Convergence Bill: briefing

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
8 April 2005

Department PowerPoint presentation
Convergence Bill [B9 – 2005]

SUMMARY
The Department of Communications summarised the aims and objectives of the Convergence Bill. Licences were currently service- and technology-specific, but the Bill aimed to converge communications that depended on an electronic medium to facilitate universal service and access, and to address the needs of the second economy. The Bill would allow conventional services to continue, but would also allow a wide range of other services, and cater for future developments.

In answer to Members’ queries, the Department clarified that the Independent Communications Authority of South Africa (ICASA) Amendment Bill would be tabled in the following week. The Convergence Bill was not intended to licence websites, nor to regulate their content. They explained the complaints process, and the purpose and scope of the Universal Service Agency, and the reasons for the 25-year licence provision. Sport broadcasting was discussed in some detail, and the Department stressed that although diversity was important, South African needs and cultural identity were paramount. Unbundling of the local loop and the formulation of this policy were still under discussion.

The closing date for comment on the Convergence Bill was 8 April 2005, but some organisations and individuals had already requested extensions. Extensions for written submissions were permitted, provided that they were received by the time copies had to be made available to the Committee. The Chairperson did not specify a final date for extensions. Public hearings would commence on 17 May and run through to the last day of the session.

MINUTES
The Chairperson reported that the closing date for comment on the Convergence Bill was 8 April 2005, but some organisations and individuals had already requested whether extensions of time would be permitted. Extensions of time for written submissions were permitted, provided that they were received by the time copies had to be made available to the Committee. The Chairperson did not specify a final date for extensions. He indicated that public hearings would commence on 17 May and run through to the last day of the session.

Department briefing
Ms Lyndall Shope-Mafole, Department Director-General, stated that convergence, in the context of information and communications technology (ICT) was the ability to transmit or receive text, audio images, video, data or other signals (which had previously been transmitted on separate and distinct networks) by a single network electronic transport medium.

Ms Shope-Mafole reported that 65 public comments had been received after publication of the draft Bill on 3 December 2003. Cabinet had finally approved the Bill in February 2005

Licences were currently service- and technology-specific. In future, those communications depending on an electronic medium (telecommunications, broadcasting, internet and data communication) would be converged, and a single medium would facilitate universal service and access, and address the needs of the second economy. The Bill would allow conventional services to continue, but would also allow a wide range of other services, and cater for future developments. A single network transport medium would improve quantity and quality of scope, provide greater access and choice of services and products and reduce the costs of doing business. The Bill would rationalise the multiplicity of legislation currently governing the industry and would bring legislation into line with policy and technology.

Ms Shope-Mafole summarised the content of the Bill as follows:
Chapter 1: contained definitions and stated that the main objective was to promote convergence in the sector, to encourage innovation and promote fair competition.
Chapter 2 related to policy and regulations, and clarified the role of the Minister and the expanded role of ICASA in making regulations.
Chapter 3 dealt with the types of licences, which would in future fall under two categories. Individual licences typically related to network operations, where the Minister would play a greater role. Class licences concerned communications services and future services, and would be dealt with by the Regulator.
Chapter 4 was similar to the current Telecommunications Act, and dealt with the roll out and fast deployment of communications networks and facilities.
Chapter 5, which had been transferred from the Telecommunications Act, dealt with the control of the radio frequency spectrum, clarified the role of the Minister and individual licences.
Chapter 6, also transferred from the Telecommunications Act, dealt with technical equipments and standards.
Chapter 7 and 8 dealt with interconnection and facilities leasing, and was intended to promote competition and fair treatment of licensees
Chapter 9, taken from the Broadcasting Act, dealt with provision of broadcasting services and prohibitions on broadcasting activities
Chapter 10 dealt with consumer protection. A code of conduct and retail and wholesale tariffs were to be prescribed by the Authority
Chapter 11 dealt with ICT for government services, competition matters, numbering, carrier pre-selection, directory services, offences, emergency services and licensing in terms of the Broadcasting and Independent Broadcasting Acts (IBA) Acts
Chapter 12 dealt with the Universal Service Agency and Universal Service Fund and other convergence-related matters
Chapter 13 dealt with the transitional provisions for existing licences. They would be valid, but would be moved, under comparable terms and conditions, to the new categories within twelve months.

DiscussionMs M Smuts (DA) queried when the ICASA Amendment Bill would be tabled, since the Convergence Bill made reference to it. Secondly, she asked why the Minister retained the power to issue licences, since service-based competition was supposed to be introduced during 2005. Thirdly, she asked for clarity whether websites would need to be issued with class licences. The Bill referred to the Minister’s power to "approve" licences, and she pointed out that the Minister could not approve traditional broadcasting licences.

