Thank you for the opportunity to comment On the ICASA Amendment bill as published in Government Gazette No 28050 on 20 September 2005.

Please find attached, MTN's submission and we wish to be afforded an opportunity to make an oral presentation.

We trust the above is in order

Yours faithfully

GRAHAM DE VRIES: ACTING GROUP REGUALTORY AFFAIRS MTN SA

1. INTRODUCTION

1.1 MTN has awaited the publication of the Independent Communications Authority of South Africa (ICASA) Amendment Bill ~B 32 - 2005] since the submission of its input for the Convergence Bill to the Parliamentary Portfolio Committee on Communications (PPCC) in April 2005. Indeed if this Bill was released in April, it would have enriched our input to the Convergence Bill principally because of the symbiotic relationship between these two legislative Instruments which seemed to be aimed at overhauling the structure of telecommunications in South Africa. Be that as it may, MTN welcomes the opportunity to comment on the ICASA Amendment Bill and would also like to be afforded time to make further representations to the PPCC when oral hearings are held later in the year.

1.2 The objectives of the IGASA Amendment BilI, as introduced in the National Assembly by the Minister of Communications, are stated as the:

1.2.1 determination in greater detail of the functions of the Authority;

1.2.2 consolidation of certain powers and duties of the Authority;

1.2.3 amendment of the procedure for the appointment of councillors;

1.2.4 financing of the Authority;

11.5 establishment of a Complaints and Compliance Committee;

1.2.6 appointment of Inspectors; and

1.2.7 creation 6f new offences and penalties.

1.3 Judged by the stated objectives of the Bill1 it is very clear that the Bill is likely to have far reaching implications for the telecommunications sector. Our commentary follows the sequence of the Bill without necessarily dealing with all the sections of the Bill.

2. AD SECTION 5: AMENDMENT OF SECTION 3 OF THE ICASA ACT

2.1 Section 5 of the ICASA Amendment Bill appears to be aimed at changing the name ICASA to Electronic Communications Authority of South Africa (ECASA) This seems to us to be a meaningless proposal because if the Regulatory Agency is also going to be the Regulator of the Post Office as seem to be envisioned in section 5(c) of the Bill1 the ECASA name will be inappropriate. The core business of the Post office includes snail mail which cannot be considered to be electronic communication.

2.2 Moreover: the name ICASA, having evolved over a period of five years, has become a brand recognised as such in the arena of telecommunications regulations throughout the world. In our experience brands are quite expensive to build and wherever possible, name changes should be avoided at all costs.

2.3 We therefore submit that the name ICASA should be retained. if:

however there are compelling reasons for the name change then an appropriate name which accurately matches the activities of the Regulator would have to be Identified especially in the absence of a white paper setting all the policy considerations for the ICASA Amendment Bill.

3. AD SECTION 8 AMENDMENT TO SECTION 5 OF THE ICASA ACT

3.1 Section 8 of the ICASA Amendment Bill seeks to amend section 5 of the ICASA Act by replacing the procedure for the appointment of the ICASA Councillors by Parliament and bestows the authority to make these appointments to the Minister of Communications on the recommendation of an independent and impartial selection panel constituted ad hoc by the Minister.

3.2 This proposed procedure for the appointment of Councillors is a retrogressive move and may conflict with the World Trade Organisation (WTO) Regulation Reference Paper which defines the structure of telecommunications regulations as follows1:

3.2.1 Minister's roles are to set policies in the national interest, without conflicting concerns based on their role as owners of telecommunications operators;

3.2.2 Separate regulatory authorities are able to implement government policy In an objective and impartial manner. The separation of regulators from state-owned telecommunications operators increases the ability of regulators to act impartially towards all market participants.

3.2. 3 Market confidence in the impartiality of regulatory decisions generally Increases with the degree of Independence from both government and operators. Such market confidence promotes increased foreign and domestic investment in both incumbent operators and new entrants.

3.3 The role envisaged for the Minister in the ICASA Amendment Bill in the appointment of the ICASA Council is worrisome given the Minister of Communications' direct shareholding in Telkom as well as interests in Sentech and the SNO. This may fuel perception that the Regulator is not insulated from political and commercial influence and could fall foul of the WTO requirement set out in the Reference Paper; and accordingly undermine confidence in the South African communications regulatory environment.

Article 5 of the WTO's Reference Paper stipulates that the regulatory body is separate from, and not accountable to, any supplier of basic telecommunications services. The decision of and the procedures used by regulators shall be impartial with respect to all market participants. It is doubtful if the current proposal envisaged In section 8 of the Bill will satisfy these requirements given the Minister of Communications' direct shareholding in Telkom, interests in Sentech and the SNO.

