. If the Chair wished to shorten their definition, he could omit the reference to S40 (2).

The Chair read the definition of VANS as contained in the white paper. He asked what was wrong with it.

Mr Van den Bergh said that the definition was locked into a time, which was relevant before 1996. It was therefore unnecessarily limiting. Even the definition in the Act is limiting. The developments in the Internet and the role of the Virtual Private Networks (VPN's) changed this. Although the definition is not incorrect, it is unnecessarily limiting. One should not use specific examples, as this could lead to the definition becoming obsolete. The test included in their definition is therefore 'future-proof' and technologically neutral.
The Chair agreed. He however stated that all the role-players must submit their definitions. He too would submit a definition, which would not rely on examples to explain the concept.

Mr Nyoka appealed to the Committee to seriously consider accepting ICASA's definition for the following reasons:
-They plough a large amount of their resources into implementing Parliament's decisions. They had expended huge sums in order to come up with this definition.
-One has to take into account the manner in which ICASA reaches its decisions. Their system is transparent and subject to judicial review.
-The definition had not just been the product of the thinking of a few members of their bureaucracy. Instead it had involved extensive hearings, which had been rather costly.
-It was the product of a year's work.

Ms N Mtsweni (ANC) said that it was still important for the Committee to consider other submissions.

Ms Smuts said that if it was a product of a year's work involving industry it would perhaps be a mistake not to accept this definition.

The Chair argued that the Committee still has to consider other submissions. They would then produce a version, which is much shorter than the one produced by ICASA.

Ms Smuts pointed out that the mobile operators had wanted the term 'without prejudice to the mobile operators' to be built into Clause 15 (a) (2) (in the same way that Telkom's rights had been built in).

The DDG responded that the clause was merely giving Telkom, the SNO and the Small/Micro/Medium Enterprises (SMME's) the right to provide Voice Over Internet Protocol (VOIP).

Ms Smuts asked why the mobile operators should not be given similar rights.

Mr A Ngcaba, the Director-General asked if it is legal for services like banking to take place over a cellular phone.

Mr T Beale of Vodacom responded that the operators were merely trying to do what Vodacom has already been doing in terms of S37 (3), i.e. to provide VANS using their own network. Vodacom's aim is therefore merely to preserve the right to do that which they had already been doing. Thus, if S37 (3), which had been deleted, should be reinserted into the Act, they would have no problem with VANS.

Clause 16
Ms Vos suggested that women should be included as part of the previously disadvantaged groups.

Mr V Gore (DP) asked what happens when the teledensity exceeds five percent. He asked if the providers should continue to keep the teledensity below five percent in order to continue to provide services in these areas.

The Chair responded that once a provider is granted a license on a certain basis, they may continue to provide the services. He added that it is important to distinguish between teledensity and universal access. In determining teledensity one should look at how many homes have phones. In determining universal access, one could also look at how many people have access to pay phones. The five- percent applies to the former, i.e. there has to be a teledensity of five percent.

Ms Vos said that the clause does not state that the small business is entitled to build its own facilities. This should be included, as the whole aim is to introduce facilities-based competition. Failure to include such provision would mean that these businesses would be locked into the facilities of Telkom and the SNO indefinitely.

The Chair stated that this is accommodated in sub-section (1).

The Chair continued that the following issues still have to be dealt with:
-a definition for teledensity
-service vs. facilities -based competition
-whether the Minister is entitled to grant these licences
-Interconnection

He stated that the Committee could discuss these at a later date.

Clause 17
This clause deals with the issue of Private Telecommunications Networks (PTN's).

Ms Smuts stated that Section 41(b)(ii) should omit the reference to a 'private network telecommunication license', as it is unnecessary.

Ms Smuts referred to a previous presenter who had stated that tertiary institutions already had networks in place and therefore do not need another one. She asked what the Department felt about his suggestion that they should not build a network for schools either, as there are better ways of dealing with schools.

The Chair said that he had had a great problem with that submission. He referred to a technical school in his home village, which remains unconnected to their network. In any case, why try to prevent government from building capacity that is essential to the country?

The DG pointed out that the situation at the University of Cape Town is very different from that of the University of Venda. The infrastructure that they had put in place most probably focused on providing access points to the traditionally 'white' universities. In addition, all the public schools to which the Departments had provided computers still do not have access to the Internet.

Ms Smuts argued that she knew the presenter personally and that he had done much for black empowerment and universities. With regard to what he had said about schools, she emphasised that this had merely been a suggestion.

Ms Smuts referred to a previous suggestion by the DDG that the fiscus would pay for the infrastructure. It now appears that this responsibility rests with the Internet providers. She added asked for clarity.

The DG stated that the fiscus does not pay for the infrastructure.

The Chair asked whether the PTN's of Transnet and Eskom will continue to exist after the SNO comes into being.

Transnet responded that all services that had previously been provided by Transnet would now be provided by the SNO. It would be undesirable to have a new PTN developing within Transnet.

Eskom agreed, saying that there should not be a duplication of infrastructure.

The Chair asked if the clause allowed the SMME's to interconnect.

Ms Vos asked if the incumbent should be allowed to call the shots and determine the interconnection rates. The provision that these agreements should only be reviewed every five years is problematic.

The DG agreed saying that in 1993 there were only two cellular networks. The Authority had no role to play. The regime that had been put in place could continue into perpetuity. The intent is that the parties must return and renegotiate the interconnection regime.

Ms Smuts asked why five years had been chosen.

The DG asked what she suggested. He felt that the period was quite reasonable. Business strategies were usually prepared over a period of three to four years. They are therefore able to negotiate after that period.

Ms Smuts said that five years was too long. In 1993 there was no way that one could foresee how many subscribers they would have five years after 1993.

The Chair stated that the consumer suffers as a result of the battle between Telkom and the mobile operators. There is a need for transparency on the interconnection agreement. He asked why the Committee has no access to the agreement.

ICASA replied that there is no secrecy. It is a public document. It has been lodged with the Authority and Counsel is currently looking at it, but has at this stage not approved it yet. Once approved it becomes a public document.

The Chair asked which section of the law states that the agreement was not a public document prior to the Counsel's approval.

ICASA responded that the document was a working document at this stage. Counsel was in the process of eliminating sections of the document.

The Chair again asked what law this was based on.

ICASA replied that this was governed by the Interconnection and Facilities Leasing Guidelines. Legislation gives them the power to introduce guidelines, as it is not possible to legislate on everything (especially not in the telecommunications environment).

The Chair stated that it seems that there is no legal provision saying that it should remain a secret. Although the Committee respects the confidentiality of certain commercial information one has to take into account public interests. The battle between Telkom and the mobile operators disadvantaged the Telkom customer (who is generally not as well off as the customer who can afford a cellular phone).

The DG agreed, saying there was an overriding Act, which deals with access to information that had been passed by the Justice Committee. The Act provides that an officer in a public institution is compelled to make information available if the public requests it to do so. He however did not know what the regulations provide and promised to find this out.

The Chair said that the issue was important, as it is relevant to the issue of carrier selection and carrier pre-selection.

ICASA agreed, but said that until Counsel approves the document none of its contents can be implemented.

The Chair insisted that carrier pre-selection directly affects the consumer. It is therefore important that the document gets introduced to public scrutiny.

[The last hour of the meeting was not minuted by PMG]