SAPO turnaround strategy; USAASA performance; ICASA, SABC, MDDA Board appointments; with Minister

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Communications and Digital Technologies

15 March 2022
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

Video (Part 1)

Video (Part 2)

Tabled Committee Reports

The Minister provided reasons and an action report on USAASA's poor performance on broadcasting digital migration (BDM) and the broadband connection project and its irregular and fruitless and wasteful expenditure. The reason for unachieved targets for the first two programmes did not emanate from USAASA but from the Department of Communications and Digital Technologies (DCDT) for deciding to revise the BDM and SA Connect policies. However, the irregular and fruitless and wasteful expenditure were USAASA’s doing. The Department had rejected the explanation given by USAASA on these matters. USAASA was instructed to take further steps to ascertain the root causes of these expenditures and apply consequence management where applicable. USAASA has since appointed investigators to conduct an investigation.

Members were not pleased that there was no indication of the timeline for when the investigation will be completed. USAASA replied that it was still at the beginning stages and it was not aware when these investigations will be concluded.

The Minister announced that the auction of the spectrum was currently on the verge of completion, and it has been ongoing without hiccups. The previous estimates raised from the auction for the National Revenue Fund were exceeded. DCDT hoped that National Treasury would redirect some of those funds to the Department’s programmes, as is usually the case in other countries.

The court case between e-TV and the Minister on the analogue switch-off date for the Broadcast Digital Migration has commenced. The Department was confident about the case as it had received support from both ICASA and Vodacom. DCDT was also confronted with another court case about the BDM switch-off date initiated by a #SaveFreeTV coalition. The Minister claimed that the coalition had been spreading misinformation about the switch-off claiming that 14 million South Africans would be switched off and not have access to TV. DCDT has refuted these claims on various platforms and the matter was now in the North Gauteng High Court where a full bench was granted by the Acting Judge President. The Department was confident that it would win the case.

The South African Post Office (SAPO) officially tabled its new turnaround strategy called, ‘The Post Office of Tomorrow’. The Chairperson said he had applied to the House Chairperson for the briefing and discussion to be closed to the public due to the sensitive information that was of commercial interest. He assured the public that was the only reason the meeting had to be closed.

After receiving the SAPO briefing on its turnaround strategy, the meeting was opened to the public and the Chairperson summarised the Committee observations and recommendations. It was clear from the SAPO presentation that the problems are not only internal but also external as it relates to its commercial side. The Post Office remains important to South Africans because it is the main entry point for some government services. From the observations made, firstly, the Committee agreed to the protection of the commercial interest of the Post Office turnaround strategy to rise above its challenges. Secondly, the Committee was clear that there have been many turnaround strategies presented by SAPO but implementation was lacking. We concluded that without funding for the strategy, there will be challenges in implementing it. Whatever funding we look at, must not simply be thrown at the problems, but must be about implementing the entire turnaround strategy. The Committee will support SAPO to ensure that this turnaround strategy is implemented – but accountability will also be at the centre of this implementation. Besides funding, there has to be capacity at SAPO. The Committee supports the turnaround strategy and the call to source funding.

Members questioned the next steps for Department intervention in USAASA; the misinformation about the switch-off date that has been peddled in the public by a coalition and if the Department was still confident about meeting the 31 March 2022 switch-off deadline.

The Committee finalised its recommendations to fill the vacancies in the SABC and MDDA Boards and ICASA Council. For the MDDA Board, the two recommendations were Ms Martina Della-Togna and Ms Carol Mohlala. The SABC board recommendation was Dr Renee Horne. The all-women recommendations for the ICASA Council were Adv Dimakatso Qocha, Ms Nompucuko Nontombana, Ms Dikeledi Mushi, Ms Thabisa Faye, Ms Ntombiza Sithole, Ms Sesethu Gqomo and Ms Rossana Gell.

Meeting report

The Chairperson welcomed the Minister and announced the Committee has applied to have this meeting partially closed when it receives a briefing from the South African Post Office as the information to be presented has commercial interest.

Minister’s remarks
Ms Khumbudzo Ntshavheni, Minister of Communications and Digital Technologies, thanked the Committee for the opportunity to present the turnaround strategy of the South African Post Office and the performance report of both the Universal Service and Access Agency of South Africa (USAASA) and the Universal Service and Access Fund (USAF).