These provisions are also problematic in as far as it relates to the ITU definition of the regulatory independence. The ITU defines separate regulator" as being "independent" in terms of finance, structure and decision making from the operator and the relevant government ministry. It Is our view that the Minister's role in the appointment of the Councillors as envisaged In the Bill fails to comply with this definition In many respects. This view is also supported by the interpretation of regulatory independence in other Jurisdictions such as the United States. In the United States the Federal Communications Commission (FCC) promotes the following notion of independence:

"An effective regulator should be independent from those it regulates protected from political pressure, and given the full ability to regulate the market by making policy and enforcement decisions. The regulator should have the authority and Jurisdiction to carry out its regulatory and enforcement functions effectively and unambiguously. And the regulator must be adequately funded from reliable and predictable revenue sources".

3.4 Not only is the problem with the appointment process, but section ~A of the Bill enjoins the Minister to establish a performance management system to monitor and evaluate the performance of the Chairperson of the Regulator, with no role defined for Parliament. What should even worry Parliament more is the role envisaged for the Ministers of Finance and Communications in the ICASA Amendment Bill on funding requirements of the Regulator.

3.5 Parliament is advised to be circumspect in its consideration of the appointment procedures Performance management of the Chairperson of the Regulator by the Minister and the funding formulae proposed. In this regard WB point Parliament to the Instructive opinion delivered by Langa DP in matter of the New National Party of South Africa v/s Government of the Republic of South Africa and Others where he was considering the accounting responsibilities of the Independent Electoral Commission (IEC), as a state institution supporting constitutional democracy as provided for in Chapter 9 of the Constitution of the of the Republic of South Africa of I 996, Langa DP made the point that all institutions supporting constitutional democracy:

3.5.1 are independent and subject only to the Constitution and the law;

3.5.2 are accountable to the National Assembly;

3.5.3 must every year report on their activities and functions to the National Assembly;

3.5.4 must be protected by other organs of state through legislative and other measures to insure their independence, impartiality, dignity and effectiveness; and

3.5.5 should not be interfered with in the execution of its functions by any person or organ of state.

The question arising from making reference to Chapter 9 of the Constitution is whether it applies to the South African Broadcasting and Telecommunications Regulator. In our view it does apply by virtue of section 192 of the Constitution which enjoins Parliament to establish an Independent Authority to regulate Broadcasting. While section 192 is specific to broadcasting, we submit that the merger In 2000 of the Broadcasting and Telecommunications Regulators was an irrevocable statement by Parliament of its commitment to value the independence for authorities entrusted with the responsibility of regulating broadcasting and telecommunications. Not only Is this concern a matter of constitutionalism but Is also expressed in the commitments that South Africa has made to the WTO which lead to the separation of the then South African Telecommunications Regulatory Authority (SATRA) from the Department of Communications and its establishment as an independent Regulatory Agency in I 997

3.6 Equally telling in Langa DP's ruling in the New National Party of South Africa’s case was his comment on the notions of administrative and financial independence when he opined that the Departments of Home Affairs and State Expenditure as well as the Minister of Finance failed to appreciate the true imports of the Constitution on the independence of constitutional institutions and asserted that it is for:

"Parliament and not the Executive Arm of Government to provide funding reasonably necessary for [a constitutional institution] to carry out its ... mandate".

3.7 The funding of regulatory agencies, even if not established through a Constitution is a key measure of the independence of the regulator. Increasingly regulators are funded from licence and spectrum fees. rather than government appropriations. And funding from sources other than government appropriations is seen as a sign of greater independence for the regulator.

3.8 The appointment of office bearer of commissions and councils of independent institutions1 as provided for in the Constitution, are generally done by the President on the recommendation of Parliament. This Is the case with the Public Protector, the Human Rights Commission and the Commission for Gender Equality. In view of this a change in the procedure for the appointment councillors - taking the responsibility away from Parliament and placing it with the Minister will be a radical departure from the appointment norms of office bearers of independent institutions which have evolved over the last ten years.

3.9 In view of the above, MTN submits that Parliament should;

3.9.1 retain the appointment procedures for the appointment of Councillors as set out in the current ICASA Act;

3.9.2 refrain from abdicating its responsibility to the Executive arm of Government for allocating adequate resources to the Regulator as Langa DP has cautioned in his opinion in the New National Party of South Africa case; and

3.9.3 not give up its power for receiving annual report from the Regulator in favour of a performance management system between the Minister of Communications and the Chairperson of the Regulator.

