ATC130516: Report of the Portfolio Committee on Communications on tts Deliberations on Budget Vote 27: Department of Communications, and its Entities, dated 14 May 2013

REPORT OF THE PORTFOLIO COMMITTEE ON COMMUNICATIONS ON ITS DELIBERATIONS ON BUDGET VOTE 27: DEPARTMENT OF COMMUNICATIONS, AND ITS ENTITIES, DATED 14 MAY 2013

The Portfolio Committee on Communications, having considered the strategic plans of the Department of Communications and its public entities, reports as follows:

1. Introduction

Section 55(2) of the Constitution of the Republic of South Africa, Act 108 of 1996, states that the National Assembly must provide for mechanisms (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of (i) the exercise of national executive authority including the implementation of legislation; and (ii) any organ of state. In terms of the Public Finance Management Act (PFMA) the Accounting Officers must provide Parliament or the relevant legislature with their respective institution’s medium-term strategic plan and where applicable with its annual performance.

The Money Bills Amendment Procedure and Related Matters Act was promulgated in 2009, and provides Parliament with powers to reject or recommend the approval of departments’ budgets. The Act also makes provision for the implementation of recommendations emanating from the committee’s oversight.

The Minister of Communications tabled the Medium Term Strategic Plan of the Department of Communications (the Department) and its entities on 13 March 2013. The Committee received briefings from the Department on 20 and 26 March 2013.

In performing its constitutional mandate, the Committee scrutinised the alignment of the Department and its entities’ strategic plans for the period 2013-2018 to the following key government objectives:

(i) the 2013 State-of-the-Nation Address (SoNA);

(ii) the 2013/14 Budget Statement;

(iii) government’s five priorities i.e. health, education, employment, rural development, and fighting crime and corruption;

(iv) recommendations made in the National Development Plan (NDP); and

(v) the objectives outlined in the New Growth Path (NGP).

1.1 State-of-the-Nation Address

In his 2013 SoNA President Jacob Zuma pronounced that “to prepare for the advanced economy we need to develop; we will expand the broadband network. Last year, the private public sector laid about 7000 new fibre cables. The plan is to achieve 100% broadband internet penetration by 2020.”

In accordance with the outcomes-based performance management framework adopted by government, the Department contributes to the development of an efficient, competitive, and responsive economic infrastructure network by developing Information Communication Technology (ICT) policies and legislation, as well as overseeing the operation of public entities within the sector. To expand access to ICT services throughout the country, the President identified the rollout of National Wireless Broadband countrywide which will expand access to ICT services throughout the country, as a vital project, to be embarked upon by the Department in 2013/14.

This pronouncement follows one made in the 2012 SoNA, in which President Zuma highlighted an Infrastructure Development-led economy as a priority area. To this end, the President noted that government would invest more than R800 billion in infrastructure in coming years. According to the New Growth Path infrastructure development could, between 2011 and 2015, produce 250 000 jobs per year in energy, water, communications and housing industries.

1.2 National Development Plan (NDP)

Broadband has a significant role to play across the African society. It provides small business with an opportunity to broaden their customer base and reduce overheads. Broadband could also assist local farmers and fishermen with information on forecasts, sustainable farming techniques and pricing. In addition, broadband serves as a vital link in smart electricity grids facilitating locally-generated electricity, including electricity from renewable sources which could be integrated, stored, and shared as the demand fluctuates.

An adequate ICT environment provides the backbone for a modern economy and therefore, expanding the infrastructure should be accompanied by measures to reduce costs. The e-strategy outlined in the NDP therefore proposes that by 2030 ICTs should underpin the development of an inclusive and dynamic information society and knowledge economy. In the short-term, that is from 2012 to 2015, this would entail the development of a comprehensive and integrated e-strategy that reflects the crosscutting nature of ICTs.

The promotion of ICT diffusion strategies, to be developed in tandem with e-literacy and wider ICT skills, and institutional development strategies to enable inter-governmental and private/public coordination, are key components of the broader e-strategy. Currently, only 9 to 13% of the population has connectivity, and according to the NDP, government’s plan is to achieve 100% broadband penetration by 2020. This target had been proposed earlier by the Department and was among those announced by the President in his 2013 SoNA. Accordingly, the definition of broadband will be expanded from 256 kilobits (Kb) to at least 2 megabits (Mb) per second.

