ATC200604: Report of the Portfolio Committee on Communications on its deliberations of Budget Vote 30: Communications and Digital Technologies, dated 26 May 2020.

Communications and Digital Technologies

Report of the Portfolio Committee on Communications on its deliberations of Budget Vote 30: Communications and Digital Technologies, dated 26 May 2020.

The Portfolio Committee on Communications (the Committee), having considered Budget Vote 30: Communications and Digital Technologies and the Annual Performance Plans (APPs) for 2019/20 – 2021/22 of the Department of Communications (the Department), the South African Broadcasting Corporation (SABC), the Independent Communications Authority of South Africa (ICASA), the Films and Publications Board (FPB), Sentech, the South African Post Office (SAPO), State Information Technology Agency (SITA), Broadband Infraco (BBI), National Electronic Media Institute of South Africa (USAASA), Universal Service and Access Agency of South Africa, and Universal Service Fund (USAF), reports a 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 Framework (MTSF) and where applicable with its Annual Performance Plan (APP).

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 reports.

The Committee met with the Department, ICASA, SABC, USAASA, SAPO and SITA on 14, 15, 16 and 19 May 2020 for consideration of their APPs 2020/21 – 2022/23.

Because of the National State of Disaster in South Africa as a result of the COVID-19 pandemic, Parliament has had to adopt news ways of doing business. As a result, some of the entities of the Department did not appear before the Committee in time before processing of the budget vote. It is expected that through the scheduling of the Committee programming, the entities will be afforded an opportunity to present their plans as is the requirement (by law).

Over the 2020/21 financial year the Department has been allocated a total budget of R3.3 billion and is set to decrease by 22.9 percent to R2.6 billion by the end of the medium term.

2. The Department’s APP 2020/21 – 20222

The overall purpose of Budget Vote 30 is to create an enabling environment for inclusive growth in the ICT sector by developing policies and legislation that promote infrastructure investment and socioeconomic development.

2.1 Mandate

The Department of Communications and Digital Technologies is mandated to enable South Africa’s digital transformation to achieve digital inclusion and economic growth by creating an enabling policy and regulatory environment.

This is done through the implementation of the 2016 National Integrated ICT Policy White Paper, which provides for the participation of multiple stakeholders for inclusive digital transformation; interventions to reinforce competition and facilitate innovation across the value chain; measures to address issues raised by ICT and convergence; and the establishment of a new national postal policy framework. It also provides for policies to address the digital divide, affordable access, supply‐side issues and infrastructure rollout, and demand‐side issues to facilitate inclusivity.

The department derives its mandate from a number of acts and policies. Key among these are the:

Broadcasting Act (1999), as amended, which establishes broadcasting policy in South Africa;
Electronic Communications Act (2005), as amended, which provides the legal framework for convergence in the broadcasting, broadcasting signal distribution, and telecommunications sectors. It also allows for the granting of new licences and social obligations; the control of the radio frequency spectrum; and the regulation of electronic communication network services, electronic communication services, and broadcasting services;
Film and Publications Act (1996), as amended, which provides for the classification of certain films and publications, and establishes the Film and Publication Board and Tribunal;
Independent Communications Authority of South Africa Act (2000), which establishes the regulator in the sector; and
Postal Services Act (1998), as amended, which makes provision for the regulation of postal services.

Furthermore, Chapter 4 of the National Development Plan recognises that ICT is a key enabler of inclusive economic growth that is critical to addressing inequality in South Africa. Taking into consideration the development in relation to the Fourth Industrial Revolution (4IR) as well as the envisaged outcomes of the Presidential Commission on 4IR, coupled with direction stemming from the NDP Five-Year Implementation Plan and the MTSF, the Department will in the medium-term focus on developing new and revising existing policies, strategies and legislation.

2.2 Strategic objective

The Department will embark on implementing its new mandate through a focused Strategic Plan and Annual Performance Plan. Taking into consideration of the new structure of the Department, the 2020-2025 Strategic Plan and 2020/21 Annual Performance Plan have been jointly developed by management and staff of both the Department of Telecommunications and Postal Services and the Department of Communications, with leadership from the Minister and Deputy Minister.

The Department has identified priority and targeted interventions over the medium-term which are aimed at achieving the envisaged impact of digitally enabled citizens with secure and affordable universal access to digital services and technologies. These include (i) enabling digital transformation policies and strategies; (ii) increased access to secure digital infrastructure; (iii) a transformed digital society; and (iv) a high performing portfolio to enable achievement of their respective mandates.

This is in a quest to illustrate alignment of the Department’s mandate of leading SA’s inclusive digital transformation in order to yield economic growth through creating an enabling policy and regulatory environment.

The Department of Communications and Digital Technologies, in an effort to attain its vision of being a leader in enabling a connected and digitally transformed South Africa, will focus on creating enabling digital transformation policies and strategies by developing and facilitating the implementation of the Digital Economy Masterplan, the Digital Transformation Policy, as well as the development and implementation of priority legislation which will also focus on the rationalisation of State Owned Entities so as to optimally deliver on government priorities. Such policies and legislation will need to be relevant and fit for purpose yet flexible and efficient enough to adapt to the rapid evolution of technologies. Furthermore, towards informing enabling digital transformation policies and strategies, the department will also develop and advance country positions at relevant international ICT Forums towards supporting the digital economy.

The Department acknowledges that to make the desired impact of digitally enabled citizens with secure and affordable universal access to digital technologies and services, a key component would be ensuring increased access to secure digital infrastructure. Hence, in order to attain this outcome, focus will be specifically given to the release of high demand spectrum as well as on the future of 5G spectrum. Another critical pillar will be the continuation of broadband connectivity in line with the SA Connect Policy, which is in turn aligned to the MTSF commitments of ensuring that 80 percent of population have access to the internet. Another critical pillar to this outcome is the conclusion of the Broadcasting Digital Migration through installation of 4,1 million household devices in all identified households within SA that will allow for the switch-off of analogue transmission in all provinces – freeing up essential spectrum.

The Department will also during the MTSF period focus on establishing the BRICS Institute for Future Networks. The programme of activities is envisaged to comprise a collection of applied research, technology development and commercialisation projects that aim to create new future networks products or localisation of selected products, services and enterprises towards the eventual commercialisation of such products and services.

A critical element to digital transformation is the outcome of having a transformed digital society which is built on a digitally skilled society. The department will therefore, over the medium term, focus on the implementation of the Digital and Future Skills Programme, in line with National Digital and Future Skills Strategy. Focus will also be on research related to emerging technologies to inform policy and legislation.

A high performing portfolio, inclusive of the department and its SOEs, is critical in order to achieve the desired impact and planned outcomes. Focus will therefore be on establishing such a high performing portfolio through the development and implementation of a fit for purpose organisational structure which is aligned to the strategy. Given its new mandate, the department will require adequately skilled resources with relevant skills to implement set projects. Therefore, the development and implementation of a targeted Workplace Skill Plan (WSP) which is aligned to the mandate will have a significant impact on the achievement of the planned initiatives. Furthermore, in order to improve the efficiency and effectiveness of its processes, the Department will prioritise the implementation of an Integrated Digitisation Strategy.

The Department will also focus on positioning itself as the authority on ICT statistics and data through prioritising the development and implementation of an integrated Digital Economy and Society Indicator Model.

Lastly, in order to optimise the functioning of its SOEs, the Department will focus on stringent oversight through pro-actively monitoring the service delivery performance and compliance of SOEs against strategic plans and relevant prescripts.

The Department recognises its position in relation to both the external and internal forces impacting on its mandate as described in detail in the Environmental Analysis of its Strategic Pan. The Department is also considerate of the limited resources available, both financial and human.

It will constitute of six programmes, namely:

Administration;
ICT International Relations and Affairs;
ICT Policy Development and Research;
ICT Enterprise and Public Entity Oversight;
ICT Infrastructure Development and Support; and
ICT Information Society and Capacity Development.

