NEMISA & Department’s 2006/07 Budget & Strategic Plans; Presidential Commission on ICT Development; adoption of Final Acts of IT

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
31 March 2006
NEMISA & DEPARTMENT’S 2006/07 BUDGET & STRATEGIC PLANS; PRESIDENTIAL COMMISSION ON ICT DEVELOPMENT; ADOPTION OF FINAL ACTS OF ITU CONFERENCE

Acting Chairperson:

Department Strategic Plan and Budget for 2006/7 presentation
Presidential National Commission for the Information Society and Development presentation
Final Acts of the ITU Plenipotentiary Conference (Morocco 2002) presentation
NEMISA presentation
Department’s Budget Review

SUMMARY
The Department of Communications summarised the aims and objectives of the International Telecommunication Union of which South Africa was a Member State. The Committee was requested to ratify the Final Acts of the Union’s 2002 Conference. There were no specific resolutions that impacted directly upon South Africa so ratification was largely a formality. Members (with the DA abstaining) voted to recommend ratification to Parliament.

The Department of Communications summarised the key performance areas, strategic plans and goals of the Department. Aims included achieving higher rates of investment, increased competitiveness of the information and communications technology (ICT) sector, broadening participation in the economy, improving the State’s capacity to deliver, using the best technological tools to provide a high technology platform governed by the Electronic Communications Act, and widening the skills base. All these aims would meet the mandate to contribute to a better economy and participation of all. The Department’s five key focus areas were (a) to achieve higher rates of investment through and in the ICT sector, with emphasis on broadband infrastructure; (b) to ensure that ICT infrastructure and services were available, reliable and affordable, (c) to broaden participation in the economy in order to accelerate and target access to ICTs; (d) to improve the capacity of the State to deliver; and (e) to build a better world through building an inclusive information society.

The Department reported that the mandate of the Presidential National Commission was to advise the President on the use of ICTs to optimise the pace and extent of addressing South African developmental challenges, to advise on South Africa’s contribution to and benefit from an inclusive Information Society, and to facilitate South Africa becoming an integral and equal member of the global Information Society.

The National Electronic Media Institute of South Africa reported that it had created a new vision and Corporate Plan to realign itself in the new market environment, which created new challenges for training, development and multi-skilling of participants to address current skills shortage in South Africa and the rest of Africa. The Institute was well-positioned and had redefined its target market and product line up, had identified and filled human resource capacity needs, had planned new courses, and had budgeted for increased revenue that would address shortfalls from the previous budget. Much of the new plan had already been implemented.

Members asked questions on the position of Sentech and rollout of broadband, provision of services on the local loop, transfers to State Owned Enterprises, the final model for TV licences, whether provision had been made for Councillors’ retirement, the Independent Communication Authority of South Africa Amendment Bill, the World Economic Forum rating of South Africa, and monitoring of Telkom to ensure that the Department’s substantial stake in Telkom was protected.

MINUTES
Appointment of Acting Chairperson
The Committee Secretary reported that Mr M Lekgoro, Chairperson, had been appointed Member of the Executive Council (MEC) for Social Development in Gauteng. Mr G Oliphant (ANC) was proposed and seconded to act, and took the Chair for the meeting.

Mr R Padayachie, Deputy Minister of Communications, tabled apologies by the Minister for her inability to attend the meeting.

Department Briefing on Final Acts of the Plenipotentiary Conference of the International Telecommunications Union (ITU)

Mr J Paterson (Director: Multilateral Affairs: Department of Communications (DoC)) reported that the ITU was formed in 1865. It was a specialised agency of the United Nations (UN) and its activities were governed by the ITU Constitution, adopted in 1992 and revised in 1998 and 2002. The ITU was open to Member States and Sector Members (such as NGOs, private enterprise and suppliers). South Africa had been a member of the ITU from 1881, but was excluded between 1965 and 1994. It had been a member of the Council since 1994. It contributed an annual amount of around R5 million, which was paid by the Department of Communications from the Multilateral Budget. The Constitution of the ITU set out to maintain and extend co-operation between Member States for improvement and rational use of telecommunication, and to promote and enhance participation and co-operation across the communications industry. It promoted and offered technical assistance to developing countries, through material, human and financial resources. It promoted development of technical facilities, and extension of new telecommunication technologies to the whole world. It promoted telecommunication services to facilitate peaceful relations. It also promoted a broad approach to telecommunications in the global information economy and society.