Between 2020 and 2030, the government plans to use ICTs extensively in delivering services to citizens. These services will include government information and educational services. The strategy includes greater collaboration between the state, industry and academia.

1.3 National Policy Framework: New Growth Plan, Industrial Policy Action Plan and Job Creation

Poverty alleviation is complex, and to reverse it physical infrastructure and efficient production systems are a necessity. There is a growing body of literature that focuses on the effect of New Economies in industrial countries. As early as 1998, a research paper by Braga concluded that the countries with the greatest prospects for economic performance in New Economies are those that can rely on widespread access to communication networks, those with an educated labour-force and consumers, and those in which institutions that promote knowledge creation and dissemination are accessible.

New Economies offer a new channel for economic growth that may bring developing countries on par with developed countries, and possibly ensure more sustainable economies. To achieve its ambitious goal, South Africa will need to strike an appropriate balance between quality, speed, access, and diffusion. Affordability and access will be critical factors in ensuring faster diffusion of internet usage. Whilst the cost of South Africa meeting its broadband objectives has been estimated at R640 billion, the Human Sciences Research Council (HSRC) has indicated that an additional R320 billion will, however, be required to expand the current networks in order to achieve 100% broadband access across both mobile and fixed lines.

To attract the necessary capital, the South African government should create an environment conducive to investment by making credible commitments based on clear policy and regulatory decisions. In addition to capital, the creation of an integrated information structure will require a clear delivery strategy that includes strategies aimed at stimulating demand.

The 2011 SoNA reiterated government’s commitment to job creation through small, medium and micro businesses. President Zuma then indicated that “we have sent out an unambiguous message to directors-general of government departments to take personal responsibility for this anomaly as accounting officers. We expect regular reports from them on progress made to pay suppliers, which should be done within one month of service of goods being delivered. Government cannot be the one that stifles the growth of Small Medium and Micro-sized Enterprises (SMMEs).”

This was emphasised again in the 2013 SoNA when the President said that “a key project for the Presidency currently is to get government departments to pay SMMEs within 30 days. Departments are required to submit monthly reports so that we can monitor progress in this regard. We have taken a decision that accounting officers who fail to execute this directive should face consequences.”

1.4 Committee oversight mandate

As part of fulfilling its legal and constitutional obligations, oversight visits conducted by the Committee in 2012/13 to the North West , Gauteng and the Eastern Cape played an important role in measuring service delivery, and whether budget allocations were appropriate.

In addition, the public hearings on the state of readiness for DTT migration (27 – 28 November 2012) and on the cost to communicate (29 – 30 November 2012) focusing on the major players in the ICT sector, assisted the Committee to respond to matters that had emanated from the above-mentioned oversight visits. Since then, there have been developments within the processes of Digital Terrestrial Television (DTT).

In order for the Committee to finalise its report and recommendations, it will embark on the second round of public hearings on cost to communicate focusing mainly on consumers, SMMEs and other players during the 2013/14 financial year.

2. The Department

The 2013 - 2018 strategic plan was prepared in terms of the statutory requirements as defined in Chapter 5 of the PFMA and Chapter 1, Part III (b), of the 2001 Public Services Regulations.

The following are the Department’s s trategic outcome-oriented goals:

- competitiveness and economic growth within the ICT industry;

- accessibility, reliability and affordability of secure ICT infrastructure;

- the building of an inclusive information society;

- performance of the Department and ICT state-owned entities (SOEs); and

- contribution to the global ICT agenda.

2.1 Expenditure Trends

Transfers and subsidies to public corporations and private enterprises decreased significantly between 2009/10 and 2012/13. This decrease was due to the final transfers made in 2009/10 to Telkom and Sentech for infrastructure associated with the 2010 FIFA World Cup, as well as a once-off allocation of funds to the South African Broadcasting Corporation (SABC) in 2009/10 for immediate liquidity requirements.

Over the same period, transfers to departmental agencies and accounts increased significantly owing to additional allocations in 2012/13 to fund Independent Communication Authority of South Africa’s (ICASA) office equipment and relocation costs, and the adjusted allocation for the 2013 Africa Cup of Nations. However, transfers to the Universal Service and Access Agency of South Africa (USAASA) for the set top box subsidy scheme could not be made owing to delays the Department experienced in finalising the DTT standards. Delays in implementing the 112 emergency call centre project and broadband owing to delays in the bid adjudication process, and in finalising the broadband study also contributed to the decreased expenditure, and accounts for the significant decline in expenditure on agency support and outsourced services over the period.