3. Expenditure analysis

Chapter 4 of the National Development Plan recognises that access to high‐speed ICT is a key enabler for inclusive economic growth. The work of the Department of Communications and Digital Technologies is integral to the realisation of this recognition, and gives it effect through the department’s contribution to |Priority 1 (Economic Transformation and Job Creation) of government’s 2019‐2024 medium‐term strategic framework.

A priority for the Department over the medium term is to develop and revise policies, strategies and legislation to align with the objectives of the 2016 National Integrated ICT Policy White Paper, taking into consideration developments necessitated by the fourth industrial revolution. As such, over the MTEF period, the Department will focus on rolling out the South Africa Connect broadband policy; implementing the broadcasting digital migration policy; and submitting new bills to Parliament.

Cabinet has approved reductions to the department’s baseline of R146.1 million over the medium term. Of this amount, R72.5 million is on Sentech’s migration of digital signals project, as it is fully funded; R23 million on noncore goods and services items such as catering, and travel and subsistence; and R19.5 million on subsidy allocations to the South African Post Office.

The Department is expected to spend a total of R10 billion over the medium term, of which R7.3 billion is earmarked to be transferred to public entities. As the entities within the department’s portfolio are responsible for many of the deliverables emanating from these policies, the department will devote considerable attention to exercising its oversight role through signing shareholders compacts and governance agreements, analyzing performance reports, and approving strategic and annual performance plans. Spending on compensation of employees is expected to amount to R1.1 billion over this period.

Rolling out broadband through South Africa Connect

The department will continue to provide broadband connectivity to government buildings over the medium term by implementing the digital development pillar of the South Africa Connect broadband policy. By 2022/23, a targeted 970 government buildings will be connected in the pilot phase, resulting in projected expenditure of R739 million over the medium term in the ICT Infrastructure Development and Support programme. The business case for the second phase, which aims to connect government buildings throughout the country, will be developed over the medium term.

Migrating towards digital broadcasting

The new model for the implementation of broadcasting digital migration over the medium term includes the provision of vouchers to indigent households for devices that will allow analogue televisions to receive digital signals, and compensation to the South African Post Office for the costs of administering the voucher and distribution systems.

To subsidise the provision of these vouchers, R1.6 billion over the medium term is allocated to the Universal Services Access Fund, and R275 million is allocated to the Universal Service and Access Agency of South Africa to compensate the post office for the administration of the project. A further R100 million is allocated to Sentech in 2021/22 for dual illumination, which will allow the entity to operate both analogue and digital signals until digital migration is fully implemented. As a result, spending in the Broadcasting Digital Migration subprogramme in the ICT Infrastructure Development and Support programme is expected to increase from R312.8 million in 2019/20 to R1.4 billion in 2021/22.

Implementing the 2016 National Integrated ICT Policy White Paper

It is envisaged that a number of bills required for the implementation of the 2016 National Integrated ICT Policy White Paper will be developed and submitted to Parliament over the medium term.

These include the Digital Development Fund Bill, State IT Company Bill, State ICT Infrastructure Company Bill, Digital Transformation Bill, and Audio‐visual Content Bill. This will allow for, among other things, the rationalisation of state‐owned ICT companies for greater efficiency, and ensure that communities and individuals have access to ICT services and skills for the digital economy.

To achieve this, expenditure in the ICT Policy Development and Research programme is expected to increase from R48.6 million in 2019/20 to R64.7 million in 2022/23 at an average annual rate of 10 percent.

The total budget for the Department for the 2020/21 financial year is 3 394.5 billion and will decrease by 22 per cent or R2 643 billion by end of medium term, see graph on next page:

4. Departmental budget allocation and programmes

4.1 Programme 1: Administration (R313.7 million)

Purpose of this programme is to provide strategic leadership, management and support services to the department.

The Department of Communications and Digital Technologies under the Administration programme will focus on the outcome of a High performing Portfolio to enable achievement of their respective mandates. The focus of Programme 1 will be specifically on developing and implementing a fit for purpose organisational structure which is optimally designed and resourced to deliver on the mandate and the strategy of the Department. Key to delivering its mandate will be on the department to have in place adequately skilled staff who possess the requisite skills to deliver on the new mandate.

To this end, the Department will develop and implement a Workplace Skills Plan which is directly aligned to the mandate as well as to address the skills gap in the department. Focus will also be on implementing an Integrated Department Digitisation Strategy as the Department moves towards a paperless environment. The outputs of Programme 1 are aligned to Priority 6 of the NDP: A capable, ethical and developmental state and Outcome 2: Functional, efficient and integrated government. The initiatives are aimed at accelerating the implementation of departmental projects to improve service delivery. The rationale for the choice of the outcome indicators is based on the reason that Department is a new department which needs to lay a proper foundation through an optimal organisational structure supported by staff with relevant skills and digitised processes and systems.

The spending over the medium term will focus on providing strategic support to the Ministry and overall management to the Department. The department’s budget is categorised into six broad sub-programmes.

Over the medium term, the budget of Programme 1 of Department increases by ten per cent to R346.4 million in the medium term. The graph below represents the expenditure trends and estimates by sub-programme:

4.2 Programme 2: ICT International Relations and Affairs (R60.8 million)

The purpose of the programme is to ensure alignment between South Africa’s foreign policy and international activities in the field of ICT.

Objectives

Advance South Africa’s ICT interests in regional and international forums to secure partnerships for economic growth and development by:

developing 3 position papers focusing on (i) the World Telecommunications Standardisation Assembly; (ii) the Brazil‐Russia‐India‐China‐South Africa group of countries (BRICS) agenda and action plan; and (iii) the Pan‐African Postal Union and 2020 Universal Postal Union to support the digital economy by March 2021;
developing and advancing South Africa’s position to support the digital economy at relevant international forums on an ongoing basis; and
developing strategic partnerships to promote the digital economy on an ongoing basis.

Subprogrammes

Programme Management for ICT International Relations and Affairs provides for the overall management of the programme.
International Affairs coordinates the functions and responsibilities of the department to meet South Africa’s international ICT obligations. It leads South Africa’s ICT interests and advances strategic programmes in African bilateral forums and the BRICS forum.
ICT Trade/Partnership develops and advances South Africa’s interests in international and multilateral trade forums by participating in the World Trade Organization’s ICT‐related initiatives and other international trade agreements such as the South Africa‐European Union trade agreement and bilateral agreements with counterpart countries. This subprogramme also makes payments for international membership fees.

The Department will over the medium-term focus on developing 9 country positions to support the digital economy, as part of contributing to the outcome of having in place enabling digital transformation policies and strategies. Furthermore, the department will contribute to the establishing the BRICS Institute for Future Networks towards achieving the outcome of Increased access to secure Digital Infrastructure. With regard to the outcome of Transformed Digital Society, the department will enter into and facilitate the implementation of 4 Partnership agreements focusing on the digital economy.

The planned outputs contribute to the NDP Implementation Plan outcome of an Inclusive economy, enabled by advanced digital technologies, which provides equally accessible, intelligent and competitive products and services through government and industry while also aligning to Priority 7: A better Africa and world.

Over the MTEF, travel constitutes the bulk of spending and increases from R4.7 million in 2020/21 to R5.3 million in 2022/23. The spending focus over the medium-term will be on transfer of membership fees to international organisations within the communications sector; participating in the global discourse within the United Nations system on telecommunications, postal services, information society and green technology; and pursuing bilateral engagement with countries of the south and north.

Over the medium term, the budget of Programme 2 of department increases by four per cent to R63 427 million in financial years 2021-2023.

The graph on the next page represents the expenditure trends and estimates by sub-programme:

4.3 Programme 3: ICT Policy Development and Research (R69.8 million)

The purpose of the programme is to develop ICT policies and legislation that support the development of an ICT sector that creates favorable conditions for accelerated and shared economic growth. Develop strategies that increase the adoption and use of ICT by the majority of South Africans to bridge the digital divide.

Objectives

Improve access to and the affordability of ICT by developing the Digital Development Fund Bill by March 2021.

Promote the growth and sustainability of small, medium and micro enterprises (SMMEs) in the ICT sector by facilitating the implementation and monitoring of the ICT SMME development strategy over the medium term.

