ATC100413: Report Deliberations on Budget Vote 26 (Department of Communications & its Entities)
REPORT OF THE PORTFOLIO COMMITTEE ON COMMUNICATIONS ON ITS DELIBERATIONS ON BUDGET VOTE 26 (DEPARTMENT OF COMMUNICATIONS AND ITS ENTITIES), DATED 13 APRIL 2010
Section 55 (2) of the Constitution of the Republic of South Africa (Act 108 of 1996), provides the legislature with the critical role of overseeing and monitoring the performance of Departments and its entities. In terms of the current National Assembly processes, all Parliamentary Portfolio Committees are required to consider and report on their deliberations on the Strategic plan and Budgets of Departments and their entities.
The Portfolio Committee on Communications considered the Budget of the Department of Communications on 09 March 2010. The purpose of the meeting was to outline the department’s budget for the 2010/11 financial year and its strategic plan for 2010 – 2013. The Department of Communications officials who appeared before the Committee included:
Gen. (Ret) Siphiwe Nyanda, Minister of Communications
Ms Mamodupi Mohlala, Director-General
Mr Gift Buthelezi, Acting DDG: Policy Development
Ms Rosey Sekese, DDG: ICT Infrastructure Development
Ms Gerda Gräbe, COO & DDG: Governance & Administration
Mr Moseamo Sibola, Acting DDG: ICT International Affairs & Trade
Mr Themba Phiri, Acting DDG: PNC on ISAD
Ms Mapitso Malaku, Acting DDG: Finance & ICT Enterprise Development
Ms Manthekeleng Monama, Parliamentary Liaison Officer, DoC
Mr Tshidiso Molukanele, Parliamentary Officer to Minister
Ms Kedibone Sekwele, Acting Chief Director: Human Resources, DoC
Zaytoen Anthony, Acting Director: Cabinet-Parliament Liaison Officer
Mr A Whitehead, Special Advisor to the Minister
Mr M Ramusi, Special Advisor to the Minister
Mr T Rikhotso, Ministry Spokesperson
2. Department of Communications budget overview
The Department of Communications 2010/11 – 2012/13 Strategic Plan is informed by the following vision: South Africa as a global leader in the development and use of information and communication technologies for socio-economic development and building a better life for all through an enabling and sustainable world class information and communication technologies environment.
The total 2010/11 budget allocated to the Department of Communications is R2 113 999 000.00.
Expenditure grew significantly from R1.3 billion in 2006/07 to R2.5 billion in 2009/10, at an average annual rate of 23.2 per cent. This was due to the following additional allocations: R500 million in 2007/08 to Sentech for the national wireless broadband network; R600 million in 2008/09 and R450 million in 2009/10 to Telkom for implementation of the ICT access network; and R200 million in 2008/09 and R100 million in 2009/10 to Sentech to fund the ICT infrastructure for the 2010 FIFA World Cup.
Over the medium term, expenditure is expected to decrease at an average annual rate of 12,9 per cent, from R2.5 billion in 2009/10 to R1.6 billion in 2012/13, as the implementation of the 2010 FIFA World Cup infrastructure and other initiatives come to completion. In 2010/11, a final allocation of R150 million is made to Telkom for the 2010 FIFA World Cup. In 2011/12, R25 million is to be allocated to the Universal Service and Access Agency of South Africa, and Universal Service and Access Fund to: build capacity and procure the necessary supporting infrastructure to expand ICT access to South Africans in underserviced areas; and complete the migration from an analogue to digital technology platform. The baseline efficiency savings of R314.7 million in 2011/12 and R479 million in 2012/13, mostly caused by reductions in the South African Post Office subsidy allocation, also contribute to the decrease in expenditure over the medium term.
The Expenditure in the ICT Enterprise Development programme is expected to decrease over the medium term, from R2 billion to R1.1 billion, at an average annual rate of 17.9 per cent due to final allocations to Sentech and Telkomin 2010/11. The decrease in transfers and subsidies over the medium term, from R2.1 billion to R1.1 billion, is due to discontinuation of South African Broadcasting Corporation: Technology as a programme under SABC Public Broadcaster and the reduction of the subsidy to the South African Post Office.
Expenditure in compensation of employees increased from R99 million in 2006/7 to R147.4 million in 2009/10, at an average annual rate of 14.2 per cent. This strong growth is the result of an increase in the number of staff from 326 in 2006/07 to 350 in 2009/10, and due to inflation-related salary adjustments. These were mainly senior management appointments, including 2 Deputy Directors-General. As at September 2009, the vacancy rate of the department was 18.3 percent. This represented 62 funded positions that have not been filled. Almost 45 per cent of the total staff complement is located within the Administration programme; 23.5 per cent in ICT infrastructure and 18.4 per cent in ICT Policy Development. Over the Medium Term Expenditure Framework (MTEF) period, spending is expected to increase to R177.9 million, at an average annual rate of 6.5 per cent due to inflation-related adjustments.