4. AD SECTION 10: INSERTION OF SECTION 6A IN THE ICASA ACT

4.1 The proposed section 6A in the Bill seems to suggest that the Minister must establish a performance management system to monitor the performance of the Chairperson and other Councillors MTN does not support this provision. In this regard MTN reiterate Its view as expressed In paragraph 3 above. We also note that section 6A(3) of the Bill enjoins the Chairperson of the Regulator to conclude a performance agreement with other Councillors. It seems to us that the Council must be managed collectively and the most effective instrument is the annual reports presented to Parliament by the Regulator.

5. AD SECTION OF 13: AMENDMENT OF SECTION 9 OF THE ICASA ACT

5.1 Section 13 provides that a Councillor's term of office is for the rest of the period of the predecessor’s term unless the Minister directs that such Councillor holds office for a longer period. This provision is problematic. We re-iterate our view that the appointment of ICASA Councillors should be an exclusive responsibility of Parliament.

6. AD SECTION 14.: INSERTION OF SECTION 11A IN THE ICASA ACT

MTN supports the provisions of section 1 IA in the Bill which seems to suggest that the Council and the Committees contemplated in the ICASA Act must prepare and keep minutes of the proceeding of every meeting of the Council or committee and cause copies of such minutes to be circulated to all councillors or members of the Committee. This provision will promote transparency and fair administrative practice within ICASA.

7. AD SECTION 7: INSERTION OF SECTION 4C(?)

7.1. Section 4C(7) of the Bill seems to propose that the findings made by the Authority will be made "enforceable and binding on all licensees and other stakeholders In the postal and communications sectors to the extent that such findings are applicable to their regulated activities."

This particular section is problematic in many respects.

7.2 The Bill must provide reasonable guidance in order to enable a person to understand what obligations are imposed upon him or her. This is a fundamental requirement of the rule of law. This section is defective in that it fails to provide 'fair warning' to affected parties of the conduct that is expected of them. The ability of persons to regulate their affairs in the shadow of the law is a defining feature of the rule of law.

The reasons why a vague enactment violates the rule emerge clearly from the dictum of Holmes J in Grayned v City of Rockford 408 US 104 (1972) at 108-9:

It is a basic principle of due process that an enactment is void for vagueness if its prohibitions are not clearly defined Vague laws offend several important values. First, because we assume that man is free to steer between lawful and unlawful conduct we insist that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he can act accordingly. Vague laws may trap the innocent by not providing fair warning. Second, if arbitrary and discriminatory enforcement is to be prevented laws must provide explicit standards for those who apply them. A vague law impermissibly delegates basic policy matters to policemen, judges and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application.

Mokgoro J made the following statement in President of the Republic of South Africa V Hugo 19974 SA I (CC) para 102:

"The need for accessibility, precision and general application flow from the concept of the rule of law. A person should be able to know of the law and be able to conform his or her conduct according to the law".

Any person must know whether or not an enquiry relates to him and whether or not the enquiry will culminate in a ruling that may be prejudicial to him at some future time. As an enquiry is the call for information it is difficult to foresee for any potential participant at the beginning of the enquiry how to address the issues raised in such enquiry. As a result MTN submits that no findings can be made enforceable or binding. After any findings have been made and if It is felt necessary to address any issues that would relate to all licensees and other stakeholders, the Authority should then proceed with the process to publish regulations. It is through regulation that any regulatory Authority should address issues of a general nature1 not through findings that entities may not be aware apply to them.

7.3 Furthermore, the proposed section 4C(7) results in a manifest lack of certainty:

7.3.1 This section makes use of an expression which is not defined9 namely "other stakeholders";

7.3.2 It is not clear which entities fall within the meaning of the term "other stakeholders"

7,3.3 It is not clear how or in what way or which factors or circumstances ought to be taken Into account when assessing 'the extent that such findings are applicable to regulated activities"

As a result we submit that this section is void for vagueness and should be deleted.

7,4 In any event there is ample scope in the Bill to address issues of non compliance with the Act or licences through the establishment of the Complaints and Compliance Committee in terms of Sections 1 7A to 17H.

7.5 This section further creates ambiguity in terms of certain sections of the Convergence Bill. The Convergence Rill in Chapter 10 (Competition matters) currently prescribes the circumstances under which the Authority must prescribe procedures for complaints and the monitoring and investigations of such actions that ensure the protection of consumer interests.

The Existence of these provisions and the provisions in the proposed Bill creates the possibility that the Authority could choose which enquiry or investigation process to follow. This ambiguity creates ample scope for uncertainty and as a result, for all the reason stated above, MTN submits that this section should be deleted.