Enable digital transformation and inclusion by:

developing the digital transformation policy by March 2022 and the Digital Transformation Bill by March 2023;
submitting the Electronic Communications Amendment Bill to Parliament by March 2023;
submitting the data and cloud policy to Cabinet by March 2021;
developing and facilitating the implementation plan for the digital economy master plan by March 2021; and
developing the implementation plan for the fourth industrial revolution country plan by March 2021, and facilitating, monitoring and reporting on its implementation on an ongoing basis.

Subprogrammes

Programme Management for ICT Policy Development and Research provides for the overall management of the programme.
ICT Policy Development drafts legislation, regulations, policy and guidelines that govern the telecommunications, postal and IT sectors to ensure broad‐based economic development.
Economic and Market Analysis conducts economic analyses of the telecommunications, postal and IT sectors.
Determine trends and make projections. This subprogramme also conducts market research to explore.
Areas that require policy intervention, and is responsible for reducing the cost of communication.
Research is responsible for understanding the ICT landscape and delivering a national ICT strategy.
Small, Medium and Micro Enterprise facilitates the growth and development of SMMEs in the ICT sector.
Broadcasting Policy drafts legislation, regulations, policy, strategies and guidelines that govern audiovisual media sectors.
Media Policy conducts research and develops print media and communications policies.

The Department will over the medium-term focus on implementing a targeted legislative programme aimed at achieving the outcome of having in place Enabling digital transformation policies and strategies which will form the foundation of the digital economy. Such policies and legislation will be targeted at stabilising and strengthening its State-Owned Entities inclusive of the South African Post Office and the South African Broadcasting Corporation. Relevant policy, legislation and plans will also be focused on creating a conducive policy environment for the digital economy which will include the Data and Cloud Policy as well as the Digital Economy Masterplan.

Programme 3 will also contribute to the Outcome of a Transformed Digital Society through the revision and implementation of the ICT SMME Strategy to include market access for local IP & innovation by SMMEs. The planned outputs are aligned to the NDP Priority 1: Economic transformation and job creation and the outcome of Improve competitiveness through ICT adoption.

The spending focus over the medium-term will be on ICT Legislation developing in line with the National Integrated ICT Policy White Paper. Over the MTEF, goods and services will decline from R27 million in 2020/21 to R16.6 million in 2021/22. The budgeted amount for travel over the MTEF is R18.6 million and for Consultants: Business and advisory services is R21.6 million.

Over the medium term, the budget of Programme 3 of Department will decrease by seven per cent to R64 733 million in financial years 2021-2023.

The graph below presents the expenditure trends and estimates by sub-programme:

4.4 Programme 4: ICT Enterprise and Public Entity Oversight (R1 750 billion)

The purpose of the programme is to oversee and manage government’s shareholding interest in the ICT public entities and state-owned companies, as well as to facilitate the growth and development of small, medium and micro enterprises in the ICT sector.

Objectives

Improve the performance of state‐owned entities through proactive oversight by monitoring and evaluating the service delivery performance and compliance of public entities against strategic plans and relevant prescripts on an ongoing basis.
Improve the impact of public entity service delivery and their market responsiveness by:

submitting the State ICT Infrastructure Company Bill to Cabinet for approval by March 2021; and
submitting the State IT Company Bill to Cabinet for approval by March 2021.

Subprogrammes

Programme Management for ICT Enterprise and Public Entity Oversight provides for the overall management of the programme.
Regulatory Institutions monitor the implementation of policies, and provide guidance on, and oversight of, the governance matters of regulatory institutions. This subprogramme makes transfers to the Independent Communications Authority of South Africa and the Film and Publication Board.
Universal Service and Access makes transfers to the South African Broadcasting Corporation, the Universal Service and Access Agency of South Africa, the Universal Service and Access Fund, and the South African Post Office to provide subsidies for the fulfilment of their universal service and access mandates.
ICT Skills Development makes transfers to and provides oversight of the National Electronic Media Institute of South Africa for the provision of skills development programmes.

The ICT Enterprise and Public Entity Oversight Programme is also contributing to the outcome: High performing Portfolio to enable achievement of their respective mandates, although with specific focus on the State-Owned Entities within the portfolio. In this regard, the key focus is on undertaking stringent and proactive oversight with regards to service delivery performance and compliance of SOEs against strategic plans and relevant prescripts.

Specific focus will be given to strengthening the Regulator through the implementation of the Performance Management System for ICASA Councilors and to the SABC through monitoring the implementation of the SABC Turnaround Plan.

Programme 4 will also, over the medium-term, contribute to the outcome of having in place enabling digital transformation policies and strategies through the development of legislation targeted at stabilising and establishing relevant State-Owned Entities inclusive of the South African Post Office and the South African Broadcasting Corporation, as well as the State IT Company and the State ICT Infrastructure Company.

The outputs of Programme 4 are aligned to Priority 6 of the NDP: A capable, ethical and developmental state and Outcome 2: Functional, efficient and integrated government.

The spending focus over the medium term will be on continuing to strengthen the department’s ability to exercise oversight over the public entities. The budgeted amount for travel over the MTEF is R9.2 million and for consultants: business and advisory services is R13.6 million.

Over the medium term, the budget of Programme 4 of department will decrease by one per cent to R1 734.8 billion at end of medium term.

The graph below represents the expenditure trends and estimates by sub-programme:

4.5 Programme 5: ICT Infrastructure Development & Support (R1 127.5 billion)

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.

Objective

Is to increase access to secure digital infrastructure by:

revising the national radio frequency plan in line with the outcomes of the 2019 World Radiocommunication Conference (WRC19) and commencing with preparations for the 2023 World Radiocommunication Conference by March 2021;
monitoring and sustaining the provision of broadband services to 970 connected government facilities over the medium term;
establishing 5 additional computer security incident response teams for the sector over the medium term;
coordinating and monitoring the installation of 900 000 set‐top boxes as part of the broadcasting digital migration programme by March 2021; and
coordinating and monitoring the provincial switch‐off of analogue transmission in 3 provinces by March 2021.

Subprogrammes

Programme Management for ICT Infrastructure Development and Support provides for the overall management of the programme.
Broadband is responsible for developing and facilitating the implementation of the broadband policy, strategy and rollout plan for South Africa Connect, and ensures that the programme achieves its broadband goals.
ICT Support is responsible for projects related to authentication, digital object architecture and internet governance.
Broadcasting Digital Migration manages broadcasting digital migration with the aim of migrating from analogue to digital broadcasting. It provides transfers to the Universal Service and Access Fund and Sentech for the implementation of broadcasting digital migration.

The ICT Infrastructure Development and Support Programme contributes towards the outcome: Increased Access to Secure Digital Infrastructure through undertaking two key infrastructure projects in the form of broadband roll-out and Broadcasting Digital Migration.

Other related and high impact initiatives are the development of policy direction on 5G spectrum as well as the revision of the National Radio Frequency Plan (NRFP) informed by the outcomes of the WRC-19.

The Programme will also focus on cybersecurity through the establishment of additional Sector CSIRTs over the medium-term. The planned outputs are aligned to the NDP Priority 1: Economic transformation and job creation and the outcome to improve competitiveness through ICT adoption.

A total R582.7 million is available over medium term in respect of the broadband policy project to support the Digital Development as per the South African Connect Implementation Plan. Sentech has been allocated R304 million over the MTEF for dual illumination.

Over the medium term, the budget of Programme 5 will decrease drastically to R358 million or 68 per cent by end of medium term.

The graph on next page represents the expenditure trends and estimates by sub-programme. The Broadcasting Digital Migration sub-programme accounts for the majority of the budget expenditure under this programme.

4.6 Programme 6: ICT Information Society and Capacity Development (72.5 million)

Programme purpose

Develop and implement strategies to build capabilities to bridge the digital divide.

Objective

Contribute towards building a digital society by developing information society strategies and programmes over the medium term.

Subprogrammes

Programme Management for ICT Information Society and Capacity Development provides for the overall management of the programme.
Information Society Development supports the promotion of digital society by facilitating the uptake and use of digital technologies. This includes the development of institutional mechanisms, intergovernmental relations forums.
Capacity Development facilitates capacity‐building interventions to develop digital and future skills towards the creation of a digital society.

