1.1. The second national operator, SNO Telecommunications (Pty) Ltd, (the SNO") thanks the Parliamentary Portfolio Committee on Communications (the "PPPC") for the opportunity to comment on the Independent Communications Authority of South Africa Bill (the "ICASA Amendment Bill"). The SNO would also be pleased to participate in any public hearings that the PPPC might hold and will require a timeslot of one hour for this purpose.

1.2. The ICASA Amendment Bill was published in the Gazette on 20 September 2005, and the PPPC has called for written submissions by 10 October 2005. In light of the very short period of time allowed for public comment, we have confined our comments to a discussion of the key issues at a high level. The SNO reserves the right to provide drafting comments to the PPPC before the SNO makes its oral submission before Parliament.

1.3. The ICASA Amendment Bill is proposed to amend the Independent Communications Authority of South Africa Act ("the ICASA Act"), which is the primary piece of legislation governing the regulator, the Independent Communications Authority of South Africa ("ICASA:)". (Even though it is proposed to change the name of ICASA to the Electronic Communications Authority of South Africa, for the sake of convenience and consistency, we have referred to the regulator as "ICASA" in this submission).

1.4. The ICASA Amendment Bill is meant to complement the Convergence Bill. It is therefore unfortunate that the two pieces of draft legislation were not published for comment simultaneously. The SNO's submission on the ICASA Amendment Bill nevertheless should be read in conjunction with its submission on the Convergence Bill.

GENERAL COMMENTS ON THE ICASA AMENDMENT BELL

2.1. As discussed in the SNO's submission on the Convergence Bill, one of the key aims of the Convergence Bill has been to harmonise the rules relating to infrastructure regulation across broadcasting infrastructures and telecommunication networks. A by-product of this objective has been to harmonise the general powers and functions of ICASA in relation to telecommunications and broadcasting, which is a process that the ICASA Amendment Bill seeks to complete. This is a welcome move, as there are a number of discrepancies between the powers and functions of ICASA under the current telecommunications and broadcasting legislation.

2.2. An additional feature of the ICASA Amendment Bill is that it seeks to absorb the Postal Regulator into the ICASA umbrella, thereby extending ICASA's jurisdiction to the regulation of the postal sector as well. (The Postal Regulator was previously constituted as a division of the Department of Communications (the DOC") in terms of the Postal Service Act 124 of 1998 (the Postal Service Act"). The desirability of merging the Postal Regulator with ICASA is discussed in greater detail in clause 5 below).

2.3. Finally, the ICASA Amendment Bill seeks to include the Electronic Communications and Transactions Act 25 of 2002 (the ECT Act") (in relation to the definition of underlying statues") within the list of underlying statutes in terms of which ICASA is required to regulate. The reference to the ECT Act appears out of place, particularly as this statute does not give ICASA the jurisdiction to regulate any of the matters governed by the ECT Act.

3. KEY PROBLEM AREAS WITH THE ICASA AMENDMENT BILL

3.1. Although the ICASA Amendment Bill is a vital offshoot of the Convergence Bill, there are a number of key problem areas with the proposed legislation, which briefly are as follows:

3.1.1. Firstly, like the Convergence Bill, the ICASA Amendment Bill has been published in a context where very little time has been allowed for public comment. In effect, the public has been given less than three weeks to respond in writing to the proposed legislation, which it is respectfully submitted is far too short a period for this purpose.

3.1.2. Secondly, it is problematic that the ICASA Amendment Bill has been published in a policy vacuum, particularly in light of the far-reaching changes that the proposed legislation will have on the structure and functions of ICASA. Some of the changes contemplated include the extension of the jurisdiction of ICASA to the postal services sector and the establishment of the Complaints and Compliance Committee (the CCC") as a quasi-tribunal to deal with disputes.

3.1.3. Thirdly, a number of provisions in the ICASA Amendment Bill will have the effect of further encroaching upon the already compromised independence of ICASA from the executive arm of government, which is problematic from both a policy point of view and a constitutional point of view.