Spectrum auction
The auction of the spectrum is about to be concluded; the last round is resuming today. From last week, the auction has proceeded well. The estimates for the National Revenue Fund have been exceeded. We hope that there will be some consideration from National Treasury of funding some of the programmes of the Department. This has happened in other countries where reinvestments were made in the sector to ensure that it continues to grow.

Yesterday, the case between e-tv and the Minister on the analogue switch-off date for the Broadcast Digital Migration commenced. The Department is confident about the case as it receives support from both ICASA and Vodacom.

There is an entity called Free to Air TV Coalition, peddling misinformation. They claimed that 14 million South Africans would be switched off and not have access to TV, this is not correct. According to Statistics South Africa, there are over 14.5 million households that have access to TV or watch TV. Even with that, 11.5 million South Africans were already watching satellite TV. There is also a demand for Over-the-Top Television (OTT), which also accounts for the number. The government committed that people who register for support will be supported, especially poorer households with a monthly income of below R3 500. Only 1.4 million households have registered. There was an increase from October 2021 of just over 200 000 registrations. This indicates that the so-called allegations that people will be switched off is not true. The Minister of Trade and Industry has published the intention to ban the importation of analogue television in South Africa to allow only the importation of digital televisions with tuners into the country. This means that the problem of analogue TV will finally be closed.

Today was the last day of arguments; we are responding to the case that was tabled by etv. The Acting Judge President of the North Gauteng High Court has given the case a full bench. Nonetheless, we are confident that our arguments are solid from the proceedings yesterday.

There is also a petition by the Coalition and we believe its sole objective is to cause panic. Everyone that was committed to connecting by 31 March will be connected. The only people that are still to be connected after the switch-off date are the ones who did not register in time or who registered after 31 October 2021. We will endeavour to have this connected in the shortest period of time because it is not a huge number.

USAASA performance
The Department was requested to provide information on the non-achievement of targets by USAASA, specifically on the broadcast digital migration, broadband connectivity and the fruitless and wasteful expenditure and irregular expenditure.

As for BDM, when the new Ministry took over in August 2021, we announced that the BDM project had stalled and there were countless lawsuits. We decided to go to Cabinet to change the model and deploy a model that will allow us to complete the migration more quickly. On 29 September 2021, Cabinet approved the new model, which is the integrated and managed model for digital migration and analogue switch-off. It changed how we had initially planned to execute BDM as we would now migrate simultaneously across all provinces using resources within our state-owned entities.

Sentech was appointed as a provider and this change allowed Sentech to ramp up the capacity of installers from October 2021 to early January 2022. The provinces of Free State, North West, Northern Cape, Mpumalanga and Limpopo had their analogue transmitters switched off by February 2022. To ramp up capacity, we approved from 285 installers to just over 5 000, which allowed the Department to double up the number of installations. As we speak, we are implementing installations in the provinces of Gauteng, Western Cape, Eastern Cape and KwaZulu-Natal with the timeline of 31 March 2022 for final analogue switch-off. We did lapse on our part as we did not re-table the Annual Performance Plan (APP) to reflect the model that has been implemented.

The USAASA board and management have ensured that where contract deviations needed to happen the applications were submitted in a timely manner and granted. USAASA was to do a voucher system set-top box support but opted against that. Instead, it partnered with the State Information Technology Agency (SITA) to develop an online application where South Africans can apply for support online and be given feedback through the online application. It is called the STB registration, which will allow us to expand and give a single view of an indigent South African. It will also allow us to move into the big data system. SITA completed this on time. People can now apply online through their smartphone and featured phones, in addition to applying at the Post Office.

On broadband connectivity, USAASA had a target to do 80 sites in municipalities but the fragmentation of work between USAASA, Broadband Infraco (BBI) and Sentech continues to fragment the impact and the value that government derives. We decided to halt the initial model and consolidate the broadband connectivity work into the SA Connect project, which was presented to Cabinet. On 2 February 2022 Cabinet approved the revised model for SA Connect. Treasury has granted the approval for the deviation to use our state-owned entities. Performance has been affected but the new model will ensure that over 33 000 community hotspots are done and over 21 000 government institutions have broadband connectivity. This includes the participation of SMMEs. It has been approved by Cabinet. We have also completed consultations with some of the provinces and this was still underway with other provinces. We can confirm that the non-achievement of targets as it related to BDM and SA Connect was not USAASA’s doing. The non-achievement of targets in the APP does not reflect the targets of the work of the entity.