The outcome: Transformed Digital Society focuses on key building blocks for a digital society and the digital economy. Therefore, specific focus will be given to modernisation of business processes within the public sector through the implementation of the National e-Government Strategy and Roadmap prioritising front-end services.

Another key building block is addressing the skills gap through the implementation of the Digital and Future Skills Programme in line with National Digital and Future Skills Strategy as well as the implementation of the Training Programme on AI related skills, focusing on the youth.

Programme 6 will also contribute to the outcome: Enabling digital transformation policies and strategies, through the development of the Blueprint for Digital Technology diffusion which will inform the development of relevant policy and legislation going forward.

In order to become an authoritative voice in relation to ICT data and statistics, the Department will focus on the development and implementation of an Integrated Digital Economy and Society Indicator Model which will contribute to the outcome: High performing Portfolio to enable achievement of their respective mandates.

The planned outputs are aligned to the NDP Priority 1: Economic transformation and job creation and the Outcome of Improve competitiveness through ICT adoption as well as Priority 6 of the NDP: A capable, ethical and developmental state and Outcome 2: Functional, efficient and integrated government.

Over the medium term, the budget for Programme 6 of will increase by four per cent to R75.6 million in financial years 2021-2023.

The graph on next page represents the expenditure trends and estimates by sub-programme:

5. Entities reporting to the Department

5.1 ICASA

The Independent Communications Authority of South Africa was established by the Independent Communications Authority of South Africa Act (2000) to regulate the South African communications, broadcasting and postal services sectors. The authority is listed as a schedule 1 public entity in terms of the Public Finance Management Act (1999).

It derives its mandate from the Electronic Communications Act (2005) to license and regulate electronic communications and broadcasting services, and the Postal Services Act (1998) to license and regulate the postal services sector.

5.1.1 Expenditure analysis

Over the medium term, the authority will focus on increasing internet access by licensing the international mobile telecommunications spectrum by 2021/22, increasing access to wireless broadband services, protecting consumers against unfair practices by service providers, increasing competition in the telecommunications and broadcasting sectors, and developing a framework for dynamic spectrum management.

The authority also plans to implement television regulations to enable the provision of broadband services in the 470‐694 MHz band, and increase its capability to monitor quality of service through the implementation of a system to manage network performance.

As the authority requires personnel with highly specialised skills to conduct this work, spending on compensation of employees accounts for an estimated 71.5 per cent (R1.1 billion) of total expenditure over the medium term.

Total expenditure is projected to increase from R519.2 million in 2019/20 to R539.6 million in 2022/23 at an average annual rate of 1.3 per cent. The authority expects to derive 96.6 per cent (R1.5 billion) of its projected revenue over the MTEF period through transfers from the Department.

5.2 SABC

The South African Broadcasting Corporation is listed as a Schedule 2 public entity in terms of the Public Finance Management Act (1999). Its mandate is set out in its charter and in the Broadcasting Act (1999) and requires it to South Africans with radio and television broadcasting services. It is also required to provide a wide range of programming that displays South African talent in educational and entertainment programmes; offer a diversity of views and a variety of news, information and analysis; and advance national and public interests.

5.2.1 Expenditure analysis

Over the medium term, the corporation will focus on finalising and implementing its turnaround strategy, which aims to invest in new and compelling content to attract audiences, and thereby attract advertisers and increase revenue.

An amount of R3.2 billion was allocated to the corporation in the 2019 Adjusted Estimates of National Expenditure for the strategy. To contribute towards nation building and greater diversity, the corporation also plans to spend R2 billion over the medium term to broadcast all sporting codes of national interest and acquire sports rights.

Total expenditure is expected to increase from R8 billion in 2019/20 to R8.9 billion in 2022/23 at an average annual rate of 3.4 per cent. Of this amount, 36.9 per cent (R9.6 billion) is earmarked for spending on goods and services, largely for programme, film and sports rights; and 34.9 per cent (R8.6 billion) for spending on compensation of employees.

The corporation expects to generate 97.3 per cent of its revenue over the medium term through licence fees, commercial revenue from advertising, and sport sponsorship across television, radio and online platforms.

Total revenue is expected to increase from R7.4 billion in 2019/20 to an estimated R8.5 billion in 2022/23 at an average annual rate of 4.4 per cent. The corporation is set to receive transfers from the Department amounting to R648 million over the medium term to subsidise various functions, including public broadcasting, programme productions, and support for Channel Africa.

The entity has experienced significant financial challenges over the past three financial years due to a decrease in viewership, listenership and revenue, and projects deficits of R302 million in 2020/21, R194 million in 2021/22 and R446 million in 2022/23 over the medium term.

5.3 South African Post Office

The South African Post Office (SAPO) was established to provide postal and related services to the public, and is listed as a Schedule 2 public entity in terms of the Public Finance Management Act (1999). It derives its mandate from the Postal Services Act (1998), the South African Post Office SOC Ltd Act (2011) and the South African Postbank Limited Act (2010).

The Postal Services Act grants the SAPO an exclusive mandate to conduct postal services in the reserved sector for items such as letters, postcards and parcels less than 1 kilogram, and makes provision for the regulation of postal services and the operational functions of the entity, including its universal service obligations.

5.3.1 Expenditure analysis

Over the medium term, the SAPO will focus on providing universal access to postal and related services, stabilising its financial position, optimising its personnel to ensure operational effectiveness, and distributing social grants on behalf of the South African Social Security Agency.

The SAPO is allocated R1.6 billion over the MTEF period to subsidise its universal service obligations to provide accessible and affordable postal services in underserviced areas. This allocation is expected to allow the entity to maintain 2 000 points of presence, including post offices, retail postal agencies and mobile units, over the medium term.

As the work of the SAPO is labour intensive, expenditure on compensation of employees accounts for a projected 50.1 per cent (R11.5 billion) of total expenditure over the medium term. Other significant spending over the medium term is on transport and IT to support an expected increase in revenue in the courier and e‐commerce sectors.

Total expenditure over the MTEF period is expected to increase at an average annual rate of 4.5 per cent, from R7.2 billion in 2019/20 to R8.2 billion in 2022/23.

The SAPO generates revenue by providing postal and courier services, and through income earned from interest and fees for financial transactions.

Total revenue is expected to increase from R6.8 billion in 2019/20 to R8.9 billion in 2022/23 at an average annual rate of 9.2 per cent due to potential revenue opportunities from government and the unreserved market. These opportunities include courier services, in which the SAPO competes with the private sector.

5.4 State Information Technology Agency

The State Information Technology Agency (SITA) is governed by the State Information Technology Agency Act (1998), as amended, and is listed as a schedule 3A public entity in terms of the Public Finance Management Act (1999).

The State Information Technology Agency Act mandates the agency to provide IT, information systems and related services to and on behalf of government departments and organs of state. The agency is required to maintain secure information systems and execute its functions according to approved policies and standards.

5.4.1 Expenditure analysis

Over the medium term, SITA will focus on delivering and operationalising an integrated digital ecosystem for government by migrating government data to cloud services. This is expected to enable greater accessibility and the integration of data from different sources, thereby improving policy analysis and decision‐making.

The implementation of the government digital transformation strategy will entail facilitating the acquisition of ICT skills and the modernisation of government infrastructure.

An estimated 65 per cent (R15 billion) of total expenditure over the medium term is earmarked for spending on goods and services, mostly for the provision of IT services. Total expenditure is projected to increase from R6.8 billion in 2019/20 to R8.1 billion in 2022/23 at an average annual rate of 6.1 per cent. As SITA is

dependent on skilled personnel to provide its services, expenditure on compensation of employees accounts for an estimated R6.7 billion (28.9 per cent) of total expenditure over the period ahead.

The entity generates its revenue by providing ICT infrastructure and services to government departments and organs of state. Total revenue is projected to increase from R7 billion in 2019/20 to R8.3 billion in 2022/23 at an average annual rate of 6 per cent.