3.2. While the first two concerns articulated in clauses 3.1.1 and 3.1.2 are self-explanatory, the third concern indicated in clause 3.1.3 has adverse implications for the future of telecommunications regulation in South Africa, and will be discussed in depth below. In the absence of any prior policy formulation process, it is also not clear whether the implications of integrating the Postal Regulator into ICASA have been fully considered. We will also touch on this briefly below.

4. IMPLICATIONS FOR THE IN DEPENDENCE OF ICASA

4.1. Preliminary comments

4.1.1. One of the most notable features of the ICASA Amendment Bill is that it will diminish the independence of ICASA from the executive arm of government, in this case the Ministry of Communications (the "Ministry").

4.1.2. In particular, the ICASA Amendment Bill proposes to give the Minister the power to appoint and remove ICASA councillors, to determine ICASA's level of funding, to approve the appointment of external advisors, to determine the tenure of councillors, to manage their performance, and even to manage their work (through the chairperson and performance agreements).

4.1.3. Not only are there serious policy concerns with doing this, it is respectfully submitted that a number of the proposed amendments are unconstitutional. Moreover, we believe that the intrusion of the executive into the realm of regulation is at odds with the objectives of both the Convergence Bill and the ICASA Act, which both envisage a separation of responsibilities between the executive and the regulator.

4.1.4. We will discuss our policy concerns and constitutional concerns separately below. However, before doing so, we will first give some background to the reform of the telecommunications sector in South Africa (which is of primary concern to the SNO), which will help to place our subsequent comments into context.

4.2. Background to regulatory reform of the telecommunications in South Africa

4.2.1. Telephony in South Africa was traditionally provided as a public utility service administered by the government. Because no or limited competition was permitted in the telecommunications market, the government effectively acted as operator, regulator and policy maker in respect of telecommunications services. However, this state of affairs became untenable once competition was introduced into the market. This is because the advent of competition exposed the government to structural conflicts of interest which made it impracticable for the state to act as an operator and as a regulator whilst it was simultaneously setting policy for the sector - both in relation to its own operations and for its competitors.

4.2.2. The push for market liberalisation, particularly from the mobile cellular and the VANS (value added network services) sectors prompted South Africa to introduce a separation of powers between policy-making, regulation and operator management in the telecommunications industry, in line with international trends at the time. (For more information on international best practices in this regard, kindly refer to Annexure A). Moreover, South Africa had committed to the establishment of an independent telecommunications regulator as a requirement to become a member of the WTO (World Trade Organisation).7 Although the reforms were well-intentioned, in reality the demarcation between these three areas was never altogether clear, particularly in relation to telecommunications.

4.2.3. The effect of the reforms was as follows:

4.2.3.1. The incumbent fixed line operator, Telkom SA Limited ("Telkom") was corporatised as a distinct entity apart from the government.

4.2.3.2. All regulatory responsibilities for the sector which had previously vested in the state or the incumbent were reallocated to SATRA (the South African Telecommunications Regulatory Authority), which was established as the regulator for the telecommunications industry, and which was later merged with the broadcasting regulator, the IBA (Independent Broadcasting Authority) to form ICASA in anticipation of convergence.

4.2.3.3.The Ministry was assigned the primary responsibility for policy making in the telecommunications sector, although the Ministry's role was not confined to this. In particular:

(a) the Ministry was granted certain co-regulatory functions concurrent with ICASA (particularly in relation to licensing and the prescription of regulations) by the Telecommunications Act;

(b) the Ministry was empowered to act as the South African government's shareholder representative in a number of communications parastatals; and

(c) the ICASA Act also granted the Ministry an indirect regulatory oversight function in that it required ICASA to report to Parliament via the Ministry.

4.3. Policy principles underlying the notion of enforcing a separation of powers between the executive and the regulator

4.3.1. The notion of separation of powers is underpinned by a number of very important policy drivers. Perhaps the most overriding objective is to minimise conflicts of interest between the regulator, the executive and telecommunication companies in as far as is possible - as a precursor to the introduction and promotion of effective competition.

