1.2 IS wishes to advise that it would appreciate an opportunity to address the PPCC orally should public hearings on the Bill be scheduled.

2. General comments

2.1 It is our submission that one of the fundamental objectives of the ICASA Amendment Bill is to set a framework within which ICASA can deliver on its mandate to regulate the communications industry. ICASA's role of regulating the industry will become even more critical given the fact that the Convergence Bill has set out additional and complex issues that ICASA will have to manage. It is therefore of fundamental importance that the rules of the game to which ICASA will have to adhere to in managing the industry will have to be clearly spelt out.

2.2 It is now universally acceptable that in order for a regulatory authority to be viewed as being independent it has to at least enjoy independence in terms of finance, structure and decision making from the operators it regulates and from the relevant government ministry to which it has to co-operate with.

2.3 It is our submission that this approach should serve as guide to Parliament on how ICASA needs to be perceived in order to give the industry confidence that it will be able to deliver on its mandate. Interpreted in its proper context it is our view that this definition was not intended to suggest that ICASA should become an institutional structure that is not accountable to anyone but itself. On the contrary it is our contention that the accountability of the regulator to the industry, government and the general public is fundamental. However such accountability cannot be construed or applied in a manner that compromises or erodes the autonomy of the regulatory authority.

2.4 From an investor perspective both international and local, it is our submission that the extent to which the regulator is perceived to be independent of political control and separate from operators greatly affects the level of confidence that the industry and the general public have in the regulator's decision-making. It further affects the regulator's capacity to make credible commitments and thus to attract investment, both foreign and local.

2.5 The regulatory framework therefore is a key determinant of the extent and efficiency of investment, which in turn dictates to a considerable extent what benefits will accrue to end users of electronic communications services. Investors generally demand the comfort of knowing that the regulatory authority charged with regulating the market is free from any interference political or commercial. They need to know that the integrity of its decisions is based on sound analysis of the market and competing forces in the market rather than political pressures. Even the slightest appearance of a regulatory authority with constrained powers vulnerable to political or commercial interference is enough to cause doubt in the mind of credible investors.

2.6 A transparent and non-discriminatory regulatory framework and a strong regulator are key ingredients in the fight to position SA as an attractive investment destination at the international stage.

2.7 Our comments therefore relate on one level to functional independence which is generally measured through the institutional framework and the effectiveness of statutory provisions governing the appointment and removal of officials and reporting requirements and financial autonomy. The institutional framework however and how it is related to independence is only one aspect of the regulatory framework.

2.8 The regulator still needs to make decisions in a procedurally correct, transparent, non-discriminatory manner and be accountable for such decisions if it is to inspire the levels of confidence necessary.

2.9 It is our submission that these basic tenets should form the underlying premise upon which the ICASA Amendment Bill is based on. The need therefore to enshrine such principles in the proposed legislation cannot be overstated.

2.10 We now turn to deal with the different sections of the Bill.

3. Appointment & Removal of Councillors

3.1 We have noted with concern that the appointment process for Councillors has been fundamentally changed. The current framework which is based on a Parliamentary led process, wherein nominations are accepted from the public and the final decision made by the President seems to have fallen out of favour. The Bill now proposes a new process wherein the Minister makes the recommendation to the President based on a recommendation from an ad hoc panel that she has appointed.

3.2 It is our submission that the current Parliamentary led process is more transparent, robust and participatory as it allows for the input of the public in the process of selecting their representatives into the Council of ICASA. The interview process is normally open which creates a good perception of transparency and effective engagement. It is therefore not clear to us why the present manner of appointing Councillors is considered flawed and therefore being changed.

3.3 The process proposed in the Bill on the other hand takes the prerogative of appointing Councillors away from Parliament and over to the Minister. This approach goes to the heart of the perception of executive or political interference on the functioning of the regulator. Given that government continues to be a significant shareholder on many of the licensed operators in the market it also creates a perception of conflict on the part of the Minister who sits as a government shareholder on many of those companies.

3.4 Investors who seek to invest on new entrants in the market may justifiably suspect that their hard earned investment may not be secure in a market where new entrants compete with incumbents who are largely owned by a government that can appoint or dismiss Councillors who sit in the regulatory authority that has overall oversight of the industry. IS therefore proposes the retention of the current appointment procedure as set out in section 5 of the ICASA Act.