B. AD SECTION 16: INSERTION OF SECTION 14A. 14B. 14C AND 14D IN THE ICASA ACT

8.1 Section 14A (2) stipulates that where an expert Is not a citizen or permanent resident of the Republic, the minister must approve the appointment before such expert is appointed, This provision is problematic in that it attempts to take away the ability of the regulator to make decisions and to manage the Authority on a day-to-day basis without undue interference. A regulatory authority's freedom to operate independently is important not merely for the sake of political principles but for effectiveness . This provision also falls foul of Langa DPs ruling in the New National Party of South Africa case which spoke against the conflation of the administrative responsibilities of an independent institution with those of a Ministry.

9. AD SECTION 14B: TRANSFER OF STAFF

9.1 ICASA has in the last five years gone through major changes especially when the merger of the 113A and SATRA took place. Mergers come with huge responsibilities which include:

9.1.1 Organisational structural designs;

9.1.2 Integration of IT systems;

9.1.3 Job Evaluations;

9.1.4 Standardisations of the conditions of service; and

9.1.5 The review of corporate policies,

9.2 The challenge for the new Regulator would be the integration of the Postal Regulator in a changing regulatory environment where demand on the resources of the Regulator would be high given the pressure that would be on the Regulator to align its regulations with the Convergence Legislation that is currently receiving the attention of Parliament

10. AD SECTION 17 AMENDMENT OF SECTION 15 OF THE ICASA ACT

10.1 Section 15 (1A) of the Bill states that the Authority may receive money determined in any other manner as may be agreed between the Minister and the Minister of Finance and approved by Cabinet As discussed in paragraph 3.4 above MTN does not support this provision. The current formulation of this provision does not give certainty on how the regulator will be funded. international precedents regarding financing of Regulatory Authorities indicate that financing of the Regulator through monies derived from licence fees is the first step In attaining true regulatory independence and autonomy. MTN expressed its support for the proposal which sought to achieve this in our submission of 3 February 2003 to the Department of Communications (DOC) on the Convergence Bill.

11 AD SECTION 19:. AMENDMENT OF SECTION 17 OF THE ICASA ACT

11.1 Section 1 7A of the Bill provides for an establishment of a Complaint and Compliance Committee consisting of no more than seven members and one of whom is a Councillor. MTN expressed its support for this proposal which sought to achieve this in one of the earlier drafts of the Convergence Bill published by the DoC. in its submission MTN welcomed the establishment of a Monitoring and Complaints Committee to resolve communications related disputes. MTN believes that a dedicated Committee which is led by experienced legal professionals assisted by experts in relevant fields that have been specifically employed for this task by ICASA Will deal with complaints more expeditiously in a procedurally correct manner and will make the ultimate decisions of ICASA a lot more robust and defensible.

12. AD SECTION 17 PROCEDURE OF COMPLAINTS AND COMPLIANCE COMMITTEE

12.1 Section 17C 1(a) of the Bill provides that a person who has a reason to believe that a licensee Is guilty of non-compliance with the terms and conditions of its licence or with this Act or the underlying statute may lodge a complaint with the Authority within 60 days of becoming aware of the alleged non-compliance. The "reason to believe test' used as H yard stick to lodge a complaint to the Authority is very subjective. MTN proposes that the test used to refer the complaints to the Authority must be objective to streamline the cases that would be referred to the Authority. The "reason to believe test in the discretion of the complainant is inappropriate. If left unchecked in its current form it could pave the way for frivolous complaints being lodged with the regulator who has an obligation to investigate. It should still remain a feature of our law that "he who alledges must prove"

13. AD SECTION 17D: FINDINGS BY COMPLAINTS AND COMPLIANCE COMMITTEE

13.1 Section 17D of the Bill seems to suggest that the Complaints and Compliance Committee must make a finding within 90 days of the date of the conclusion of the hearing. A period of 60 days to make a finding appears to be too long and my harm commercial interests. MTN proposes that this period be reduced to at least 60 days.

14 CONCLUSION

14.1 It is clear from our submission that the Bill has many problematic provisions in Its current form. If the Bill is enacted in its current formulation it will take the South African communications industry a number of steps backwards. We believe that rather than moving backwards we should endeavour to entrech ICASA by giving it more autonomy and independence through a funding model that allows ICASA to keep a percentage of licence and spectrum fees that it collects. Problems with the current appointment procedures of Counclilors which have occasionally failed to identify the right skills for ICASA should be addressed. However the answer is not to shift the power of making these appointments from Parliament to the Minister of Communications and an ad hoc panel.