Expenditure on advertising increased significantly between 2009/10 and 2012/13 due to the DTT awareness campaign, launched in 2012/13. Spending on this campaign also explains the increased expenditure on consultants over this period: consultants continue to be employed to assist the Department in developing and rolling out the campaign through various media channels. Spending on advertising is expected to increase marginally owing to monies being reprioritised to fund the DTT awareness campaign under the Administration programme.

Expenditure on transfers and subsidies to public corporation and private enterprises is expected to increase significantly in 2013/14 owing to the allocation of additional funds to Sentech to expedite the rollout of DTT infrastructure in order to avoid delays in its launch. Expenditure on goods and services is expected to increase over the medium term owing to the use of outsourced services for the design, implementation and operation of the 112 emergency call centres and DTT awareness campaigns.

Cabinet-approved baseline reductions amounting to R611.1 million over the medium term have been effected. The reductions were made mainly in relation to broadband and non-core goods and services. The Department had an establishment of 302 posts, all of which were filled at the end of September 2012.

An amount of R801.9 million has been allocated to the broadcasting digital migration project over the medium term. Of this, R202.9 million was allocated to the SABC for the implementation of digital library and a digital playout centre. Sentech has been allocated R605.1 million over the medium term. This amount includes an additional R277 million for expediting the rollout of the DTT infrastructure in 2013/14, and R6 million to cater for ICT infrastructure for the 2014 African Nations Championship. Funding for broadband has been put on hold pending the finalisation of the broadband strategy and rollout plan.

3. Expenditure Trends per programme

3.1 Programme 1: Administration

The spending focus over the medium term will be on providing strategic support to the Ministry and overall management to the Department, and support for implementation of DTT through awareness campaigns. The latter accounts for the significant spending projected over the medium term on advertising within the Corporate Services sub-programme.

Funds originally allocated to the 112 emergency call centre project, which was delayed, have been reprioritised to fund projects in other programmes.

This reprioritisation had led to significantly increased spending in 2012/13 on advertising in the Corporate Services sub-programme. Expenditure on consultants increased significantly in 2009/10 and 2012/13 so as to compensate service providers who assisted the Department in developing the DTT campaign and conducting the organisational reviews which began in 2009/10. The review had resulted in increased expenditure on compensation of employees, mainly for the appointment of additional staff in the Internal Audit sub-programme, between 2009/10 and 2012/13.

3.2 Programme 2: International Affairs

The spending focus over the medium term will be on paying membership fees to international organisations within the communications sector; participating in the global disclosure within the United Nations system on telecommunications, postal services, information society and green technology; participating in engagements that result in e-skills development initiatives for young South Africans and employment creation projects; and pursuing bilateral engagement with countries of the South and the North. To this end, the Department will, over the medium term, annually submit five ICT position papers for international engagements.

Expenditure on transfers to foreign governments and international organisations increased significantly between 2009/10 and 2012/13 as the Department had incorrectly classified payments to international organisations as operating payments, instead of as transfers and subsidies. This was corrected in 2012/13. Expenditure on consultants decreased over the same period owing to a once-off allocation for consultants to help the Department organise the World Telecommunications Standardisation Assembly in 2010/11.

To give effect to the Cabinet-approved budget reductions, the Department terminated transfers to the New Partnership for Africa ’s Development e-Africa Commission over the medium term, yielding R13 million. In 2012/13 this amount was reprioritised to the Administration programme so as to provide for the DTT awareness campaign.

3.3 Programme 3: Policy, Research and Capacity Development

The spending focus over the medium term will be on providing support to improve the functioning of information society and promoting development and use of ICTs through the Information Society Development sub-programme; the migration to DTT; and the review of ICT policies and legislation through the ICT Policy Development sub-programme.

Expenditure on compensation of employees increased significantly between 2009/10 and 2012/13 due to additional funding for improved conditions of service and the hiring of additional personnel. This also explains the increase in spending on the Information Society Development programme, which also increased due to the hosting of the ICT Indaba in 2012/13. Expenditure on consultants also increased significantly between 2009/10 and 2012/13 as consultants were appointed to support the Department in the policy and legislative making process, mostly with regard to the proposed transaction between Telkom and Korea Telecom.