5.5 Sentech

Sentech was established in terms of the Sentech Act (1996) and is listed as a schedule 3B public entity in terms of the Public Finance Management Act (1999). It is responsible for providing broadcasting signal distribution services to licensed television and radio broadcasters.

5.5.1 Expenditure analysis

Over the medium term, the entity will focus on creating new revenue streams through acquisitions and the formation of strategic partnerships. It aims to build a wireless broadband business and invest in technologies to enhance the performance of its connectivity services to existing and future clients.

The entity considers these investments key to enhancing connectivity and has set aside R445.8 million over the medium term for the acquisition of assets.

Total expenditure is set to increase from R1.2 billion in 2019/20 to R1.3 billion in 2022/23 at an average annual rate of 3.6 per cent. Spending on goods and services, mostly for satellite rental and other operating costs, accounts for an estimated 45.6 per cent (R1.7 billion) of total expenditure over the medium term.

As the entity employs many skilled technical personnel, expenditure on compensation of employees constitutes an estimated 40.9 per cent (R1.6 billion) of total spending over this period.

The entity expects to generate 98.1 per cent (R4 billion) of its revenue over the MTEF period through services rendered to customers, mostly for the provision of signal for television and radio broadcasting services; and the rest from the department through project‐specific funding for dual illumination, which is the operation of both analogue and digital signals.

Total revenue is expected to increase at an average annual rate of 3 per cent, from R1.3 billion in 2019/20 to R1.4 billion in 2022/23.

5.6 Broadband Infraco

Broadband Infraco was established in terms of the Broadband Infraco Act (2007) to provide ICT infrastructure and broadband capacity in South Africa. This entails expanding the availability and affordability of access to electronic communications including but not limited to underdeveloped and underserviced areas; ensuring that the bandwidth requirements for specific projects of national interest are met; and enabling the state to provide affordable access to electronic communications networks and services.

The entity is owned by government and the Industrial Development Corporation and is listed as a Schedule 2 public entity in terms of the Public Finance Management Act (1999).

5.6.1 Expenditure analysis

Over the medium term, the entity will continue to provide long‐haul connectivity and various broadband communications services to its clients, including mobile operators, internet service providers and state‐owned companies; expand its available long‐distance network infrastructure; and provide available capacity to the private sector. It will also focus on connecting government facilities as part of the South Africa Connect broadband policy.

The increased availability of the entity’s infrastructure through initiatives such as South Africa Connect is expected to lead to the acquisition of new clients and thereby significantly increase the affordability of its services over the medium term. As the entity gears up for the full implementation of South Africa Connect, total expenditure is expected to increase from R653.2 million in 2019/20 to R1.3 billion in 2022/23 at an average annual rate of 26.1 per cent.

The entity generates revenue mainly by providing connectivity infrastructure services to customers. Total revenue is projected to increase from R562.1 million in 2019/20 to R1.5 billion in 2022/23, at an average annual rate of 38.2 per cent, due to a projected increase in revenue as a result of projects such as South Africa Connect.

5.7 The FPB

The Film and Publication Board was established in terms of the Films and Publications Act (1996), as amended, and is listed as a Schedule 3A public entity in terms of the Public Finance Management Act (1999).

Its mandate is to regulate the creation, production, possession and distribution of certain publications and films by classifying them; imposing age restrictions on content; and rendering the exploitative use of children in pornographic publications, films or online material punishable.

5.7.1 Expenditure analysis

To ensure that distributors comply with the Films and Publications Act, over the medium term, the board will review its classification guidelines to ensure they remain relevant, and aims to conduct 19 000 inspections of distributors of content and 132 provincial raids.

As this work is labour intensive, spending on compensation of employees accounts for an estimated 53.1 per cent (R197.2 million) of the board’s total estimated expenditure over the medium term.

Total expenditure is expected to increase from R110.4 million in 2019/20 to R129.1 million in 2022/23 at an average annual rate of 5.4 per cent. The board expects to derive 88.8 per cent (R327.5 million) of its revenue over the medium term through transfers from the Department.

5.8 National Electronic Media Institute of South Africa

The National Electronic Media Institute of South Africa was established as a non‐profit educational institute in terms of the Companies Act (1973), and is listed as a Schedule 3A public entity in terms of the Public Finance Management Act (1999).

Its mandate is to enhance the market readiness of students in various broadcasting disciplines and support the development of e‐skills for South Africans.

5.8.1 Expenditure analysis

Over the medium term, the institute will focus on implementing the operating model for the iKamva National e‐Skills Institute, the new entity to be formed through the merger with the Institute for Satellite and Software Applications. The bill that will govern the merger process is undergoing the parliamentary legislative process for approval.

The institute will also focus on implementing its e‐skills agenda in collaboration with government, education, business and civil society, and continue to train and fund learners and sector users in a wide range of competencies in broadcasting, e‐skills and e‐literacy.

Spending on goods and services accounts for an estimated 35.7 per cent (R111.3 million) of total spending over the medium term, mostly on property rental, internal and external audit fees, cleaning and security services, IT services and insurance. Transfers and subsidies to higher education institutions to fund e‐skills projects account for an estimated 29.5 per cent (R92.6 million) of total estimated expenditure over this period.

Spending on compensation of employees is projected to increase from R32.7 million in 2019/20 to R41.3 million in 2022/23 at an average annual rate of 8.1 per cent, in line with the new organisational structure for the new iKamva National e‐Skills Institute. Total expenditure is expected to increase from R95.3 million in 2019/20 to

R109.7 million in 2022/23 at an average annual rate of 4.8 per cent.

The institute is set to derive all (R313.6 million) of its revenue over the medium term through transfers from the Department.

5.9 Universal Service and Access Agency of South Africa & Universal Service and Access Agency Fund

The Universal Service and Access Agency of South Africa was established in terms of section 80 of the Electronic Communications Act (2005) as a statutory body and is listed as a Schedule 3A public entity in terms of the Public Finance Management Act (1999).

Its sole mandate is to promote universal service and access to electronic communications services, electronic communications network services and broadcasting services.

The Universal Service and Access Fund was established in terms of section 89(1) of the Electronic Communications Act (2005), and is listed as a Schedule 3A public entity in the Public Finance Management Act (1999).

The fund’s sole mandate is to make is to subsidise ICT equipment and services, as well as electronic communications and broadcasting networks for needy people in underserviced areas. The fund is managed by the Universal Service and Access Agency of South Africa.

5.9.1 Expenditure analysis

The agency is set to receive additional once‐off allocations of R178 million in 2020/21 and R97 million in 2021/22 for distribution and administration costs related to the new implementation model for the broadcasting digital migration programme.

These allocations will be paid to the South African Post Office. Total expenditure is

expected to increase from R83.8 million in 2019/20 to R96.8 million in 2022/23 at an average annual rate of 4.9 per cent.

The agency expects to derive 99.4 per cent (R549.6 million) of its total revenue over the medium term through transfers from the Department.

For USAF, transfers and subsidies, mostly for implementing projects related to broadcasting digital migration in 2020/21 and 2021/22, and providing and maintaining sites with internet connectivity, account for an estimated 98.1 per cent (R2.2 billion) of total expenditure over the medium term.

Total expenditure is expected to increase from R128.6 million in 2019/20 to R141.8 million in 2022/23 at an average annual rate of 3.3 per cent.

The fund derives its revenue through transfers from the department, and is set to receive additional one‐off allocations amounting to R1.6 billion over the medium term for broadcasting digital migration.

These allocations will be used to provide vouchers to low‐income households for devices that will allow analogue televisions to receive digital signals once the analogue signal is switched off.

6. Committee considerations

The MTSF document released by the Department of Planning, Monitoring and Evaluation is prescriptive to the key economic and societal issues to be addressed by DCDT. While ICTs are largely acknowledged as an economic enabler; it fails to provide leadership on issues of content development and services that inherently underpin all ICT development. Instead, it focuses mainly on infrastructural barriers which have been at the cornerstone of policy development in South Africa for more than a decade. The country has not been able to capitalize on its rapid policy development processes, country resources and financial endowments to drive transformation.