The Conference in Marrakech in 2002 endorsed the Strategic Plan. Its priorities included facilitation and development of fully interconnected and interoperable networks and services; playing a leading role in the follow up to the World Summit on the Information Society; and development of tools to safeguard the integrity and interoperability of networks.

The Final Acts of the Plenipotentiary Conference were published in the form of a book. It contained the articles of the constitution and conventions, declarations and reservations by member countries, General Rules of conferences, assemblies and meetings of the union and decisions, resolutions and recommendations of the Conference. The Final Acts had been signed by Ms Shope-Mafole, Head of delegation to the Conference, in October 2002. Signature of the Final Acts amounted to an international agreement and therefore required ratification. The Final Acts had already been submitted to the State Law Advisors of the Departments of Justice and Constitutional Affairs, and Foreign Affairs. A Presidential Minute had been prepared and signed by the National Executive. The Select Committee had given its approval for ratification. The Final Acts were therefore tabled for approval by this Committee prior to final ratification by Parliament.

Discussion
Ms D Smuts (DA) indicated that she had not seen the Final Acts that the Committee was asked to ratify, although she was aware that other Members of the Committee had apparently received the document. She would therefore abstain from voting.

There being no further questions, the Chairperson asked whether the Committee could vote. The motion to recommend to the Assembly, in terms of Section 231(2) of the Constitution, that it approve the Final Acts was proposed and seconded, with all members except Ms D Smuts (abstaining for the reasons given above) in favour.

The Chairperson specifically requested that a copy of the Final Acts be made available to Ms Smuts.

Briefing by the Department of Communications (DoC) on its 2006/7 Strategic Plan and Budget

Mr R Padayachie (Deputy Minister of Communications) reported that the Strategic Plan encompassed a three-year plan. South Africa was moving in the right direction to develop the economy and promote its broad aims and objectives. A crucial part of this strategy, based upon Accelerated Shared Growth Initiative of South Africa (ASGISA) imperatives, lay in building multi-stakeholder participation in Information and Communications Technology (ICT) development, leading to better growth and prosperity for all. Mr Padayachie summarised the key performance areas.

Ms L Shope-Mafole (Director General: DoC) summarised the core functions of the DoC, which included development of ICT policies and legislation to stimulate and enhance the sustainable economic development of South Africa; to impact upon and integrate the needs of the first and second economies; to evaluate the economic, social and political impact of the policies; to exercise oversight over State Owned Enterprises (SOEs) and to fulfil South Africa’s responsibilities in the international arena. She stressed that ICT impacted upon every other Department and sector. All strategies were geared towards making a socio-economic impact.

The Department’s key focus areas, together with strategic goals and objectives, were based on Cabinet decisions. These were set out in full in the documentation. Ms Shope-Mafole focused on the following objectives:

(a) To achieve higher rates of investment through and in the ICT sector, with emphasis on broadband infrastructure. DoC would be concentrating on digital migration strategy, on providing affordable broadband for the country, and developing a strategy for utilisation of the radio frequency spectrum. DoC would also be strengthening its intergovernmental focus and programmes and developing a stakeholder management strategy;

(b) To ensure that ICT infrastructure and services were available, reliable and affordable. Although cost of communications remained a priority, excellence in service and reliability should not in any way be compromised.
New policy directives would help in making ICT more widely available. Post offices throughout the country would have core ICT infrastructure and the number and location of post offices would be improved. Sentech and the South African Broadcasting Corporation (SABC) would be the leaders in digital migration. Costs would be reduced through policy directives, the rollout of national wireless broadband, and funding to Sentech. Sentech contained elements of both a public service and a commercial nature, which would have an impact upon their funding structure;