4.3.2. In reality it is impossible for the regulator to ever be completely independent from the executive arm of government, not only because the regulator is technically an organ of state, but also because of the regulator's mandate, which is to implement government policy. It is also not always possible to achieve a complete separation of powers between the executive and operations management, particularly if the state retains a shareholding in the incumbent or in other communications companies.

4.3.3. Nevertheless, there are a number of checks and balances that can be put in place to demarcate the boundaries between the executive, the regulator and the operators as far as is possible. Although there is no single, 'one-size4its-all-solution, some of these mechanisms include providing the regulator with an independent budget, giving it freedom in employment processes, or by appointing several 'commissioners' in the form of a collegial body with fixed staggered terms as opposed to appointing a single individual to fulfil this role. Another way of protecting the independence of the regulator is to place the accountability for oversight of the regulator in the hands of a state department other than the line ministry that is responsible for setting policy for the sector.

4.3.4. In this context, the SNO is concerned about the fact that the ICASA Amendment Bill is seeking to dispense with many of these checks and balances. From a pure policy point of view, the SNO does not believe that this is in the interests of sound governance and regulation. It is respectfully submitted that further compromising the independence of the regulator will only serve to exacerbate the structural conflicts of interests that the Ministry is already exposed to, and could ultimately precipitate policy failure. If this happens, then this will have negative effects on the South African economy and will deter otherwise willing international investors from entering the local market,

4.4. Constitutional problems with compromising the independence of the regulator

4.4.1. Policy considerations aside, and from a strictly legal point of view, the compromised levels of regulatory independence envisaged in the ICASA Amendment Bill undermine ICASA's status as a Chapter 9 institution under the Constitution (Constitution of the Republic of South Africa Act 108 of 1996).

4.4.2. Chapter 9 of the Constitution seeks to confer extra protection on selected government agencies by virtue of their role and mandate that they fulfil vis-a-vis the government. The specific institutions that Chapter 9 safeguards include the Public Protector (which is empowered to investigate government corruption), the Human Rights Commission (whose mandate it is to investigate human rights abuses), and the Auditor-General (which is charged with the responsibility of auditing the finances of the government), to mention a but few.

4.4.3. The significance of being listed as a Chapter 9 institution is that the Constitution mandates that these bodies must be independent of day-to-day government interference. Specifically, the Constitution obligates Chapter 9 institutions to account to the National Assembly in the legislative arm of government rather than to a line ministry in the executive branch of government.

4.1.4. Although the IBA was not specifically listed as a Chapter 9 institution in section 181 of the Constitution, section 192 (which is housed in Chapter 9) contains a provision to the effect that national legislation must provide for the establishment of an independent authority to regulate broadcasting in the national interest, which would have been the BA at the time, and which has now been superseded by ICASA.

4.1.5. Although no similar constitutional protection was expressly granted to the telecommunications regulator, SATRA, in the Constitution, SATRA and the IBA subsequently merged to form ICASA in 2000 in anticipation of increasing convergence between the broadcasting and telecom sectors. The constitutional status of the merged regulator as a Chapter 9 institution was also never resolved. However, as a general rule, ICASA was given a much higher level of independence from the Ministry to regulate the broadcasting sector than in relation to the telecommunications sector.

4.1.6. The Convergence Bill seeks to consolidate the existing broadcasting and telecommunications legislation under one banner. The effect of this is that it will no longer be possible to create differential levels of independence of ICASA in relation to infrastructure and content regulation as was the case in the past.

4.1.7. Moreover, the fact that the Convergence Bill will have the effect of harmonizing infrastructure regulation across telecommunications networks (which falls outside the protection of section 192) and broadcasting networks (which are protected by section 192) implies that the ICASA Amendment Bill must afford ICASA the same level of institutional independence from the executive arm of government as was afforded to It under the Independent Broadcasting Authority Act 153 of 1993 ("the IBA Act").