While it is widely known that connectivity is underpinned by access to broadband infrastructure and lower costs to communicate, digital inequality for South Africa is rife. Poor people pay more per MB than the wealthier for data - a reflection of a stark reality of the political economy of the country that has exacerbated access and adoption barriers to ICT for ordinary South Africa.

It can be interpreted as a reflection of an incoherent approach to policy implementation and to some extent, a reflection of poor leadership and lack of governance at State Owned Enterprises that have been widely reported on. The undermining of a decade-long process of convergence legislation by splitting of a department in 2014 was central to the disjointed ICT policy implementation for South Africa.

The sequence of industrial revolutions is systematic in nature and all have distinct features associated with them. The 3rd Industrial Revolution, for example, was about, among other things, the transformation of analogue networks to digital platforms. Grouping DTT under the 4th Industrial Revolution is misconstruing the technical meaning of 4IR. DTT programme as annotated in the plans remains an infrastructure programme. No plans are described relating to services, enabling e-government and local content development specific to DTT.

The Department will in the medium-term focus on developing new and revising existing policies, strategies and legislation. Yet both the Strategic Plan and Annual Plan fail to reflect on the Audio-Visual and Digital Content Policy during the medium term.

Noting that during the October 2019 presentation of Annual Reports, the department reported that the rationalisation of State Owned Entities (SOEs) has resulted in the process to review the (i) MDDA Amendment Act of 2002; and (ii) that the final White Paper on Audio-Visual and Digital Content Policy to be put on hold in order to accommodate the reconfiguration of the Departments.

It would have been expected that some explanation is provided for the omission of the Audio-Visual and Digital Content Policy during the medium term.

On 19 Dec 2019, Minister Stella Ndabeni-Abrahams, in a media statement, said that the department is in a process of designing an optimal structural and institutional framework that will respond to a new mandate. She announced that she reviewed the portfolio capabilities and is taking the necessary steps to strategically align it with the overall digital technology strategy.

She further identified the (i) licensing of High Demand Spectrum; (ii) fast-tracking the rollout of Broadcasting Digital Migration; (iii) Digital Government; (iv) building a Big Data Economy; (v) skilling the nation; and (vi) institutional reforms, as the key drivers of digital transformation.

For the argument raised previously, DTT cannot be associated with digital transformation concepts; digital transformation which appears to be the core focus for the new department going forward, by nature implies changes to organisations and society driven by digital innovation. The infrastructure approach to DTT cannot be the driver for digital transformation. It is the innovation that is carried on the platform in the form of localized services that becomes a driver.

The Committee should further note that (i) the South African Post Office SOC Ltd Amendment Bill will only be tabled at Parliament in 2022/23 financial years; and (ii) the South African Broadcasting Corporation SOC Ltd Bill will be introduced to Parliament (2021/22) Quarter 4.

A clear legislative programme is critical for the Committee to also prepare accordingly in anticipation. An unclear indication of the quality of the bills that will be tabled to Parliament is indicative of the need for the Committee to conduct thorough oversight over the Department and its programmes over the MTSF period.

It is critical for the Committee to be provided with adequate information in order to measure the department’s commitment to creating ‘enabling digital transformation policies’ as proclaimed in the strategic plan.

Notwithstanding that fact that South Africa’s global rankings are broadly indicative of poor performance (despite problems associated with global data collections and indices), they are important to measure the state of readiness of the country to adopt 4IR. There are definitely critical barriers to adoption and use of ICTs.

In a country marred by socio-economic imbalances, it is important that careful analysis of empirical evidence guides any policy implementation process; 4IR is no exception to the notion. The ITU’s ICT Development Index of 2017 below, is indicative of a country not ready to adopt 4IR unless some indices are improved.

The state of infrastructure development and technological advancement is a critical component of the ability of countries to embrace the 4th industrial Revolution:[1]

Other than secondary enrollment and mobile-cellular subscriptions, South Africa does not fare well in terms of most of the ITU’s ICT Development index as illustrated above.

Data prices in South Africa are too high and 36 African countries were cheaper for 1GB mobile prepaid data than South Africa at the beginning of 2020. The Committee must commend ICASA’s ongoing inquiry into mobile broadband services. Subsequently, the Competition Commission found data prices excessive and in consultation and cooperation with the larger private sector mobile operators, secured significant reductions in data costs.

The two biggest mobile operators conceded to the regulatory findings and put plans in place for reductions in tariff levels, especially prepaid monthly bundles. This will go a long way in ensuring that ordinary citizens stay connected and therefore improve chances of being economically active.

The Competition Commission of South Africa noted in its Data Service Market Inquiry from April 2019 that “the failure to release high demand spectrum due to delays in digital migration has left mobile operators with both insufficient spectrum and a lack of access to favorable low frequency bands, raising costs unnecessarily. This is because operators need to compensate for the lack of spectrum through increasing the volume of base stations, raising capital and operational costs.”[2]

The Committee must remain committed to monitor the implementation of the policy directive on high demand spectrum and the regulations thereof in order to facilitate for affordable communication services in South Africa.

South Africa missed the initial digital migration deadline set by the ITU in 2015. Since then, there have been multiple delays and missed deadlines. In February 2020, the South Africa government issued a new deadline of 2021 for digital migration. Assuming that this deadline is met, there is the potential for further delay. A process called digital restacking will need to take place and this could take up to 24 months. This means that sub-1GHz 24 spectrum for 5G would potentially be available in 2023.[3]

The COVID-19 has resulted in unprecedented challenges for the country and the sector is no exception. As an example, the usage of broadband networks around the world has quadrupled, and network operators have had to boost network capacity.

The prompt response by the Department and its entities must be commended and the Committee will continue to monitor the impact of COVID-19 on the budgeting of the Department and its entities over the medium term.

6.1 Committee observations

6.1.1 The Department

Having considered the Strategic Plan and APP of the Department, the Committee noted:

its appreciation for the good work done by the Department and its entities during the COVID-19 pandemic;
its appreciation for the achievement of the target (of April 2020) set for the reconfiguration of the two departments into one;
with concern that the Department Strategic Plan lacks clarity in respect of a clear performance management system for ICASA;
with concern the high costs for subscription fees charged by Multichoice, especially during the pandemic;
with concern the non-compliance by the Department on the Broad-Based Black Economic Empowerment (B-BBEE) certification requirements;
that no job losses occurred due to the amalgamation of the two departments;
that savings occurred after the amalgamation process in respect of the DTT Project Management Office (PMO);
with concern that the impact of COVID-19 pandemic on the budget of the Department and its entities, and is of the view that post COVID-19, the Committee may have to review budget allocations;
that due to the COVID-19 pandemic, the budget for the SA-Connect was allocated to the Digital Terrestrial Television (DTT) migration and was linked to the licensing of radio spectrum;
with concern that the procured platforms and infrastructure by SITA are under used by the Department and other government structures;
with great concern that there are no clear timelines on the delivery of the digital migration programme;
with great concern the ambiguity surrounding the stakeholders involved in the delivery of the digital migration programme and note that it is yet another year without finalization of the process;
1. and with even greater concern the contrasting presentations by both USAASA and SAPO relating to DTT;
that SITA indicated non-involvement in the investigation into its failure to procure cybersecurity services for the Gauteng government;
with concern the anticipated loss of revenue to entities due to the COVID-19 pandemic;
that the Department will reduce the turnaround time for bills, which will now be concluded in Quarter 3 and not Quarter 4 as previously required and as insisted by the Minister;
that a Security Hub has been created in collaboration with telecommunications operators to secure digital infrastructure for online communications, especially by government and Parliament;
that a Digital Economic Masterplan will be finalised by June 2020 in order to deal with the election process in 2021; and
that the Department will still need to engage the Independent Electoral Commission (IEC) on the issue of cybersecurity during the upcoming local government elections.