To give effect to the Cabinet-approved budget allocation reductions of R26.5 million over the medium term the Department has implemented cost-saving measures affecting expenditure on consultants and other non-core goods and services. This accounts for the significant decrease in expenditure on such services over the medium term.

3.4 Programme 4: Broadcasting and Communication Regulation and Support

The spending over the medium term will be focussed on continuing to strengthen the Department’s oversight over the public entities, and facilitating the growth and development of ICT SMMEs. This will provide for the creation of two ICT SMME hubs per province, per year, over the medium term.

Expenditure on transfers to public corporations and private enterprises decreased significantly between 2009/10 and 2012/13 owing to a once-off allocation of funds to the SABC in 2009/10 for liquidity requirements, the conclusion of transfer payments to Telkom and Sentech for 2010 FIFA World Cup ICT infrastructure, and the final allocation to the South African Post Office (SAPO) in 2012/13 for universal access. This accounts for the decrease in spending in the Public Entity Oversight sub-programme over the same period. Transfers to departmental agencies’ accounts increased significantly between 2009/10 and 2012/13 owing to additional allocations in 2012/13 to fund office equipment and relocation costs for ICASA.

Spending on goods and services, particularly on consultants, increased significantly between 2009/10 and 2012/13, following a change to the Department’s budget structure in 2012/13. This resulted in expenditure for the 112 emergency call centres being moved from the ICT Infrastructure Support programme to this programme. The Department also reduced spending on goods and services, particularly on consultants, by R47 million over the medium term to give effect to the Cabinet-approved reductions. The reductions and funds realised from delaying the implementation of the 112 emergency call centres were reprioritised in 2012/13 to enable an awareness campaign for DTT through Administration programme. In spite of the delay, spending on consultants, contractors, agency support and other outsourced services is expected to increase significantly over the medium term as a result of the implementation of the 112 emergency call centre project.

3.5 Programme 5: ICT Infrastructure Support

The spending focus over the medium term will be on increasing transfer payments to Sentech continue network expansion in rolling out DTT infrastructure in preparation for the launch of commercial DTT. These allocations will enable Sentech to complete the rollout of the infrastructure required for the migration from analogue to digital by 2014/15.

Transfers to Sentech increased significantly between 2009/10 and 2012/13, as funding was made available for digitisation in support of government’s target to switch off the analogue signal in December 2013. Owing to delays in the technical standards review however, Sentech has had to extend the delivery date. Additional funding amounting to R283 million will be made available to Sentech in 2013/14. R171 million of this amount is to be spent on the rollout of infrastructure for the commercial launch of DTT, R106 million on dual-illumination, and R6 million on ICT infrastructure for the 2014 African Nations Championship.

Expenditure on consultants increased significantly between 2009/10 and 2012/13 for service providers who assisted the Department to develop the report on baseline data for broadband coverage, penetration, speed and cost, and implementing a testing centre for set top boxes.

Expenditure is expected to decrease significantly over the medium term as the funding for broadband is placed on hold while the broadband strategy and implementation plan are being refined. The delay has allowed the Department to give effect to the Cabinet-approved budget reductions of R854.4 million over the medium term in this programme. The projected decline in expenditure over this period is also attributable to the reduction in allocations to Sentech as the entity moves towards concluding the rollout of DTT infrastructure.

4. Departmental Budget 2012/13 – R2, 04 billion

The main budget, including state debt costs, provides for the total expenditure of R 1.1 trillion in the 2013/14 financial year. The Department has been allocated R2, 04 billion.

In nominal terms the 2013/14 allocation represents a budget increase of R389 million or 23.5 percent compared to the previous financial year. In real terms i.e. taking into account inflation, the Department’s budget has increased by only R280.6 million or 16.96 percent.

4.1 Economic classification

4.1.1 Transfers and Subsidies

Spending in this category declined from R1.2 billion in 2012/13 to R1.1 billion owing to allocations transferred to entities for the development of ICT infrastructure related to the 2010 FIFA World Cup ceasing. In 2011/12 expenditure increased to R1, 4 billion as a result of approved rollovers of R109, 9 million during the 2012 adjustment period. Over the medium term, expenditure will not exceed R1, 1 billion. During the 2013/14 financial year the bulk of the departmental budget (i.e. R1,6 billion), will be spent on entities.