4.1.8. Anything falling short of this will render the ICASA Amendment Bill vulnerable to being set aside on constitutional review, and should be rejected on this basis.

5. THE ROLE OF THE REGULATOR IN RELATION TO POSTAL SERVICES

5.1. As indicated above, telecommunications was previously administered under the auspices of the state along with postal services. The SAPT, often colloquially referred to as the Post Office was run through the office of the Minister of Transport and Communications and was operational in both the postal and telecommunications sectors.

5.2. In the 1998 White Paper on Postal Policy (the Postal White Paper), the policy decision was taken to separate the regulatory authority from any operational functions. Accordingly in October 1991, posts and telecommunications were separated from each other and freed from direct ministerial control. On 30 September 1991 Telkom and the South African Post Office Limited ("the Post Office") were incorporated as public companies, with the state as the sole shareholder. However, it was decided to retain the Postal Regulator as a division of the DoC in order to consolidate expertise and knowledge."

5.3. The Postal White Paper stipulated that, in order to facilitate the effective delivery of universal postal services to disadvantaged communities, a set of reserved postal services conferring exclusive rights to the Post Office should be established. The Postal White Paper undertook that the liberalisation of the postal sector should be phased in gradually over time, in line with the government's broader policy of managed liberalisation and in line with international benchmarks in other countries around the world. As the postal services sector becomes more competitive, retaining the Postal Regulator within the DoC will increasingly expose the DoC to conflicts of interest in this regard, particularly as the Ministry acts as the state's shareholder representative in SAPO.

5.4. In our view, this is most likely the reason that the DoC for the drive to structurally separate the Postal Regulator from the DoC. In 2004 the Department of Communications (the "DoC") issued a tender for advice on the transfer of the Postal Regulator into ICASA. However that tender was later abandoned. There has not, to our knowledge, been any other policy or statement of intent published by the DOC dealing in detail with the most optimal structure for separating the Postal Regulator from the DoC.

5.5. Internationally, there appear to be two broad methodologies for separating the regulatory authority responsible for postal services from the government as follows:

5.5.1. The first methodology is to consolidate the responsibility for broadcasting, postal and telecommunications regulation in the hands of a single communications regulator. An example of where this has been done is in Ireland, where the regulator, the Commission for Communications Regulation has been granted jurisdiction over telecommunications, broadcasting and postal services.

5.5.1. The second methodology is to establish the postal authority as an independent statutory body that is separate both from the line ministry having oversight over it and that is separate from the regulatory authority responsible for telecommunications and/or broadcasting. An example of where this has been done is in the United Kingdom, where the Postal Services Commission (POSTCOM) has been established as an independent entity from the Department of Trade and Industry and as an independent entity from the Office of Communications (OFCOM), which is responsible for the regulation of telecommunications and broadcasting services.

5.6. The ICASA Amendment Bill finds favour with the first approach, namely to establish ICASA as a super regulator with jurisdiction over the telecommunications, broadcasting and postal sectors. As such, it is envisaged that the regulatory functions that are currently being performed by the Postal Regulator will be transferred to ICASA.

5.7. Given the far-reaching implications of merging the two regulators, it is unfortunate that a prior policy process was not followed along the lines of the Postal White Paper process in 1988. As a result, many of the underlying advantages and disadvantages of proceeding with this course of action remain unventilated. Without taking a firm view on the matter, some of the potential problem areas that the SNO has identified with doing this include the following:

5.7.1. One disadvantage of absorbing the Postal Regulator into ICASA is that this could further dilute the already stretched resources available to ICASA

5.7.2. A secondary concern is that the practical implications of the transfer could impact on the processes and relationships already under strain within ICASA, in trying to address a fast-changing telecommunications and broadcasting landscape, against a backdrop of changing legislation.

SPECIFIC COMMENTS ON THE BILL

For ease of reference, all references to section numbers in relation to the ICASA Amendment Act will refer to section numbers as they will appear in the principal statute once it is amended, in this case the ICASA Act.