(c) To broaden participation in the economy in order to accelerate and target access to ICTs. Although DoC could not provide access throughout the country simultaneously, it would focus upon the areas where access would have the greatest impact and improve the lives of citizens. South Africa was a participant in the New Partnership for Africa’s Development (NEPAD) submarine cable project. Limited public awareness of ICT would be targeted by an e-awareness strategy. A register of crypto-providers and critical database would be set up. Small, medium and micro enterprise (SMME) growth and development would be assisted. A national emergency communications framework would assist national safety and security. Various strategies were being developed for women, people with disabilities, youth and children to ensure that an inclusive information society was built;

(d) To improve the capacity of the State to deliver. This area included training and retaining skilled personnel, particularly within the Department, and contributing to achieving effective cohesive functioning of government. DoC wished to strengthen the capacity of the Regulator and build ICT through public, private and civil society partnerships. Oversight, support and sustainability of SOEs would be addressed, and pricing models would be drawn up;

(e) To build a better world through building an inclusive information society. The Project Consolidate programme was directly aimed at achieving the objective of government functioning as one effective entity. The Independent Communications Authority of South Africa (ICASA) and the Electronic Communications Act would strengthen the position of the Regulator. DoC contributed to a number of committees and discussions, including national and international commissions. South Africa was active in the reform of the institutions of global governance and had observer status in the Organisation of Economically Developed Countries (OECD).

Department Briefing on the Presidential National Commission (PNC) on Information Society and Development (ISAD)
Ms Shope-Mafole reported that the mandate of the PNC was to advise the President on the use of ICTs to optimise the pace and extent of addressing South African developmental challenges, and to advise on South Africa’s contribution to, and benefit derived from, the development of an inclusive Information Society. The PNC also aimed to facilitate the co-ordination and integrated development of an inclusive Information Society in South Africa and to give support to making South Africa an integral and equal member of the global Information Society. The PNC was in the process of being restructured. It currently consisted of fifteen members. It was focussing upon finalising the ISAD plan and its corresponding provincial components, coordinating and aligning ISAD processes between national, provincial and local governments, effecting partnerships within the ISAD sector, and measuring the impact of the Information Society.

The strategic plan built upon the achievements of the PNC. It was based upon and aligned to four of the key focus areas of DoC, namely achieving higher rates of investment in the economy, increasing competitiveness of the South African economy, broadening the participation in the economy, and improving the capacity of the State to deliver. The mission was to build an Information Society in which human rights, economic prospects and full participation in the democracy were fully realised through the optimum use of ICTs.

Ms Shope-Mafole indicated that the strategic goals and specific objectives were similar to those of the DoC and were detailed in the documentation and that she would not present them to Members of the Committee. However, she summarised that the priorities for 2006/7 included the implementation of the Information Society and Development Plan, programmes for designated groups for information society with an initial focus on youth and women, tools for measuring the impact of the Information Society and project management within PNC.

Presentation of Department Budget
Mr H Mathabathe (Chief Financial Officer (CFO), DoC) presented a review of the budget for 2005/6 and the baseline allocations for 2006/7 through to 2008/9. He reported that the budget in the last financial year had been R1.03 billion, and 28% of this (R279.5 million) had been allocated to DoC Operations. For the first time there had been no rollover, with spending representing 99.8% of the budget. The R2 million savings would be surrendered. The Medium-term Expenditure Framework (MTEF) baseline allocations for 2006/7 were R1.28 billion, rising to R1.37 billion in 2008/9, divided between administration, strategy co-ordination, policy unit, finance, innovative applications and the PNC. The PNC would receive R24.9 million, rising to R29.74 million by 2008/9. The transfers to various portfolios were tabled. It was noted that ICASA had received an additional allocation, increasing at around 15% per annum in line with the objectives of capacitating regulation. R150m of the SABC transfer would be put towards technical upgrades and around R31 million would be transferred to SABC for Channel Africa.

Briefing by National Electronic Media Institute of South Africa (NEMISA)
Mr P de Klerk (Acting Chief Executive Officer) reported that NEMISA had created a new vision and Corporate Plan to realign itself in the new market environment of rapid technological advances, a dramatic change in the media landscape of South Africa, the convergence of telecommunications, broadcasting and information technology, and the various ways in which information reached consumers. These dynamics created new challenges for training, development and multi-skilling of participants, who would fill the current skills shortage in South Africa and be able to export their skills to the rest of Africa. NEMISA believed it was well positioned to meet the challenges and was already structured to deliver training programmes in multimedia, animation, radio and TV production. The new mandate, offering new products, would broaden NEMISA’s approach, make it sustainable, and make it the prime electronic content producer for the government.