6.1.2 ICASA

Having considered the APP of ICASA, the Committee noted:

its appreciation for the relevant and prompt interventions such as releasing high demand spectrum to the sector during the COVID -19 State of National Disaster;
its appreciation for the overall active response by the Regulator during the COVID-19 pandemic;
and acknowledged ICASA’s audit findings and that it has put in place plans aimed at ensuring the achievement of clean audit reports in future;
1. that in order to improve audit outcomes, internal control measures such as the compliance of supply chain management (SCM) is a standard item placed on the agenda of the Audit Steering Committee and focus in the future will be put on the eradication of fruitless and wasteful expenditure.
with concern that local content producers were not consulted with regard to the COVID-19 exemption on local content production and that the zero per cent allocation for local content did not make sense as it was in turn promoting foreign content consumption over local content;
that content producers have found innovative ways to create content despite the COVID-19 epidemic;
with concern that the merger as proposed by the Department was considered a threat by ICASA, citing undue political influence which may impinge on its independence;
that key risks ICASA faced include litigations by stakeholders, inadequate funding, reduced MTEF allocations, non-compliance by licensees, delays in approval of the National Radio Frequency Plan and the COVID-19 pandemic business continuity risks;
that the process from issuing of the Information Memorandum, to collating views from industry players, and issuing invitations for application for spectrum release was almost complete;
that ICASA was experiencing challenges in respect of its constrained budget and an expanded mandate;
with concern that there is an ongoing investigation on irregular activities involving and leading to the suspension of the Chief Financial Officer;
that possible health implications as a result of the deployment of 5G infrastructure in the country form part of ITU discussions, which South Africa was a signatory, that ICASA had conducted a study following claims that 5G caused the Corona virus that will be submitted to the Minister once completed;
that ICASA issued temporary spectrum on a technology neutral basis, and that the emergency/temporary spectrum would be provisioned for use till December, after which it would be auctioned;
that there were plans to set up virtual classrooms in rural areas to benefit the local community; and
that spectrum was going to be auctioned to companies in December 2020.

6.1.3 SABC

Having considered the APP of the SABC, the Committee noted:

its appreciation for the Board’s positive work to stabilise the public broadcaster;
its appreciation that 134 of 139 cases emanating from various forensic reports such as the SIU, Public Protector and internal forensic reports have been resolved;
1. its appreciation to the Board for instilling accountability at the SABC
that all critical vacancies have been filled and that overall women representation at leadership level stands at 51 per cent (56% at EXCO);
1. and applauds the SABC for filling all critical posts;
2. and applauds the SABC for ensuring leadership stability; and
3. that 51 per cent overall women representation at leadership level is testament to SABC being at the forefront of the transformation agenda;
and congratulated the SABC for the increase in viewership;
and it applaud SABC journalists for excellent coverage during the COVID-19 pandemic;
and congratulated the launch of the SABC education channel and its critical role during the COVID-19 pandemic;
that COVID-19 pandemic has contributed to the displacement of programming in order to make space for government leading to loss of revenue;
1. with serious concern that SABC had recorded a R1.5 billion projected revenue loss due to the decline in advertising and sponsorship during the COVID-19 pandemic;
2. shut down of production houses hindered production of fresh content;
3. that the payment of television licences had taken a significant knock during the COVID-19 pandemic; and
4. welcome the initiative by SABC to provide protective gear for frontline workers at the public broadcasters.
with concern that signal distribution is one of the biggest cost drivers for the SABC;
with concern that actors are often owed royalties to the detriment of the industry;
that pay progressions of six per cent general salary increase and 5 per cent increase for management was negotiated and finalised as far back as April 2018;
that between April 2018 and March 2020, the SABC had either closed or exhausted internal disciplinary processes for 119 disciplinary cases; and
1. that the completion of five (5) cases was still outstanding with a further 16 cases still being attended to;
2. that legal and investigation costs amounted to R38.17 million in the 2018/19 financial years and R20.15 million in 2019/20; and
3. that there is an additional amount of R15,6 million which was incurred for forensic and investigative services in the last financial year;
that as part of the conditions of the bailout received by the SABC, it was required to report regularly the shareholder and to National Treasury on the utilisation of the funds received;
1. with appreciation that the SABC was spending the bailout money accordance with the agreed terms, it was required to submit a monthly report to National Treasury;
with concern that DTT is not compatible to DTH whereas competitors to the SABC have DTH capability in the STBs in contrast to the DTT STB; and
1. With concern that the low numbers of audience on the DTT platform is not driving revenue and will make it difficult for SABC to monetise the platform.

Lastly, the Committee applauds the SABC for driving social cohesion and being the primary source of government information dissemination during the COVID-19 pandemic.

6.1.4 USAASA/USAF

Having considered the APP of USAASA/USAF, the Committee noted:

its appreciation that the process of installation of set top boxes (STBs) is underway;
1. however, note with concern the extended time and financial resources that have been spent in implementing DTT;
2. fast-tracking of procurement of migration devices in order to ensure a quicker migration.
that the focus for USAASA is to rollout broadband infrastructure, especially to rural areas;
with concern that USAASA has been placed under administration because the entity was not able to sustain itself;
that there is ambiguity in relation to the Service Level Agreement (SLA) between Sentech and USAASA;
that the governance and control of installers of STBs will be implemented and that a post installation, reports will be complied so as to ascertain if correct procedures were followed;
that USAASA was spending R56 million monthly on the storage of STBs;
that delays in migration process were contrary to service delivery; and
that STBs are available to be purchased by unsubsidized people at all retail stores.

6.1.5 SITA

Observations

Having considered the APP of SITA, the Committee noted:

its appreciation for the positive work done by SITA under the current administration;
1. and welcomed the SITA clarity in as far as the SITA APP presentation;
2. and welcomed the new performance based approach by SITA;
its appreciation for SITA’s collaboration with SABC and Department of Education on virtual learning and the education channel, especially during the National State of Disaster;
that SITA was one of the entities earmarked to be repurposed during the reconfiguration process to position it as a digital transformation institution rather than a procurement agent;
and encouraged SITA to lead government in exploring 4IR technologies such as artificial intelligence and robotics;
and commended SITA’s support for local businesses, localisation of procurement and broader contribution to economic transformation;
the decision to repurpose SITA as relevant in the loom of 4IR;
with concern that SITA was placed under administration and that there was no clear indication as to the reasons for placing the entity under administration;
1. however, with concern that the Committee was only informed after the appointment of the administrator;
that SITA was embarking on a recruitment drive to ensure it attracts staff with the requisite skills;
that SITA is ably equipped to offer cloud-computing services, data security service and also has fully functional artificial intelligence and robotics capabilities;
with concern that the fully functional and secured ICT systems developed or endorsed by SITA were not being used by government, who instead, use alternative, unsecured and sometimes costly platforms;
1. that Parliament was approached to offer Jitsi-Meet, the video conferencing solution developed by SITA;
with concern that the lack of utilization of SITA’s ICT solutions, amounts to wasteful and fruitless expenditure;
1. with concern that the current procurement and management policies are inadequate, there is a legislative gap that allows departments to deviate from SITA processes and procure systems independent of SITA;
that SITA indicated non-involvement in the State Investigating Unit (SIU) investigation into the R30 million Gauteng deviation on cyber security tender and note that SITA is cooperating with the SIU;
with concern that government departments owed SITA about R540 million in the past financial year, a debt that must be recovered;
1. that SITA issued letters of demand to owing departments by end of May 2020;
with concern that most departments use basic and primitive connectivity infrastructure which inhibits adoption of modern technology solutions;
1. that cooperation with the Department and Telkom was underway to address the issue of poor broadband infrastructure;
and welcomed the initiative by SITA to engage Treasury to facilitate State-to-State partnerships; and
that SITA was in cooperation with the Department and SALGA on e-learning programmes.