In terms of the allocation to various programmes, transfers and subsidies to Sentech, National Electronic Media Institute of South Africa (NEMISA), Universal Service and Access Agency of South Africa (USAASA)) account for the largest share of the budget i.e. R1.1 billion or 65 percent. The second largest allocation, R603.2 million or 53.3 percent of the total budget, will go to public corporation and private enterprises like ICASA and the SABC.

In September 2012 the Minister approved, and the Department implemented a new budget structure derived from an organisational review that began in the 2009/10 financial year. As a result, the former Presidential National Commission programme was merged with the Policy, Research and Capacity Development and ICT Infrastructure Support programmes, leaving only broadband and DTT related activities, thus leaving the Department with five programmes.

Similarly, some programme names have been altered: Programme 2 – ICT International Affairs and Trade, Programme 4 – ICT Enterprise Development, and Programme 5 – ICT Infrastructure Development will henceforth be known as now International Affairs; Broadcasting and Communications Regulation and Support, and ICT Infrastructure Support, respectively.

4.2 Programme 1: Governance and Administration – R216. 1 million

The purpose of this programme is to provide strategic support to the Ministry and overall management of the Department. The programme comprises the following six sub-programmes: Ministry; Departmental Management; Internal Audit; Corporate Services; Financial Management; and Office Accommodation.

4.3 Programme 2: International Affairs– R33. 3 million

The purpose of this programme is to ensure alignment between South Africa’s international activities and agreements in the field of ICTs, and South Africa’s foreign policy. The ICT International Affairs Programme comprises the sub-programmes International Affairs, and ICT Trade/Partnerships.

The International Affairs sub-programme allows for the coordination of the functions

and responsibilities aimed at ensuring that South Africa meets its international ICT

obligations through bi-laterals, multi-laterals and tri-laterals.

The ICT Trade/Partnerships sub-programme provides for the development and

advancement of the country’s interests in international trade forums through participation

in World Trade Organisation (WTO) ICT-related initiatives and other international trade

agreements, such as South African European Union Trade Agreement, and bilateral

agreements with counterpart-countries. South Africa’s national interests are also

promoted in these forums.

4.4 Programme 3: Policy, Research and Capacity Development – R84. 4 million

The purpose of this programme is to develop ICT policies and legislation that support the development of an ICT sector that creates favourable conditions for the accelerated and shared growth of the economy. The programme also provides for the development of strategies that increase the uptake and usage of ICT by the majority of the South Africans, thus bridging the digital divide.

The ICT Policy Development Programme comprises the following sub-programmes: ICT Policy Development, Economic and Market Analysis, Research, Information Society Development and Capacity Development.

The ICT Policy Development sub-programme provides for the drafting of legislation,

regulations, policy and guidelines that govern the broadcasting, tele-communications,

postal and IT sectors, and therefore ensures broad based economic development within

the ICT sector.

The Economic and Market Analysis sub-programme is responsible for economic

analysis and growth projections. This sub-programme also undertakes market research

to identify and explore areas that require policy intervention.

The Research sub programme is responsible for delivering a National ICT Strategy,

through sound knowledge of the ICT landscape.

The Information Society Development sub-programme renders delivery management services in support of an ICT information society, development and usage.

The Capacity Development sub-programme provides direction for the advancement of e-skills graduates, and the advancement of a society that functions effectively in an emerging information society.

4.5 Programme 4: Broadcasting and Communications Regulation and Support – R1 129. 3 billion

This programme oversees and manages government’s shareholding interest in public entities and facilitates the growth and development of ICT-sector SMMEs.

It comprises the following sub-programmes: Public Entity Oversight; Small Medium and Micro Enterprise Development; and ICT Support.

The Public Entity Oversight sub-programme provides oversight of SOEs through the

management of government’s shareholding interests in public enterprises so as to support the reaching of key national goals and strategic priorities. The Small Medium and Micro Enterprise Development sub-programme facilitates the growth and development of ICT SMMEs. Lastly, the ICT Support sub-programme provides for oversight and management of transfers to public entities and state owned companies responsible for the management and protection of South Africa’s ICT environment.

4.6 Programme 5: ICT Infrastructure Support – R580. 9 million

The programme promotes investment in robust, reliable, secure and affordable ICT infrastructure that supports the provision of a multiplicity of applications and services. The programme comprises the Broadband and Digital Terrestrial Television sub-programmes.