NEMISA had redefined its target market and its product line-up. Whilst continuing to cater for previously disadvantages individuals, the student profile would be expanded and would include those from the rest of Africa. The human resource capacity of the NEMISA would reflect the changing needs. The product would incorporate more expertise in the theoretical component, broaden the study plan, draw on market advisors, include self-evaluation, include a written research policy, and become outcomes based. Two new full time courses were planned – Media Producer Foundation Certificate and Broadcast Technology Certificate at basic, intermediate and graduate levels. There would be increased revenue from content generation, an expanded curriculum (including short courses), paying students, hiring of the facilities, sponsorships and grants from Sector Education and Training Authorities (SETAs). Local and international partnerships and linkages were planned.

Strategic imperatives included changing the NEMISA mindset to become more proactive, becoming self-sustainable, reviewing the entire study plan, instituting a skills analysis, and preparation for the 2010 Soccer World Cup. A three-year draft operations plan had been completed, which identified projected revenue, outlined the execution for strategies to meet objectives, and which incorporated some additional projects, bringing them forward in the 2006/7 financial year to cater for a shortfall which had arisen since the budget was based on the old NEMISA mandate and model. The final plan would be presented by mid-April.

NEMISA had already implemented the market skills study, which had identified potential courses and enabled drafting of study plans. The study showed that there were three urgent needs of focus – SABC 4and 5 Regional TV Channels, 2010 World Cup and Mobile Content- and that within each focus area there was a variety of training needs. NEMISA had received a certificate for interim accreditation from the Department of Education and would be working on its full accreditation by December 2006. NEMISA had also instituted an internal skills audit, had identified new job functions and job descriptions, and made some appointments. A brand awareness study had been completed, and NEMISA would be building meaningful brand values. A new study plan process was already well under way. NEMISA had attended two preparatory meetings with officials of the DoC and had presented a plan of commitments. All activities would benefit NEMISA and the country.

NEMISA was in the middle of the three year MTEF cycle of R19 million. It already had an allocated budget for the 2006/7 year, but this was based on the old model. NEMISA needed additional funds to deliver on its new mandate. These would be sourced from savings from current special projects. The new model provided for special training and other activities that would general income to make NEMISA self-sustainable in the medium term.

Discussion
Ms Smuts asked the Department to clarify the position of Sentech. She referred to previous statements by DoC and the Department of Trade and Industry (dti) that the State would fund the rollout of broadband through Sentech. However, Sentech’s presentation of plans on 13 March did not refer to these statements. Sentech had undertaken due diligence studies, and had, with the approval of the Ministers of Communication and Finance, approached the banks for loans to undertake broadband rollout. The Electronic Communications Act (ECA) had anticipated that a number of service providers would roll out new technologies, aiming to recover costs within one year. Sentech required funding urgently to perform the rollout. Although it had been told that R600 million would be provided, only R200 million appeared in the MTEF allocation budget for that purpose.

The Deputy Minister stated that there were two issues. The first involved the modernisation of the infrastructure to meet global digital imperatives, which had been under discussion for many years. The DoC was faced with the reality that it competed with other sectors, such as Health, Housing and Education, and therefore would not receive its full requested funding. There was no doubt that South Africa would be amongst the first African countries to convert to digital. Sentech already had sufficient resources to set up the necessary infrastructure. The second issue related to the fact that one could no longer define "core business" in the ICT sector. Sentech comprised a multiplicity of services and DoC had a responsibility to ensure that the proper infrastructure existed for Sentech’s licence to provide wireless broadband. Wireless broadband was particularly complex because it had both a commercial and a public service focus. The DoC had to ensure that there was no conflict of interest, whilst also ensuring that sufficient funding was available. Although Sentech was unhappy that it had not received the full funding, at the time requested, DoC was satisfied that its funding model provided would, on an ongoing basis, meet its obligations to ensure greater ICT access, through a reliable infrastructure, to improve the lives of citizens.