6. INTRODUCTORY PROVISIONS (CHAPTER I)

6.1. Proposed name change of the regulator to the "Electronic Communications Authority of South Africa" (section 1)

6.1.1. The ICASA Amendment Bill seeks to change the name of the regulator from the Independent Communications Authority of South Africa to the Electronic Communications Authority of South Africa ("ECASA").

6.1.2. Our primary concern with this is that it sends out a clear message that the independence of ICASA is not to be accorded a high level of priority in the future, which is unfortunately confirmed in other parts of the ICASA Amendment Bill. This shift on the part of the policy makers represents a significant departure from the 1996 White Paper on Telecommunications Policy (the Telecommunications White Paper'), which states:

"An independent and impartial telecommunications regulatory authority shall be established... The independence of the Regulator is necessary to ensure its impartiality. Independence has three aspects: independence from the operational organisations(s) responsible for building and operating the public telecommunications infrastructure and providing telecommunications services (eg Telkom); independence from other interested parties, such as industrial interests in me telecommunications sector; independence from the Government in dealing with its mandated functions, once the general framework of telecommunications policy has been set.'

6.1.3. A secondary concern is that the use of the term electronic to describe ICASA is not appropriate in relation to postal services, many of which are not strictly electronic (such as courier or mail delivery services, for example).

6.1.4. It is accordingly recommended that ICASA's current name remain unchanged.

6.2. Inclusion of the ECT Act within the definition of "underlying statutes" (section 1)

6.2.1. The ICASA Amendment Bill proposes to amend the definition of underlying statutes by deleting the references to the IBA Act and to the Telecommunications Act (which are to be repealed and replaced by the Convergence Bill), and by including references to the Convergence Bill, Postal Services Act, and the ECT Act,

6.2.2. As indicated above, the references to the ECT Act do not make any sense, given that the ECT Act does not confer any powers on ICASA to regulate any of the ecommerce related activities governed by that legislation. The reference to the ECT Act should accordingly be deleted from this definition.

6.3. Defining what is meant by "communications" (section 1)

6.3.1. There are numerous sections in the ICASA Amendment Bill that refer to "communications and postal services without defining what this means. Moreover, the ICASA Amendment Bill uses inconsistent terms to refer to the concept of communications/electronic communications.

6.3.1. It is suggested that a uniform term be adopted, and that the ICASA Amendment Bill include a inclusive definition of 'communications" which should be defined to encompass telecommunications, broadcasting and postal services. However, care would need to make sure that the terms used in the ICASA Amendment Bill mirror those used in the Convergence Bill and the Postal Services Act.

7. ELECTRONIC COMMUNICATIONS AUTHORITY OF SOUTH AFRICA (CHAPTER II)

7.1. Establishment of the Electronic Communications Authority of South Africa (section 3)

7.1.1. Section 3 proposes to retain ICASA as is, but under the guise of a different name ("ECASA"), and with extended jurisdiction over postal services. For the reasons indicated above, the name of ICASA should not change to ECASA.

7.1.2. According to section 3(c), ICASA will be deemed to be the Postal Regulator for the purpose of the Postal Services Act. However, aside from section 14B (which deals with the employment status of DoC employees engaged in the Postal Regulator), the ICASA Amendment Bill contains insufficient transitional provisions to regulate the merger between the Postal Regulator and ICASA. This is discussed in greater detail further below.

7.2. Functions of Authority and chairperson (section 4)

7.2.1. The ICASA Amendment Bill proposes to amend the heading of section 4 of the ICASA Act to include reference to the chairperson. In our view, it would be preferable (for the sake of drafting clarity) to deal with the chairperson's powers in another section. Accordingly, it is suggested that the provisions of section 4(5) (which list the chairperson's functions) be incorporated into a standalone section, entitled 'Functions of the chairperson".