In the 2010 Medium Term Expenditure Framework (MTEF) allocation, the department was requested to include explicit savings initiatives in the Strategic Plan. It was required that through savings measures, at least R155,48 million in 2010/11, R341,68 million in 2011/12 and R479,04 million in 2012/13 should be saved without compromising existing, new and expanding frontline services over the next three years.
The Department has identified efficiency savings over the MTEF period of R40 million in 2010/11, R43, 6 million in 2011/12 and R50, 6 million in 2012/13 across all programmes. Goods and services items targeted for cost reduction include: consultancy services, travel and subsistence, agency support, catering, venues and facilities, and other operating expenditure. Savings will be achieved by reducing the department’s reliance on consultants. In addition, the allocations to the Universal Service and Access Agency of South Africa and National Electronic Media Institute of South Africa have each been reduced by R2,7 million in 2010/11, R3 million in 2011/12 and R4,2 million in 2012/13.
South African Post Office subsidy allocations are reduced by R100 million in 2010/11. R250 million in 2011/12 and R400 million in 2012/13, and the Independent Communications Authority of South Africa’s baseline is reduced by R45 million over the MTEF period.
3. Departmental Budget 2010/2011
The Department of Communications budget is structured into six programmes
3.1 Programme 1: Governance and Administration – R151 801 000.00
The purpose of this programme is to provide strategic support to the Ministry and overall management of the Department.
3.2 Programme 2: Information Communications Technology (ICT), International Affairs and Trade – R44 618 000.00
The purpose of this programme is to ensure alignment between South Africa’s international activities and agreements in the field of ICTs with South Africa’s foreign policy.
3.3 Programme 3: ICT Policy Development - R90 112 000.00
The purpose of this programme is to develop ICT policies, legislation and strategies that support the development of an ICT sector, which creates conditions for the accelerated and shared growth of the economy and to develop strategies that increase the uptake and usage of ICTs by the majority of the South African population, thus bridging the digital divide.
3.4 Programme 4: Finance and ICT Enterprise Development – R1 617 492 000.00
The purpose of this programme is to oversee and manage government’s shareholding interest in public entities and to facilitate growth and development of Small, Micro and Medium Enterprises (SMMEs) in the ICT sector.
3.5 Programme 5: ICT Infrastructure Development – R177 451 000.00
The purpose of this programme is to promote investment in robust, reliable, secure and affordable ICT infrastructure that supports the provision of a multiplicity of applications and services.
3.6 Programme 6: Presidential National Commission – R32 525 000.00
The purpose of this programme is to facilitate the development of an all inclusive information society by promoting the uptake and usage of ICTs for improved socio-economic development and research. This programme is currently under review and is likely to change during the 2011 Medium Term Expenditure Framework process
4. Entities of the Department of Communications
For the financial year under review, the Department has the following entities and agencies reporting to the Minister of Communications and the ICT regulatory authority:
4.1 South African Post Office (SAPO)
The South African Post Office was established in accordance with the Post Office Act (1958) as a government business enterprise to provide postal and related services to the South African public. It was granted a mandate to conduct postal services to South Africa by the Postal Services Act (1998). The Act makes provision for the regulation of postal services and the operational functions of the company, including, its universal service obligations.
Total 2010/2011 Budget allocation to the South African Post Office is R306 077 000.00 in subsidy.
The South African Post Office has the following focus areas for 2010/11:
· The financial sustainability of the organisation
· Human capital development and management
· Diversification programs
· Rural development programs
· Youth development programs
The Committee recommends that the Budget Allocation of SAPO be approved.
4.2 South African Broadcasting Corporation (SABC)
The South African Broadcasting Corporation was established in terms of the Broadcasting Act (1936) as a government enterprise to provide radio and television broadcasting services to South Africa. As provided for in the Broadcasting Amendment Act (2002), from October 2004 the SABC has been incorporated into a limited liability company with two operational divisions: public broadcasting services and commercial broadcasting services.
Total 2010/2011 Budget allocation to the SABC is R230 014 000.00 for the public broadcaster, R38 896 000.00 for Channel Africa, R6 850 000.00 for Community radio stations, and R10 000 000.00 for Programme production.
The SABC has the following projects/strategies/key result areas:
2011 Local Government Elections
Digital Terrestrial Television (DTT)
It was pointed out that the SABC might face a financial shortfall and is depending on its bank guaranteed loan to the amount of R1.4 billion
It was also pointed out that there is no budget allocation for IEC and election awareness programmes.
The Committee recommends that SABC’s budget and the estimated R15 million requested to cover the 2011 Local Government Elections be approved.
Sentech Ltd was established in terms of the Sentech Act (1996) as a common carrier to provide broadcasting signal distribution for broadcasting licensees. In 2002, Sentech was licensed, through the Telecommunications Amendment Act (2001), to provide international carrier-to-carrier voice services, as well as multimedia services. Sentech is viewed as a core provider of wireless broadband in South Africa. The Cabinet confirmed this policy statement and declared that Sentech shall remain as a strategic State-Owned Enterprise. Sentech will achieve 63.3% DTT population coverage by 31 March 2011 based on the current Budget allocation of R160.9 million.