Ms Smuts asked about costs within the local loop. She pointed out that the ECA now provided that every operator would have to make all facilities available on a non-discriminatory basis, and queried which legislative provision would be invoked to cover the Minister’s policy on local loops. She also pointed out that policy directives could not override the legislation and could not bind the Regulator.

The Director General responded in the first instance by stressing that ICT played a critical role in the development of South Africa, and DoC therefore aimed to provide services that were accessible, available and reliable. Twenty-two countries were contributing to the submarine cable project. The Government believed South Africa had an obligation not only to its own nationals, but also to ensure other landlocked countries in southern and eastern Africa would be linked. South Africa therefore wished to find an affordable way to build the infrastructure to meet Government’s responsibility to provide cabling. Private sector investment would facilitate investment in order that neither consumers nor participating institutions would be faced with a huge financial burden. Public/public sector partnerships would allow participation on an equal basis, and would ensure reliable communications, jointly owned by 32 centres.

In regard to policy directives, Ms Shope-Mafole reported that although it was not possible at this stage to go into details of policy directives, they would generally be taken as part of the implementation of the ECA.

Mr M Mohlalonga (ANC) asked why finance and management accounted for about 75% of the total budget allocated. Although SOEs received a substantial allocation, there were reductions in certain programmes and policy, and he enquired which activities were regarded as part of the core mandate.

Mr H Mathabathe (Chief Financial Officer, DoC) pointed out that certain adjustments could be made, if needed, within the MTEF cycle. The budget for finance included the transfers shown under the baseline allocation, and there was also provision for in-house research. Policy allocations were undertaken on an annual basis and increments could be given if properly motivated for particular programmes.

Mr Mohlalonga asked how far DoC was with the new licensing process, and when the licences were likely to be issued.

Mr Mathabathe replied that DoC had undertaken a study with the SABC, and the first phase considered whether the triple process was viable. DoC would shortly be making recommendations whether to proceed with the triple process, or whether other models should be pursued.

Mr Mohlalonga asked for a progress report on the ICASA Amendment Bill since the terms of office of three of the Councillors was due to expire in June. He asked how far the DoC had progressed with the replacement.

Ms Shope-Mafole reported briefly that consultations had been held to consider how the matter would be dealt with when the Bill came into operation.

Mr Mohlalonga stated that the fixed line service placed obligations on the operators, but there had been serious problems with disconnections, which had defeated the objectives of the service. He asked how the DoC viewed these problems.

Ms Shope-Mafole reported that this was linked to the question of the cost of communications. Investigations into cost would consider the problems, as well as the growing trend, worldwide and in South Africa for use of mobile phones in preference to fixed lines.

Mr Mohlalonga reported that the World Economic Forum competitiveness index currently listed South Africa as number 37, a drop from the previous year’s listing of 34. He asked what had caused this drop in listing, and what DoC had done or needed to do to address the issue.

Ms Shope-Mafole (DoC) replied that the ranking was partially based on use of ICTs. South Africa did not have a high ICT awareness, and many who could afford ICT did not use it. An improved awareness campaign would hopefully contribute to better use. She pointed out that the ratings fluctuated all the time, and the teams who carried out the surveys resulting in evaluations did not always spend sufficient time in the country and were often unable to access sufficient information. However, South Africa aimed to be in the top ten rating soon.

Mr Mohlalonga asked how DoC ensured that its considerable stake in Telkom was being properly monitored, and whether there was a particular form of oversight that applied in this case.

Mr Mathabathe reported that Telkom was controlled by legislation and had to report in terms of that legislation.

Ms Shope-Mafole added that DoC maintained excellent relations with Telkom and other stakeholders. All SOEs were aware of their responsibilities and implemented universal service policies.

Mr R Pieterse (ANC) asked NEMISA whether there were other institutions offering similar courses, and whether NEMISA was truly viable. He also asked if NEMISA actively recruited students from outside South Africa.

Mr de Klerk reiterated that NEMISA was offering new services all the time, including partnerships, and would welcome the opportunity to explain these further to the Committee.

The Acting Chairperson ruled that, in view of the shortage of time, no further questions could be addressed but requested that the Director General note any further questions for a report-back to the Committee when it reconvened.

The meeting was adjourned.