7.2.2. The ICASA Amendment Bill proposes to incorporate ICASA's statutory mandate to regulate the sector in terms of the ICASA Act, the underlying statutes and other laws in section 4(1). The ICASA Amendment Bill also proposes to introduce a new subsection into section 4(3), which lists ICASA's specific powers. Once again (and for the sake of drafting clarity), it is proposed that sections 4(1) and 4(3) be housed in their own standalone sections, dealing with the functions of ICASA and the powers of ICASA respectively.

7.2.3. In relation to the powers listed in section 4(3), there are certain powers that may be missing. For example, section 4(3) does not specifically give ICASA the power to make regulations either in terms of the ICASA Act or in terms of the underlying legislation. Another omission from section 4(3) is the inclusion of a wide, catch-all which would entitle ICASA to perform any function necessary to give effect to the objects of and its powers and function under the ICASA Act and the underlying legislation.

7.3. Register of licences (section 4A)

7.3.1. Section 4A(1) obliges ICASA to keep a register of licences that have been "granted in terms of this Act".

7.3.2. There are two problems with the wording of this clause:

7.3.2.1. The first problem is that the wording continues to confuse the basic distinction between individual licences (which require the pre- approval of the regulator) and class licences (for which no regulatory pre-approval is required). The use of the word "grant" in this context is inappropriate, because class licences are not strictly granted by ICASA, although licensees may be required to pre-notify ICASA of their intention to provide telecommunication services in terms of a class licence.

7.3.2.2. The second problem is that licences are not granted in terms of the ICASA Act, but in terms of the Convergence Bill. The reference to the words "this Act" in this clause is accordingly incorrect.

7.3.3. For the sake of simplicity, it is suggested that the wording of clause 4A(1) be amended to mandate ICASA to keep a register of individual and class licences that have been granted by or pre-notified to it respectively.

7.3.4. Clause 4A(1) also requires ICASA to record amendments to and transfers of licences. In addition, it is suggested that this be expanded to include licence revocations (in the case of individual licences) and licence deregistrations (in the case of class licences).

7.4. Inquiries by Authority (section 4B) and Conduct of inquiries (section 4C)

7.4.1. Section 4B empowers ICASA to conduct inquiries, and is meant to replace section 27 of the Telecommunications Act and section 28 of the IBA Act.

7.4.2. Section 4B(1) empowers ICASA to hold inquiries on any matter relevant to:

7.4.2.1. the achievement of the objects of the ICASA Act or the underlying statutes;

7.4.2.2. regulations and guidelines passed in terms of the ICASA Act or the underlying statutes;

7.4.2.3. compliance by persons with the ICASA Act, the underlying statutes or any licences granted by ICASA, which is out of place in section 4B, and should appropriately be absorbed into the provisions dealing with the CCC. (The inquiry provisions in section 4B are meant to facilitate the formulation of a policy framework by ICASA on the issues falling within its jurisdiction, whereas the CCC provisions in sections 17A to 17E are meant to provide a process for the referral and adjudication of complaints by persons who do not comply with the telecommunications regulatory framework - which serves a very different purpose from section 4B).

7.4.3. No provision has been made in section 4B(1) for ICASA to conduct inquiries into "the exercise and performance of its powers, functions and duties" in terms of the ICASA Act or the underlying legislation. It is suggested that provision be made for this in section 4B(1).

7.4.4. The envisaged procedure for holding public inquiries (which mirrors that in the existing legislation, with some differences) is as follows:

7.4.4.1. ICASA must give notice of its intention to conduct a public inquiry by giving notice in the Gazette The public must be given at least 60 days (2 months) to respond in writing to the notice.

7.4.4.1.It is unclear whether ICASA must hold oral hearings prior to finalising its findings, or whether this is discretionary. In the interests of transparency and sound public administration, it is suggested that it be made obligatory for ICASA to conduct public hearings, for example on the grounds of urgency.

7,4.4.2. Where ICASA does hold public hearings, section 4B(6)(a) requires it to give notice of the time and place where the public hearings will be held. It is suggested that ICASA be mandated to give such notice in the Gazette within a minimum time period in advance.