6.1.6 SAPO

Having considered the APP of SAPO, the Committee noted:

its appreciation for the launch of the cashless Automated Teller Machines (ATMs) project;
1. that modernization of SAPO is underway with the implementation of the rollout of cashless ATMs, amongst others;
its appreciation for SAPO partnering with the Department of Health and Dischem to distribute medicines during COVID-19;
1. that it has also partnered with universities to distribute laptops to students;
that SAPO was experiencing many challenges which included the entity’s operational concerns, security issues, human capital concerns, infrastructure issues and the proper implementation of the South African Social Security Agency (SASSA) platform for paying social grants;
with concern that SAPO has noted a R 1.9 billion loss which included the COVID-19 period with a loss of R 798 million as at end of May 2020;
that a R140 million in debt was recovered by SAPO; and another R100 million debt was in the process of being recovered;
with concern that critical posts such as the Group Chief Executive Officer and Chief Financial Officer were vacant;
1. however, that the process is now being finalised to fill critical vacant posts;
with concern that Board members have resigned which affects the stability of the entity;
with concern about the rationality of the government’s decision to remove the Postbank from the Post Office Group;
1. with concern about existing tensions between SAPO and the Postbank;
with concern that SAPO may not sustain itself post the split from the Postbank;
with concern that SAPO has been given approximately R8 billion in bailouts to support numerous Strategic Turnaround Plans tabled since 2016, and yet with no positive result;
with concern that SAPO had requested the National Treasury to provide some relief to cover its projected R1.9 billion revenue loss;
with concern that there is a backlog of parcels and mail at the Johannesburg International Mail Centre;
that SAPO has implemented a Covid-19 readiness plan by setting up a Pandemic Committee to deal with the provision of personal protective equipment and ensuring that work areas are cleaned in compliance with regulations amongst others.

7. Committee Recommendations

7.1 The Department

The Committee recommends that the Minister should ensure that the Department:

urgently implements a Performance Management System at ICASA;
1. consult the Committee about the Performance Management System in accordance with legislation;
encourages Multichoice to consider price reviews during COVID-19 epidemic similar to what other telecommunication companies have done;
must comply with all Broad-Based Black Economic Empowerment (B-BBEE) certification requirements;
must endeavor to use and promote existing technology platforms developed and or promoted by SITA and ensure that such platforms are widely used across government and Parliament;
must provide clear timelines for the delivery of digital migration;
1. given contrasting presentations by both USAASA and SAPO, must provide a governance structure for DTT and a list of all stakeholders identified to partake in the delivery of the digital migration programme and associated performance and service level agreements; and
2. where there has been secondment of individuals, provide delegation of authority given to the individuals;
must provide policy clarity when it relates to (i) interoperability issues between DTH and DTT boxes (ii) governments strategy to promote uptake of DTT in the advent of influx of DTH;
1. must provide monthly reports, a project plan of all DTT processes and related projects on DTT rollout;
must provide clear timelines on processes involved towards the merger of entities reporting to the Department;
provide further information relating to (i) legislative prescripts; (ii) the process towards appointments; and (ii) the defined roles of the Administrators versus that of the Boards at SITA and USAASA;
must provide clarity on all the events leading to the Special Investigating Unit (SIU) investigations into SITA’s failure to procure cybersecurity services for the Gauteng government;
1. also explain the role of Department itself and that of National Treasury on the matter;
provide an annotated account on all forthcoming Bills to be tabled before the Committee so that it is able to adequately prepare;
ensure alterations to budgeting do not impact negatively on key projects of the Departments such as DTT; and
must respond to all parliamentary questions posed to it.

Lastly, over the medium term, the Committee has committed itself to strengthening its oversight systems so that the (i) conclusion of the DTT programme is realised by monitoring adherence to timelines; (ii) the release of high demand spectrum is expedited; and (iii) the strengthening of connectivity in rural areas of South Africa is ensured.

7.2 ICASA

The Committee recommends that the Minister should ensure that ICASA:

must consult with local content producers in order to find innovative ways in which content production could continue and report back to the Committee;
1. regulations should be changed in favour of the local content producers; and
2. local content should not contest for space with foreign content;
should investigate complaints by actors not being paid royalties;
1. ICASA must investigate the legislative framework and find ways in which to assist.
investigate other alternatives to generate funds due to the shrinking fiscus;
must finalise the disciplinary process in respect of the suspension of the Chief Financial Officer and report back to the Committee including on;
1. implementation of consequence management; and
must present to the Committee its report on the relation between 5G and the Corona virus.

7.3 SABC

The Committee recommends that the Minister must ensure that the SABC:

reporters on the frontline are consistently guaranteed proper protective equipment at workplace;
1. reporters working during the pandemic are provided with regular testing but taking into consideration privacy and other constitutional issues;
through its operational plan finalizes engagements with union leaders in order to deal with the issue of planned salary increases in the advent of national crisis;
fills all vacant SABC radio stations management positions with urgency;
should work in cooperation with USAASA, SAPO and Sentech to ensure successful delivery of set top boxes;
provide a detailed report relating to the clean-up of the public broadcaster including funds spent on litigations and cases against the SABC;
ensure that the SABC presents a plan to the Committee on how to prevent the projected losses in order to avoid further bailouts from government;
ensure that the strategy on provisioning of compelling content of SABC is improved in order to deliver on DTT;
provide written and detailed response on the management at SABC radio stations;
must present the content strategy upon completion and before the scheduled nation-wide roadshows;
must reappear before the Committee to present the turnaround strategy and investigate further on the financial losses of the public broadcaster;
submit a differentiating description between resources used from the bailout versus other initiatives; and
provide clarity in respect of the disposal of core assets of the SABC.

7.4 USAASA/USAF

The Committee recommends that the Minister must ensure that USAASA/USAF:

must ensure that citizens have improved access to broadband connectivity;
must implement processes to ensure that set top boxes (STBs) that are non-functional are attended to;
gives priority to distribute the remaining consignment of STBs are implemented;
must ensure that the development and marketing of DTT receivers for the unsubsidized market is fast-tracked;
must accelerate the process of distribution of STBs to ensure a quicker migration process;
1. must ensure that installation of STBs is effective and speedily implemented;
must ensure proper governance and implementation processes of the digital migration are in place ahead of the switch off date.

7.5 SITA

The Committee recommends that the Minister should ensure that SITA:

attracts qualified and competent staff with the requisite skills;
1. ensure that processes are in place to facilitate the transfer of scarce skills at the entity;
2. create partnerships with universities and the Council for Scientific and Industrial Research (CSIR) to ensure a flow and transfer of skills within the entity;
is the preferential service provider by parliament, government departments and other stakeholders for providing ICT services;
ensures that processes are in place to recover all monies owed to SITA by government departments;
should ensure that the procurement backlog problems are resolved speedily;
must ensure that all policies are implemented as this is fundamental to service delivery;
must provide a list of all stopped ICT contracts including of those ICT systems that were procured but do not function;
must improve on delivery timeframes and management of SLA’s with departments as part of the service offering;
must use the Committee to test the viability of Jitsi-Meet video conferencing platform;

The Committee will engage its counterparts in National Treasury and the DPSA to find solutions to support the work of SITA. It will also continue to support SITA’s initiative to ensure that that value-for-money is received on all SITA-developed software that is not been utilised.

7.6 SAPO

The Committee recommends that the Minister should ensure that SAPO:

must fill all vacant and critical posts;
should permanently implement adequate screening systems of all staff for criminal and other transgressions records;
should ensure that their business model is relevant and responds to demand services and products;
must ensure that the tensions between SAPO and Postbank are expediently resolved;
1. and Post Bank should expand its footprint to rural communities;
should ensure that plans are in place to convert cash into card-based payments;
must conduct a forensic audit on cash management and report back to the Committee before any further government support is administered;
must speedily resolves all the backlog of parcels and mail;
should focus on maximising the use of available resources and adhere to the strict implementation of the strategic plan;
should consider repositioning SAPO in order to build reputation and attract more customers and skills especially the youth;
should implement innovative strategies to allow SAPO to diversify the postal sector and create opportunities for SMMEs;
must provide a timeline for filling of all vacancies; and
should assess what SAPO needs to be sustainable and must report back to the Committee.

Report to be considered.

[1] African Development Bank Group, Unlocking the Potential of 4IR is Africa Study Report, 2019

[2] Stork, 5G Flagship Report. Case Study on South Africa. 2020

[3] [3] Stork, 5G Flagship Report. Case Study on South Africa. 2020

Documents

No related documents

ATC200604: Report of the Portfolio Committee on Communications on its deliberations of Budget Vote 30: Communications and Digital Technologies, dated 26 May 2020.

Communications and Digital Technologies

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