SUPPLEMENTAL SUBMISSION OF THE UNIVERSAL SERVICE AGENCY TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATIONS REGARDING THE CONVERGENCE BILL (B9-2005)
12 August 2005
The Universal Service Agency ("USA") is a statutory body created by section 58 of the Telecommunications Act, 103 of 1996. The object of the USA is to promote the goal of universal service in a variety of ways as set out in the Telecommunications Act. The USA thus plays a major role in ensuring that every person in South Africa benefits from access to communications.
The USA welcomes the Convergence Bill (the "Bill") as a step forward towards enabling the legal and regulatory environment to meet the challenges of the convergence of services and technologies. The comments submitted hereunder are made for the purposes of highlighting the concerns of the USA in contributing to a better final product, informed by its responsibility and its experience. The comments fall under the following headings:
Having noted the need to come up with legislation responding to the challenges of convergence in the communications sector, the USA is also aware of the challenging process of finalising the legislation, especially in respect of definitions and the roles of the various players. The USA is quite comfortable in understanding its role in relation to the Minister and the independent regulator, the Independent Communications Authority of South Africa. However, the USA is concerned that the Bill is not clear on the division of the roles of the USA on the one hand and the Media Development and Diversity Agency on the other. , whose stated role is to enable historically disadvantaged communities and persons not adequately served by the media to gain access to the media. The USA would urge some clarity on this issue before the finalisation of the legislation on convergence.
Although the USA understands its relationship with the Minister and the independent regulator, Icasa, set out in the Bill, the USA believes that the Minister and Icasa should be required to consult with the USA prior to making policy, regulations or other decisions that concern universal access and service. Accordingly, the USA proposes the addition of a provision setting out this requirement.
Before making policy, regulations or any other determination that relates to or impacts on universal access or universal service, the Minister and the Authority must consult with the Agency.
Finally, the USA has noted that its responsibilities have been extended, for example, to include broadcasting. Although the USA makes no proposed changes to the Bill in this regard, the USA wishes to put on record that increased responsibilities must be accompanied by an increase in funding for the Agency from Parliament to enable the Agency to capacitate itself in terms of personnel, skills and other resources, to deal with an extended mandate.
The Bill appears to narrow the possibilities in respect of universal access and service on major respect. Current references to telecommunication services in the Telecommunications Act are replaced in the Bill with references to communications network services only (and in limited instances, communications services). However, there are many categories of services provided for in chapter 3 of the Bill. The references in the Bill to communications network services will result in a narrowing of assistance to be provided to our under serviced communities. The USA believes that the application of universal access and service must be broadened instead of being narrowed. The USA also points out that because of this narrowing in the Convergence Bill, there now appear contradictions in section 74, 80 and 82 of the Bill. Accordingly, the USA proposes consequent amendments to section 74, as well as section 80 and 82 of the Bill.
Section 74(1) sets out the main functions of the USA. Most of the functions currently stated in the Telecommunications Act are incorporated into the Bill. However, one of the important functions of the USA, the stimulation of public awareness of the benefits of communication services, has been left out. The USA proposes that the current section 59(1)(d) of the Telecommunications Act be retained as one of the functions of the USA in the Bill.
Section 59(2) of the Telecommunications Act, which is incorporated into the Bill in section 74(3), provides that the USA must hold public consultation processes from time to time into the meaning of universal access and universal service, and make recommendations to the Minister, who officially publishes the meaning of those terms in the Gazette. Convergence brings great changes and complexity to a number of issues, including universal access and universal service. Recognising this, the USA believes that the current wording in sub-sections (i) and (ii) of section 74(3)(a) are limiting and somewhat confusing. The sections are limiting in that they provide that universal access and service apply only to two categories of services (namely communications and communications network services). The USA believes that universal access and service should potentially to all services mentioned or promulgated in terms of chapter 3 of the Bill. Furthermore, it is not clear that the wording of sub-section (ii) any longer denotes universal service. The USA accordingly proposes that subsections (i) and (ii) state as follows:
including any elements or attributes thereof.
In terms of the Telecommunications Act as it first was enacted, the Head of the USA was appointed by the Minister. There was no board. In 2001, an amendment to the Telecommunications Act authorised the Minister to appoint a board to provide oversight of and guidance to the USA (in terms of section 58(2) of the Telecommunications Act).
The board has been appointed and has been operating successfully for some time now. In line with corporate governance principles, the USA is of the opinion that the board should appoint the Head of the USA. Therefore, amendments to section 75 of the Bill therefore are suggested.
The National Revenue Fund has been established in terms of section 213 of the Constitution of the Republic of South Africa, 1996, not in terms of section 185 as stated in the Bill. The USA suggests that the changes be made to section 79(2) of the Bill accordingly.
The USA believes that the industry, through this convergence legislation process, is being presented with an opportunity to improve on what are some shortcomings in the current regulatory framework. The USA has experienced situations where it has provided subsidies for communication facilities but those facilities could not be sustained because the Agency does not have sufficient funds to train and equip communities with skills to maintain the facilities. In order to avoid such situations arising in future, the USA proposes amendments to the Bill, which would allow it to fund training and skills development and other activities that would make universal service projects sustainable.
The USA also has had difficulty in the past in making its personnel and other resources available to projects for lack of sufficient funding. In order to avoid this situation, the USA suggests amendments to the Bill to allow the USA to allocate and pay for USA resources to universal service projects out of Universal Service Fund money. This will help ensure the viability of universal service projects.
The USA also proposes, in a new section 80(1)(e), that Universal Service Fund should be allocatable to those functions of the USA set out in 74(1) and 74(4).
The USA also proposes an amendment to section 80(1)(d) of the Bill to make clear that equipping and maintaining end user equipment is included in the establishment and operation of centres to be set up with Universal Service Fund money.
Finally, section 80(1)(b) restricts application of Universal Service Fund money to communications network service licensees and in declared under-serviced areas. In addition, certain categories of subsidy recipients included in the Telecommunications Act (those set out in sections 66(1)(e) – (g)) are excluded from the Bill. The USA believes that convergence and in particular how the Bill is proposing a varied licensing scheme, requires that the application of Universal Service Funds be available to all types of licensees. More, at a speedier pace, will be achieved in terms of universal access and service, if the different licensing categories are exploited to the fullest. In the light thereof, the USA proposes amendments to section 80(1)(b) of the Bill.
The Telecommunications Act, in section 67A, provides that the USA may award subsidies for universal access projects by competitive tender. There is no limitation on who is permitted to apply for such awards and there is no limitation on what type of services may be involved. In terms of the proposed section under the same heading in the Bill (section 82), the USA may award project grants only to communication network services licensees and only in underserviced areas.
It is not clear how the new section 82 is any different from the new section 80(1)(b), which provides for subsidies to be paid to "any communications network service licensee for the purpose of financing the construction or extension of communications networks in under-serviced areas". Although the heading speaks of competitive tender, the section itself does not. Furthermore, the section appears to be little more than a requirement regarding the procedural aspects of awarding project grants to communication network services licensees in underserviced areas. Furthermore, the USA believes that it should continue to have a general authority to award subsidies out of the Universal Service Fund by competitive tender. In light of these considerations, the USA suggests amendment to section 82 of the Bill.
The USA thanks the Committee for the opportunity to submit these supplementary comments and will be happy to address any questions or issues arising therefrom.