7.4.4.3. ICASA must then publish its findings within a maximum period of 180 days (6 months) after the conclusion of the hearing 25 It is not clear what the consequences are if this 6 month period lapses (for example, will the inquiry lapse, and have to recommence afresh thereafter?).

7.4.4.4. The findings published by ICASA in the Gazette are considered to be binding and enforceable on both licensees as well as non-licensees whose activities fall within the scope of the finding. Unfortunately, the relevant section, section 4C(7), does not make provision for a person who is aggrieved by such a finding to be permitted to apply to court to review the finding. It is suggested that this be made explicit in the legislation.

7.4.5. A number of the provisions of sections 4B and 4C deal with the submission and retention of documentation during the course of a public inquiry. It is suggested that these subsections be consolidated into one section dealing with documentation, as these provisions will undoubtedly also apply to the proceedings of the CCC as well, and not only to inquiries.

7.4.6. Section 4C(3) permits ICASA to retain documentation and objects submitted to it during the course of a public inquiry for an unspecified "reasonable period of time". For ease of compliance, it is suggested that this period of time be quantified as a minimum period of between three to five years.

7.5. Constitution of and appointment of councillors to Council (section 5)

7.5.1. Section 5 proposes to give the Minister the power to appoint councillors to the ICASA council (the "Council"). (Currently, the Council is appointed by the state president on the recommendation of the National Assembly of Parliament). The effect of this section is to strip ICASA of its already compromised independence vis-a-vis the executive arm of government. This section is not only unconstitutional, but if passed into law, will expose the Ministry to unacceptable structural conflicts of interest, which is inappropriate in a market that is transitioning to competition.

7.5.2. Under the newly fashioned section 5, the proposed procedure for appointing ICASA councillors is as follows:

7.5.2.1. The Minister must appoint a selection panel by publishing the names of the panel in the Gazette. The public has no say over the constitution of the panel, whose appointment vests solely in the hands of the Ministry.

7.5.2.2. The panel must invite the public to nominate councillors for appointment to the Council and must recommend potential candidates to the Minister from the list of nominees that it receives.

7.5.2.3. If the Minister is not satisfied, the Minister may request the panel to review its recommendations. Although the relevant section, section 5(1 C), does not expressly permit the Minister to substitute his or her decision for that of the panel, the Minister can keep on rejecting the panel's recommendations until the panel offers a recommendation that the Minister wants. In this way, the Minister has the ultimate say over the selection ICASA councillors.

7.5.3. As regards the chairperson, the ICASA Amendment Bill proposes to give the Minister the direct power to appoint the chairperson, rather than the state president, which is currently the case.

7.5.4. The proposed new procedures for appointing ICASA councillors and for appointing the chairperson are unconstitutional and should be rejected on this basis. The policy makers are urged to leave the current sections 5(1) and 5(2) of the ICASA Act as they are.

7.5.5. Section 5(3) sets out the qualifications that ICASA councillors must posses in order to be appointed to the Council. As regards section 5(3)(b)(ii), it is unclear why the references to "technology frequency band planning and "business practice have been deleted. It is suggested that these be reinstated.

7.6. Performance management system (section 6A)

7.6.1. Section 6A requires the Minister to establish a performance management system for the purpose of monitoring and evaluating the performance of the chairperson and the other councillors. Section 6A(3) even goes as far as to require each of the councillors and the chairperson to sign a performance management contract with the Minister, and according to section 12(9), councillors can be removed from office if they fail to sign a performance management contract.

7.6.2. The effect of this section is to render the ICASA councillors directly accountable to the Minister, and completely contrary to the precepts of section 192.

7.7. Term of office of councillors (sections 7 and 9)

7.7.1. Section 7(1)(b) allows for the chairperson to be appointed after the end of his or her term of office. For the sake of consistency with section 9 (which allows for an ordinary ICASA councillor's term of office to be extended by a maximum of one term only), it is suggested that section 7 likewise state expressly that the chairperson's term of office may only be extended for a period of time term.