Ms Shope-Mafole replied that the ICASA Amendment Bill would be taken forward to the parliamentary process in the following week.

With regard to the Minister’s powers, the individual licences where the Minister would still exercise power to issue individual licences, were those which had significant investment in, and an impact upon the economy, performance and social services, relying upon infrastructures built by the public sector, and to the frequency spectrum. These were public resources and control was required to ensure proper management. There should be a proper balance between economic opportunity and potential for market failure, and although it was intended to open up the ICT sector, care should be taken to safeguard national and public interests, including issues of fair access, fair treatment, safety and security. Similar concerns applied internationally. Ms Shope-Mafole confirmed that websites would not need to be licensed in terms of the Bill.

Mr R Pieterse (ANC) asked for clarity how the complaints procedure would operate, and whether complaints would be referred by ICASA to the Complaints and Compliance Committee. Ms M Matlala (Director, Department) replied that complaints would be referred to that Committee by ICASA and the response would similarly come via ICASA. The Director-General commented that IBA complaints had been dealt with by a similar procedure, but, where appropriate, some complaints could be answered directly by the Committee. She suggested that ICASA should have the flexibility to operate a similar system, in the interests of efficiency.

Mr Pieterse asked why the Bill prohibited political advertising for 48 hours before voting day, rather than leaving this to the Independent Electoral Commission.

Mr Joe Mjwara, Deputy Director General: Multi-Media: Department of Communications, replied that the 48-hour prohibition period, which was intended to prevent incitement of political agitation prior to the voting day, had been followed since the 1994 elections, All parties would, prior to that time, be given ample time to promote themselves to the electorate. ICASA and the Regulator had not seen a need to alter that timeframe.

Mr K Khumalo (ANC) referred to Chapter 12 and asked for clarity how the Universal Service Agency and its Fund would operate.

Mr Edmund Baloyi, Legal Advisor, Dept of Communications, stated that the Universal Service Agency was, in terms of Clause 82, empowered to award grants for licences to service providers, on submission to the Agency. Funding would be used to subsidise or provide services in under-serviced areas.

Mr Khumalo cited areas in South Africa that were not able to receive South African news broadcasts, and asked whether the Fund was intended to roll out broadcasting or telecommunications. There was no clarity in the Bill on the purpose and extent of the Fund, whether it would be covering fixed or mobile services, and the areas covered. He felt that Chapter 12 should be able to address the broader aims of poverty alleviation and access to all, which meant that there should be an inter-relationship between the objects and funding. He asked whether these objects were being achieved.

Mr Mjwara replied that steps had already been taken, in the areas mentioned by Mr Khumalo, to install radio transmitters. The Department had undertaken an audit to identify and locate areas where broadcasting services were required, and to decide the types of services required. He clarified that the Universal Service Agency would not be limited to one type of communications, but to the converged electronic communications.

Ms N Mokoto (ANC) asked whether the regulation of content would extend to Internet content. She expressed concern over the long time-frame for licences and asked whether this was really of benefit to the licencees.

Ms Shope-Mafole replied that Internet content would not be regulated. She mentioned that in the international arena the United States had been strongly opposed to regulation of the Internet and free flow of ideas. However, many countries had difficulty with this concept. It was furthermore increasingly difficult to fix responsibility in regard to satellite broadcasts. Delegates discussing these issues at United Nations Education, Scientific and Cultural Organisation (UNESCO) had agreed that UNESCO was not the appropriate body to deal with Internet content. France had legislated against Internet publication of certain propaganda, but it was uncertain whether this legislation would hold up to scrutiny. This issue had not been provided for in the current Bill, but it was being discussed at international level and the Department would be guided by the outcome of those discussions.

The Department believed that the 25-year licence period was not excessive, since the mobile operators were only now, after 15 years, settling their businesses. This extended period allowed for a good return on licencees’ investments and allowed them to stabilise and run their business profitably. The legislation would provide for some flexibility and change of licences where licencees could not meet their obligations. Different licences had different conditions attached. It was hoped to achieve a good balance between allowing profitability and ensuring good public service.

Mr R Pieterse (ANC) asked if the needs of the disabled were sufficiently addressed. Ms Shope-Mafole replied that this was an important issue and regard would be taken of "universal design equipment, which, although not specifically designed around disabled needs, in particular the deaf, would nonetheless be able to take account of disability.

Mr Pieterse asked whether the Minister of Sport had been consulted on international broadcasting services, and on the broadcast, on local or international subscription broadcasting services, of sport "of national interest". The "national interest" still needed to be properly defined. Netball was the second most popular sport in Africa, after soccer, and yet it was still regarded as a "Cinderella sport". He mentioned that sporting bodies had sold rights to outside broadcasters, from whom subscription services would have to buy back the rights. The Bill did not appear to have addressed the actions that sports federations were already taking.