4. Funding of ICASA

4.1 IS notes that the previous published copy of the Convergence Bill contained expansive mechanisms that ICASA could use in order to secure funding. We note that in the current Bill those expansive measures have been dropped.

1.2 We view this approach with concern as it is our submission that funding is a key element of the institutional framework of an effective regulator, in particular in light of the increased responsibilities that ICASA will have as a result of the Convergence Bill.

4.3 We see no objective rationale as to why a framework that allows the regulator to source funding from sources other than the Ministry, including all or part of license fees, administration charges, levies or other charges has been departed from.

4.4 It is our view that in order to ensure that robust measures that guide against over-spending and inefficient use of monies obtained from these sources the Bill could include a requirement that before obtaining the funds, the regulator must make a motivation for the use of such funds to the Minister through justifying its proposed expenditure and the preparation of estimates. This we submit would allow ICASA to obtain greater financial security while ensuring that the appropriate checks and balances are in place.

5. Inquiries by Authority (Section 4b)

5.1 It is noted with concern that the Authority will have very limited powers in terms of subsection 4b of the Amendment Bill which deals with enquiries. It our submission that the scope of ICASA enquiries should be broadened and that the Authority should have the ability to conduct enquiries into any matter, and not just "for the purpose of improving the performance of its functions". It is accordingly proposed that the Authority should be allowed to conduct a general enquiry regarding compliance with the Act and underlying statutes.

5.2 However ICASA should not be allowed to conduct a hearing regarding any specific alleged contravention by regulated parties as this is function specifically reserved for the Complaints and Compliance Committee/Communications Tribunal.

6. Conduct of inquiries

6.1 In relation to conduct of enquiries we submit ICASA has two broad options to pursue after finalising a public enquiry. The first of these is already set out under section 27 of the Telecommunications Act which provides that ICASA should publish its findings and, based on its findings, use the legislative framework, in other words the relevant sections in the Act, to draft regulations, should the inquiry indicate such need.

6.3 However should the inquiry have been to clarify an interpretation or the application of existing regulations, ICASA's findings can be binding to the extent to which they, like declaratory order, clarify the framework. Currently, in the telecommunications regulatory framework, this is not possible. ICASA cannot enforce a finding except through regulation as discussed herein above. This is problematic as sometimes the enquiry seeks to clarify an aspect of the regulatory framework and not to make regulations in that regard. Without the power to make declaratory orders, the result has been that ICASA has in the past reached findings that cannot be viewed as binding and therefore not enforceable.

7. Complaints and Compliance Committee

7.1 Section 20 of Amendment Bill provides that the Authority must establish a Complaints and Compliance Committee ("the Committee"). Essentially the Committee is required to investigate (through inspectors appointed by the Authority), hear and make findings on matters referred to it by the Authority. It can hear any complaints received and all allegations of non-compliance with the ICASA Act and underlying statutes. The Committee having made a finding based on a hearing must recommend to the Authority what action should be taken against a licensee.

7.2 The Amendment Bill in its present form contemplates no separation of the powers granted to the Authority, the Committee and the Inspectors. Effectively the Authority acts a "judge, jury and executioner.' The Authority appoints the Committee and the Inspectors. Both the Inspectors and the Committee have investigative powers and the Committee is empowered to make findings and recommendations to the Authority.

7.3 In order to protect the integrity of this process and the decisions that are arrived at it is our view that there should be a clear separation between investigative and adjudicative functions of the different role players involved.

7.4 We note that there is currently no provision for the Complaints and Compliance Committee to deal with matters on an urgent basis. It is our view that to give effect to the powers of this Committee any person should at any time be able to apply to the Complaints and Compliance Committee for an interim order in respect of an alleged offence. The Complaints and Compliance Committee must base its decision on the urgency of the matter, taking evidence, the possibility of serious or irreparable damage to the complainant and the balance of convenience into consideration.

8. Conclusion

8.1 Once again Internet Solutions wishes to thank the PPCC for the opportunity to address it on the ICASA Amendment Bill and we look forward to an interactive process towards the conclusion and promulgation of this Bill.