The Broadband sub-programme is responsible for developing and facilitating the

implementation of the ICT infrastructure broadband strategy and implementation plan, in

order for broadband goals to be achieved and the Digital Terrestrial Television sub-

programme is responsible for making transfers to Sentech to fund the roll-out of ICT

infrastructure for the migration of signal distribution from analogue to digital.

5. Entities of the Department of Communications

The following entities and agencies will report to the Minister of Communications and the ICT regulatory authority, in 2013/14

5.1 South African Post Office – R50. 6 million

SAPO is a schedule 2 public entity in terms of the PFMA. It is a government business enterprise established to provide postal and related services to the public, and derives its mandate from the South African Post Office SOC LTD Act (Act No 22 of 2011) and the South African Postbank Limited Act (No 9 of 2010). The Postal Services Act (Act 124 of 1998) grants SAPO the exclusive mandate to conduct postal services. This Act further makes provision for the regulation of postal services and the operational functions of the postal company, including Postbank’s universal service obligations and associated financial services.

SAPO’s strategic goals over the medium term are to: drive operational excellence to achieve quality at benchmark costs; continue implementing universal service obligations; implement the second and third phases of the information technology network upgrade; continue the corporatisation of Postbank through applying for a banking licence and upgrading banking systems; and to review the labour model within the organisation.

The Committee identified the following concerns:

(i) the inaccessibility of post offices by people living with disabilities;

(ii) the manner in which the recent strike-action was managed, and the non-existence of a proactive plan to address striking workers, or to mitigate the losses suffered during the 2012/13 strike;

(iii) failure by Executives to implement the Board decisions;

(iv) delays in filling vacancies, including that of the Chief Operations Officer and the Chief Information Officer.

5.2 Sentech – R308 million

Sentech Limited is an SOE established in terms of the Sentech Act (Act No 63 of 1996) and is listed as a schedule 3B public entity in terms of the PFMA. Its mandate is to provide broadcasting signal distribution for broadcasting licensees.

Sentech’s strategic goals over the medium term are to: align its strategic roadmap with shareholder programmes to enable the development of open access government participation in the communications industry through infrastructure based investment; continue working to support and realise government’s ICT vision and goals including innovation in broadcasting and media services, and content management and distribution; create solutions that enhance the customer experience and are in line with government’s mandate of access to communication services for all citizens; and re-package social responsibility interventions and create community social investment ICT programmes that improve lives, create value and are sustainable.

The Committee identified the following concerns:

(i) R500 million with interests for National Broadband Wireless Network has been taken back from Sentech’s account to National Treasury due to non-existent of Broadbank policy; and

(ii) the projected income and the operational costs of the entity does not allow for any deviation from projected planning.

5.3 Universal Service and Access Agency of South Africa – R60. 1 million

USAASA was established under the Electronic Communications Act (No 36 of 2005). The role of the agency is to promote the goals of universal access and universal service in under-serviced areas of South Africa.

In order to contribute to the achievement of government priorities and outcomes; USAASA is to pursue the following strategic objectives: providing measureable and sufficient universal service and access to underserviced areas; facilitating the provision of adequate and cost-effective connectivity to ICT infrastructure to identified under-serviced areas; increasing the subsidization of innovative access equipment; providing information and knowledge on the state of ICT access and services to key stakeholders so as to influence South Africa’s policy and strategy; providing an effective and efficient management of the Universal Service and Access Fund (USAF); promoting an effective, efficient and well-resourced organisation; and upholding the principles of good corporate governance.

The Committee identified the following concern:

(i) the sustainability and efficient operations of the Tele-centres (Thusong Centres).

5.4 South African Broadcasting Corporation - R138 million

The SABC was established in terms of the Broadcasting Act (Act No 22 of 1936) as a government enterprise to provide radio and television broadcasting services to South Africa. As per the Broadcasting Amendment Act (Act No 64 of 2002), the SABC has since October 2004 been incorporated into a limited liability company with two operational divisions i.e. public broadcasting, and commercial broadcasting services.