Mr Mjwara replied that sports and multi-channel coverage were a worldwide issue. In Australia and Europe there had been enormous public campaigns to keep sport available on national channels. In 2001, legislation was introduced in South Africa to the effect that subscriber services should not acquire rights for national events, "as determined from time to time". Discussions had indeed been held with the Minister of Sport and regulations were drafted, but SABC had complained that they were obliged to broadcast sports of national interest although other broadcasters were committed to exclusivity. These issues still needed to be finalised. In future there would be greater coverage of national sport on national television, which would include sport of national interest. It was necessary to develop a system that responded to South African needs. Broadcasting was an instrument of the country and therefore it was necessary to develop a system, which responded to South African needs and realised its own cultural determination. In future, all licencees would be required to contribute something towards the national objectives in a converged system. Diversity, of service and content, was important, and a converged environment must promote South Africa and assist employment. No class of licence would exist which would exclude contribution to national objectives.

Ms M Smuts (DA) stated that the Bill had not stated its intentions clearly enough. If it intended to regulate service providers who packaged a "bouquet" of channels then it should say so. Subscribers to certain types of channels wished to watch only certain subject matter. If more competition was considered desirable, then the service-providers must be allowed to offer different packages. The Bill, as presently worded, contained obligations that were wrongly grouped together. Although the Director General had stated that it was not the intention of the Bill to regulate the Internet, the Bill still made reference to online publishing and Internet services. In addition, in taking over sections from other Acts, poor or unenforceable drafting had been perpetuated. For instance, Clause 58, relating to multi-channel broadcasting, dealt with signal distributors, yet sought to impose obligations in regard to content, over which they clearly had no power. She urged that the wording of the Bill must be addressed to clarify intentions and remove inconsistencies.

Ms P Makoto (ANC) followed up on the questions posed on the Universal Service Agency and asked whether the Department was satisfied that the obligations to provide basic services had been satisfied.

Ms Shope-Mafole replied that clearly the obligation to provide full access and services had not yet been fulfilled. The first step was to identify, in each area, what services were important to the area, and which technology fell within the "universal services". The Department would be making further presentations on this issue the following week.

Ms Makoto pointed out that the Minister was allocated responsibility for allocation of frequencies, but there was no indication in the Bill as to how the decisions would be made. Ms Shope-Mafole stated that the Act purposely avoided specifying how much frequency was to be allocated to different areas, because the frequency needs depended upon the type of equipment being used.

Ms Makoto also asked for clarification why some of the sections used the word "may" and some used the word "must". Ms Shope-Mafole responded that in general the word "may" was used when the authority had to exercise its mind or discretion as to which option was the better, whereas "must" imposed an obligation to do something, without calling upon discretion, usually within a specific time frame or by a certain method.

The Chairperson asked why there had been no policy statement or reference to unbundling of the local loop, as small market-players were clearly waiting for some indication of direction.

Ms Shope-Mafole replied that the question was complex. Some of the local government areas had the necessary infrastructures while others did not, and it was not easy to formulate legislation to cover every part of the country. Signal distribution was important, but the infrastructures would need to be established. Those with a signal distribution licence would be expected to make their contribution, and to comply with environmental issues. South Africa wanted to avoid the situation in other African countries, where the signal distributors distributed only foreign content. The whole issue was still under examination and the policy still needed to be formulated.

Ms Smuts asked for further clarity on who took responsibility for the unbundling process. Telkom had made the local loop available for two years, but there was a threat that Telkom might rip cable. The advent of wireless communication had altered the position and she asked whether self-provisioning would be allowed for wireless operators and call operators. She queried whether the two-year provision would be repealed and, since the Bill did not appear to deal with the issue, whether this would be left in the hands of the regulator.

Ms Shope-Mafole confirmed that the Bill made no provision for unbundling and that policy and further procedures would need to be formulated by ICASA. On the point of self-provisioning, she stated that the Minister’s announcement to remove the Telkom monopoly on provisions had related to certain parts of the current legislation, applicable to mobile operators who were obliged to use the Telkom network. Her comments had not been intended to address the broader industry. The Bill did make self-provisioning possible, but this would depend on the service, which would affect the type of licence. The Bill aimed to give choice to the consumer and opportunities to the industry to provide the best service available in different circumstances.

Mr S Kholwane (ANC) asked whether the references to "historically disadvantaged" were intended to include women and youth and suggested that the drafters be asked to consider this question.

Ms Shope-Mafole stated that all comments in regard to wording would be taken into account. She concluded that the Department was looking forward to engagement with the public and industry, and was sure that all contributions, some of which would be very controversial, would lead to development of a better communications system.

The meeting was adjourned.