On the fruitless and wasteful expenditure matter, the Department did not accept the explanations provided by USAASA. They alternate between appointing an external or internal investigator, because the employees were not happy. This does not wash. This is not acceptable. It is not the responsibility of employees to decide who investigates, it is the responsibility of management and the board who investigates. If there is a concern about fairness, people are always given an opportunity to dispute the reports with factual evidence. This similarly applied to irregular expenditure.

Discussion
Dr M Basopu (ANC) welcomed the presentation from the Minister. All the progress and improvements in USAASA were identified and welcomed. As a Committee, we are impressed that the Minister said that the Department was not accepting the explanation given by USAASA on the irregular and wasteful expenditure. What is the next step since it is not accepting this explanation?

Ms T Bodlani (DA) asked what was being done to nip-in-the-bud the misinformation that the Ministry has picked up in the public space. Secondly, the Minister spoke about the possibility of the 31 March deadline being missed. If there would be an additional six months, what would the financial implications of that be and what are the challenges or risks identified to hinder achieving the 31 March deadline? How accessible is STB registration to communities across the country?

Minister response
The Minister replied that DVDT issued a media statement and conducted radio interviews and also conducted mass gatherings to clarify this matter. This matter was also ventilated in court and our standpoint is being clarified on that platform. What South Africans are being told to panic about is misinformation. We are using all platforms to clarify to South Africans that they are being misled.

We will not miss the 31 March deadline. We indicated in October 2021 that the people who applied by 31 October 2021, will be connected by 31 March 2022. There are people, numbering over 200 000, who did not apply by 31 October to meet the switch-off date, and these people will be connected within the next three to six months. These people may be connected in time but we made it 31 October to take into account the financial implications. We are not certain if Treasury would approve our application on time by the 31 March deadline, hence the three to six month period to allow Treasury to do its transfers. We hope by May 2022 the approval will be done to connect the 200 000. Three to six months is too long for 200 000 applications, but we must be prudent and take into account other factors at play. This may be done before the three to six months. Treasury's responsibility is funding all of government, and we cannot simply adjust numbers because a small number of the population decided not to apply on time.

We have overcome the challenge of rates negotiations with service providers and installers. We have put our foot down that we will stick to the prices that were negotiated and accepted. When we do the re-contracting, we will insist the service providers accept the price that was offered, which is the current installation rate that is applicable.

We have instructed USAASA/USAF to appoint investigators through the DPSA panel of investigators. Work assumed on 1 March 2022 to investigate the causes of irregular expenditure and fruitless and wasteful expenditure. For the former, it will then activate the process to regularise the expenditure. For the latter, we want to ensure that consequence management is applied to those who violated the processes prescribed by the law.

USAASA response
Mr Sidney Mongala, USAASA Acting CEO, noted that he had just joined USAASA recently and spoke about how overwhelming the work was. Looking at the register for irregular expenditure, these must be categorised because there are some that needed to be condoned but these would mostly be the ones where contracts had ended. The contract work had to continue but we must also not repeat this. There were justifiable reasons for some because work had to continue, and the service providers needed to be paid. All relevant information and reasons will be provided for condonation. The other ones that must be investigated have also been grouped together. Once the investigations have been completed, USAASA will revert to the Committee.

Most of the fruitless and wasteful expenditure did not need investigation, we just need to act against those who are responsible. Some of these matters were investigated by the Public Protector and the SIU. We need to improve our internal control environment, processes and policies. Compliance and adherence to these must be enforced.

Ms Zukiswa Rantho, USAASA/USAF Board Chairperson, emphasized that the Board is working with the Minster and the Department. The mishaps have been identified and the new board is capable in working with the Ministry to take the corrective measures for USAASA.

Mr T Gumbu (ANC) asked when the investigation will be completed as there were no timelines.

Mr Mongala replied that they had met as a team and decided that the investigations must be finalised. He did not have the relevant dates at this point because an investigator was still to be identified. He can provide this information in writing, but he did not want to give a blanket date.

Ms Rantho said that it has been a long time since USAASA has been investigated. The investigation has commenced, and the information collection had also commenced. Once the investigation is done, we can advise on the dates.

The Chairperson said that besides the prior year investigations, the trend is that there is reoccurrence since the figures have grown for irregular expenditure and fruitless and wasteful expenditure. This speaks directly to the internal control environment in USAASA. The Committee is also deeply concerned about consequence management and that "urgently" did not mean a timeline. A timeline is important for an entity that needs to address such issues. Now that investigators have commenced the work, surely, they can provide a sense of when the investigation can be completed. The Committee is expecting consequence management to be implemented.