The SABC has the following strategic goals to be pursued over the medium term: putting the broadcasting corporation and broadcasters back in the forefront of what the organisation is about; bringing editorial integrity back into the platforms, programming and content, with a particular focus on News and Current Affairs; having an operating model that is simple and easily understood, supported by an organisational design that assigns accountability directly to those charged with execution of the enterprise plans and good governance; building an organisation that is economical, efficient and effective; focusing on the performance of the organisation at every level and holding individuals accountable for delivery; building the digital SABC and integrating the digital future into all plans and actions; and managing and reporting on strategy development and implementation, operational performance and risk management.

The Committee noted the following:

(i) the provision of low power transmitter sites in some parts of the Northern Cape in order to extend coverage. However, it noted with concern the slow pace in the rolling out of low power transmitters throughout the country;

(ii) the lack of subtitles in most programmes which disadvantaged deaf viewers; and

(iii) the need for the Committee to visit the SABC studios in Auckland Park in order to assess the digital studios.

5.5 National Electronic Media Institute of South Africa – R21. 6 million

NEMISA was established as a non-profit organisation in terms of the Companies Act of South Africa (Act No 61 of 1973). It provides much needed skills-training for the broadcasting industry. It is accredited by the Media Information and Communication Technologies Sector Education and Training Authority (MICT SETA) and offers diploma courses, short courses and internships in four areas i.e. television production; radio production; graphic design; and (iv) animation. Training emphasises equipping students with skills making preparing for the media industry through programmes that have theoretical and practical training components.

NEMISA strategic objectives are as follows: to transform NEMISA into a training and development centre of excellence in ICT; to have a secure, efficient and effective organisation; to improve and align stakeholder and strategic partner relations both internally and externally; and to expand the accessibility and reach of the NEMISA product offerings.

The Committee noted:

(i) that NEMISA recently received its tax clearance certificate which will assist the entity in their fundraising activities;

(ii) the merger of three entities namely, NEMISA, e-Skills Institute and the Institute for Software and Satellite Applications (ISSA); and

(iii) additional funding for the newly merged entity is required.

5.6 Independent Communications Authority of South Africa – R390. 7 million

ICASA is a Chapter 9 institution that operates in terms of the amended ICASA Act (No 13 of 2000). 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 manages the effective use of the radio frequency spectrum.

ICASA undertook to promote competition, the digital agenda, the efficient use of spectrum and numbering resources, the protection of consumers; and its own modernisation.

The Committee noted that the term of the Chief Executive Officer is coming to an end.

The Committee identified the following concerns:

(i) the closure of the Regional Offices (Mpumalanga, Limpopo and North West) which would deny the ordinary people access to services provided by the regulator;

(ii) signs of disunity among Councillors;

(iii) Inconsistency in handling licensees which owe the regulator;

(iv) the continuous handling of alleged misconduct by Councillors without referring those matters to the relevant authority (Minister or Parliament) ;

(v) Consistent failure to address licence collection system which has been a source of qualification by the Auditor-General;

(vi) In most instances, the regulator could not meet their regulatory mandate as a result of lack of policy directive from the Executive; and

(vii) lack of skills audit within the regulator.

5.7 .za Name Domain Authority – R1. 5 million

The .za Name Domain Authority (ZADNA) is a statutory, not-for-profit entity established in terms of Chapter 10 of the Electronic Communications and Transactions (ECT) (Act No 25 of 2002) to administer, manage and regulate the .za namespace.

In terms of the Act, ZADNA’s key objectives are: the implementation of an effective policy and regulation framework; the promotion and development of the .za namespace; the improvement of infrastructure capabilities; and influencing internet policy and governance

6. Progress made on the recommendations of the Committee in its 2012/13 Committee Budget Vote Report.

6.1 The Committee noted the following progress made by the Department and its entities:

(i) the finalisation and the approval of the Department’s new structure in September 2012, and the progress that has been made in the filling of critical positions at leadership level;

(ii) the improvement in the spending of the Department’s allocated budget;

(iii) progress made by ICASA in terms of acquiring broadcasting monitoring equipment. However, there is still a need for monitoring equipment in relation to postal and telecoms monitoring;

(iv) the appointment of the Board of Directors and the Chief Executive Officer of USAASA;

(v) progress made by USAASA on the disciplinary processes involving former senior executive managers;

(vi) progress made in the refurbishment of SAPO outlets but a lot still needs to be done;

(vii) that Postbank was still not a fully fledged bank. However, the Committee noted that the Department will be making amendments to the Postbank Act to be in line with the Banks Act;