Total 2010/2011 Budget allocation to Sentech is R160 900 000.00 for Digitisation, and R110 000 000.00 for Digital Terrestrial Television (Dual illumination).
Sentech has the following key result areas:
· Analogue television until Digital Switch Over.
· Low Power transmitter’s expansion in partnership with SABC (15 per FY).
· Digital Terrestrial Television (DTT)
· 2010 FIFA Soccer World Cup (satellite back-up infrastructure)
· Radio: FM, MW, SW
· Business Television and Radio
· Facility Rental
· Other (consulting)
· Investigate the provision of mobile TV infrastructure and value added services to
· broadcasting signal distributors (e.g. subscriber management, interactive services, etc
It was pointed out that the Committee calls for a further briefing on Sentech’s strategic plan and commercial budget as will be approved by the new Board.
The Committee recommends that the Budget Allocation of Sentech be approved.
4.4 National Electronic Media Institute of South Africa (NEMISA)
NEMISA was established as a non-profit organization in terms of the Companies Act (1973). It provides much needed skills training at an advanced level for the broadcasting industry. It is accredited by the Council for Higher Education and offers diploma courses, short courses and internships in three subjects: TV production, radio production and creative multimedia.
Total 2010/2011 Budget allocation to the NEMISA is R32 632 000.00
NEMISA has the following focus areas for 2010/11:
Content Development: National Heritage
· GDYC Mainstreaming
· Broadcast Digital Migration
· Community Development
· Media Industries New Entrants Development
· Information Technologies Technicians Development
The Committee recommends that the Budget Allocation of NEMISA be approved.
4.5 Universal Services and Access Agency of South Africa (USAASA)
USAASA was established in terms of Section 58 of the Telecommunications Act (1996). The main role of the agency is to promote universal service and access to communications technologies and services for all South Africans. It also facilitates and offers guidance on evaluating, monitoring and implementing programmes, which propose to improve universal access and service.
Total 2010/2011 Budget allocation to USAASA R20 000 000.00 for infrastructure, and R46 704 000.00 as a contribution to operations.
USAASA has the following focus areas for 2010/11:
• Development of the Universal Access and Service Strategy
• Publication guidelines for US Fund application
• All USAASA subsidized sites mapped in a Geographical Information System (GIS)
• Development of measurable ICT access and impact indicators.
• Implementation of STB Scheme-of-Ownership Model
• Development of Competitive Bidding Strategy and Implementation
• Continued Implementation of handover strategy
• Development and Implementation of an ICT Hub Model
• Implementation of Rapid Deployment Strategy
The Committee recommends that USAASA’s budget be approved
4.6 Independent Communications Authority of South Africa (ICASA)
ICASA is responsible for regulating the telecommunications and broadcasting sectors in the public interest so as to ensure affordable services of a high quality for all South Africans. In addition to developing regulations, ICASA also issues licenses to telecommunications and broadcasting service providers; enforces compliance with rules and regulations; protects consumers from unfair business practices and poor quality services; hears and decides on disputes and complaints brought against licensees; and manage the effective use of radio frequency spectrum.
Total 2010/2011 Budget allocation to ICASA is R290 923 000.00 as a grant from the DoC, further R10 000 000.00 from interest on income, as well as R18 000.00 from other income, totaling R300 941 000.00.
ICASA has the following projects that have a total cost of R31 042 000.00:
- Facilities leasing
- Carrier pre-selection
- Universal service and access regulations
- Review of E-rate regulations
- Radio regulations
- Spectrum coordination
- Licensing high demand bands
- Type approval regulations
- Licensing commercial radio
- Licensing of mobile TV
- Licensing of DTT
- Ownership and control regulations
- Spectrum fees regulations
- Review numbering regulations
- Competition framework regulations
- Enquiry for services without frontiers and VoD
- Review of CAP regulations
- Review of handset subsidy regulations
- Regulatory framework for financial reporting and price control
- Digital dividend
- Local government elections regulations
- Astronomy geographic advantage areas
- Review of band plan
The Committee recommends that the Budget Allocation of ICASA be approved.
4.7 .za Domain Name Authority (.zaDNA)
.zaDNA was established to assume responsibility for the .za Domain Name Space. The .zaDNA was established in terms of Chapter 10 of the Electronic Communications and Transactions Act (ECT), 2002. The Department currently provides funding for the .zaDNA until the Authority is fully operational. Funding will then be sourced through a funding model developed in accordance with section 66(3) of the ECT. The .zaDNA will also oversee the implementation of an alternative dispute resolution mechanism.
Total 2010/2011 Budget allocation to .za Domain Name Authority is R1 500 000. 00 for contribution to operations
The Committee recommends that the .za Domain Name Authority budget be approved.
The Committee has considered and examined the Business Plans (Budgets and Strategic Plans) of the Department of Communications and the Entities accountable to it. The Committee reports that it has concluded its deliberations thereon and made the following recommendation:
The Committee recommends that the Budget Allocation of the Department of Communications and the Entities accountable to it be approved.
Report to be considered.
Hon. I Vadi Date
Portfolio Committee on Communications
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