The Committee is pleased with what is happening on the legal side and will allow those processes to take place. On the #SaveFreeTV matter, the Committee can only support the Department to ensure that the deadline is met and to guarantee South Africans that nobody will have a challenge.

The Chairperson noted the Department request to close the next agenda item of the meeting due to the commercial sensitivity of the information in the SAPO turnaround strategy. There is nothing to hide but we must protect the integrity of the information presented to protect SAPO.

[The Committee closed the session for the SAPO turnaround strategy]

Committee’s View on SAPO
The Chairperson said that right at the start of the meeting, he clarified the partial closure of the meeting. The first item on USAASA non-achievements as identified by the Auditor-General report was open to the public. The Committee had received a parliamentary legal opinion and reached out to the House Chairperson to consult on the partial closure of the meeting. This did not deal with disputes with the Auditor-General report, as South Africans have falsely been fed. It was about the turnaround strategy of the Post Office of the future, its challenges and how it can turn itself around. The sensitivity of the commercial information in that turnaround strategy had to be kept from the public. The presentation presents an opportunity to explain it so the Committee is aware of what is involved in making observations and recommendations. He confirmed that the Committee agreed to the closure and there was no dissenting view. Some of the information presented would have been problematic to be open about due to those with a commercial interest.

It was clear from the SAPO presentation that the problems are not only internal but also external as it relates to the commercial side of the entity. The Post Office remains important to South Africans because it is the main entry point for some government services. While we may not make the presentation public, we must make observations and recommendations. Thus, a Committee statement will be issued. This is not the first time we face this situation. When we dealt with SABC commercial matters, we adopted the same approach.

From the observations made, firstly, the Committee agreed to the protection of the commercial interest of the Post Office turnaround strategy to rise above its challenges. Secondly, our understanding is clear that there have been many turnaround strategies presented by SAPO but implementation was lacking. We concluded that without funding for the strategy, there will be challenges in implementing it. Whatever funding we look at, must not simply be thrown at problems, but must be about implementing the entire turnaround strategy. The Committee will also support SAPO to ensure that this turnaround strategy is implemented – but accountability will also be at the centre of this implementation.

Even if we receive the money, we must prove beyond reasonable doubt that there is capacity in SAPO. The Committee supports the turnaround strategy from what has been presented and supports the call to source funding. Support from Treasury and the Department of Social Development (DSD) will be needed as some of SAPO services are done on behalf of DSD.

It also meant that the corporate strategy should also be revised to focus on implementation of the turnaround strategy. The Committee will require an update on this.

Having looked at the funding that goes to the universal service obligation of the Post Office, a funding model is something to consider ensuring that corporate services were not compromised. We expect that there will be support for a new funding model considering this presentation made earlier. All stakeholders must be brought on board, so we move together as we turnaround the Post Office.

Committee Report on MDDA Board appointments
The Chairperson noted the Committee Reports emanating from the Interview Sub-Committee had been circulated to all Committee members.

The Committee Secretary presented the report on the filling of two MDDA board vacancies. He outlined the recruitment, the candidates that applied, the process of interviews and those shortlisted. Two candidates, Ms Martina Della-Togna and Ms Carol Mohlala, were recommended.

The Committee adopted the Committee Report. There were no dissenting views.

Committee Report on SABC Board appointment
The Committee Secretary presented the report which outlined the letter received from the Minister, the process of advertisement, consideration of criteria, shortlisting of candidates, interviews of candidates and the recommendation of the Sub-Committee. The recommended candidate was Dr Renee Horne. The Committee adopted the Committee Report. There were no dissenting views.

Committee Report on ICASA Council appointments
The Committee Secretary presented the report which outlined the process of advertisement, consideration of criteria, shortlisting of candidates, interviews of candidates and the recommendations of the Sub-Committee. The candidates are Adv Dimakatso Qocha, Ms Nompucuko Nontombana, Ms Dikeledi Mushi, Ms Thabisa Faye, Ms Ntombiza Sithole, Ms Sesethu Gqomo and Ms Rossana Gell.

The Chairperson indicated that the Committee has since received some declines due to the longevity of the process but the Committee was pleased with the recommendations made.

The Committee adopted the Committee Report noting all candidates recommended for appointment were women.

The Committee minutes dated 1 and 8 March 2022 which were considered and adopted.

The meeting was adjourned.
 

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