(viii) the progress made in terms of the Skills Audit at the SABC which will be presented to the Committee at the end of May 2013;

(ix) the presentation of the comprehensive report regarding the merger between ISSA, e-Skills Institute and NEMISA. However, there is no organogram for the new Institute; and

(x) the budget allocation for DTT to Sentech is commendable. However, the shortfall for USAASA and SABC still remains;

6.2 Committee observations with no progress

The Committee has noted no progress on the following recommendations:

(i) that the SABC still did not comply with the provisions of the PFMA and the Broadcasting Act with regard to public and commercial services;

(ii) SABC had made no progress on conducting research to identify relevant best practices that are used to maximise the collection of television licences;

(iii) the matter of the SAPO subsidy which has come to an end in the 2013/14 financial year is still pending.

(iv) SAPO had made no progress in the development of long-term sustainability strategy to mitigate the decline in the mail volume

7. Observations

The Committee noted the following:

(i) the recommendation of integrated planning has not been fully implemented by the Department;

(ii) the realignment of programmes including the dissolution of the Presidential National Commission; However, the Committee noted that there were still entities that were failing to comply with the National Treasury Framework for Strategic Plans and Annual Reports;

(iii) the effort made by the Department to improve the capacity of the existing internal audit personnel through sourcing services of the Auditor-General;

(iv) that the country might not fulfil its international and regional commitments in relation to DTT and this could impact on the department’s job creation targets as per NGP and IPAPII;

(v) the improvement in USAASA’s strategic plan for the separation of funds (Agency funds and the Universal Service and Access Fund); and

(vi) the role of ZADNA is only limited to the functionality of internet address and emails. However, the central registry manages the collection of licence fees.

8. Recommendations

The Committee recommends that the Minister must:

(i) prioritise the policy review for Broadcasting, Telecommunications, Postal and ICASA amendments; and

(ii) respond in writing on all outstanding policy directives that impacted negatively on the regulator performing its regulatory function.

In addition, the Committee recommends that the Minister should provide:

8.1 Department of Communications

(i) a list of all areas in which the 104 low power transmitters have been rolled out;

(ii) a report detailing the date and process followed after receiving strategic plans of all entities;

(iii) a geographical audited list of all schools with total solution connectivity, and those with point connectivity only. In addition, the Minister should provide a detailed plan and budget that demonstrates the migration of point connectivity to total solution connectivity of all schools.

The Minister should further:

(iv) institute a skills audit in the Department, USAASA, NEMISA. ICASA and Post Office;

(v) ensure the implementation of the Memorandum of Understanding (MoU) between the Department and Government Communication and Information System (GCIS) in relation to the community programme production, whilst policy discussions as to where the cost centre will reside are ongoing;

(vi) expedite the process of appointing the ZADNA Board of Directors.

8.2 Independent Communications Authority of South Africa

The Minister should provide:

(i) an audited comprehensive report of all monies owed to ICASA by licensees and cause of action to be taken;

(ii) an update on the finalisation of ICASA’s new organogram; and

(iii) a detailed report about the allocation of ICASA offices at regional level.

8.3 South African Broadcasting Corporation

The Minister should ensure:

(i) that the SABC programmes are accessible to all persons with disabilities especially the provision of subtitles.

8.4 Universal Service and Access Agency of South Africa

The Minister should provide:

(i) a quarterly progress report and budget on USAASA’s schools connectivity programme; and

(ii) a list of all operational and non-operational Telecentres throughout the country, including those requiring refurbishment.

8.5 South African Post Office

The Minister should provide:

(i) a detailed report about the findings of the internal investigations into the recent SAPO strike;

(ii) an audited outcome on the progress made in the implementation of the 1998 White Paper on Postal Services; and

(iii) a turnaround strategy for SAPO given the decline in mail volumes, corporatisation of Postbank and government subsidy coming to an end.

8.6 National Electronic Media Institute of South Africa

The Minister should:

(i) provide an update on the progress made by NEMISA in establishing partnerships with the Department of Higher Education and Training, Department of Trade and Industry, the Department of Arts and Culture and other role players; and

(ii) expedite the finalisation of the merger and the development of the Institute’s organogram.

The Committee recommends that the 2013/14 budget allocation of the Department of Communications and its entities be approved.

Report to be considered.