7.7.2. Section 9(2)(b) has been amended to permit the Minister (rather than the National Assembly, which is currently the case) to extend a councillor's term of office. For the reasons indicated above, the proposed amendment is unconstitutional and should be rejected on this basis.

7.8. Appointment of experts (section 14A)

7.8.1. Section 14A(1) empowers ICASA to appoint experts to assist it in the performance of its functions, which is a welcome inclusion in the ICASA Amendment Bill. However, section 14(2) requires the Minister to approve the appointment of experts who are not South African citizens. Section 14(2) represents an unwarranted intrusion into the independence of the regulator by the executive and should accordingly be deleted.

7.8.2. Section 14A(3) requires ICASA to enter into a written contract of "employment with the experts with who it contracts. The use of the term "employment" is incorrect in this context. Legally speaking, the experts would be hired as subcontractors rather than employees a more appropriate term would be engagement". Section 14A(3) does not make it clear what the effect will be on the validity of such a contract will be if it is not reduced to writing, and in particular whether such a contract will be regarded as being null and void.

7.9. Transfer of staff (section 14B)

7.9.1. Section 14B regulates the transfer of staff engaged in performing Postal Regulator functions at the DoC to ICASA. This section is transitional in its nature and should be contained in Chapter IV of the ICASA Act (Transitional Provisions) rather than in the operational provisions of the ICASA Act.

7.9.2. Section 14B(1) requires ICASA to make all Postal Regulator employees an offer of employment with effect from a date to be determined by the Minister, which may be cumbersome in practice. It would be administratively easier if section 14B(1) provided for the automatic transfer of Postal Regulator employees to ICASA with effect from a date to be determined by the Minister. This would also be more in line with section 197 of the Labour Relations Act 66 of 1995 (the "LRA") which provides for the automatic transfer of contracts of employment from the old employer to the new employer whenever an undertaking is transferred as a going concern. An omission from section 14B(1) is that it does not indicate on what terms and conditions Postal Regulator employees will be transferred to ICASA. In line with section 197(3)(a) of the LRA, it is suggested that the ICASA Amendment Bill make it explicit that ICASA must employ Postal Regulator transferees on terms and conditions of employment that are "on the whole not less favourable to the employees than those on which they were employed by the old employer.'

7.9.2.As regards the pension benefits of Postal Regulator employees, it is unclear to what extent consideration has been given to the Supreme Court of Appeal decision in the Telkom SA Limited v Blom" case. In that case, the applicable pension fund was required to pay Out certain very favourable pension benefits to employees who were engaged in a business that was transferred to another business as a going concern, notwithstanding the fact that their contracts of employment were transferred to the new employer pursuant to section 197. This was because the rules of the fund mandated the payment of very generous benefits if the identity of the employer changed, notwithstanding that the employees' employment was not disrupted. It is not clear whether there is a similar provision in the pension fund rules pertaining to Postal Regulator employees, but clearly this is something to be borne in mind as an unforeseen, and unfunded, liability may arise from the transfer.

7.9.3. A further issue to bear in mind is that if the current funds to which the employees belong are all so-called paragraph (a) funds a substantial portion of the lump sum benefit payable to members in terms of the fund's rules could be tax free (as a result of the application of Formula C of the Second Schedule to the Income Tax Act 58 of 1962). Transferring members' benefits from the current fund to a new non-paragraph (a) retirement fund would result in them losing the entire Formula C benefit. The value of the tax benefit potentially lost could be substantial.

7.10.1. In previous drafts of the Convergence Bill, provision had been made for the ICASA Act to be amended to allow ICASA to retain a portion of licence fees, rather than to remit these to the National Revenue Fund. These references have been omitted from the ICASA Amendment Act, presumably on account of section 13(1) of the Public Finance Management Act 1 of 1999 (the "PFMA") (to which ICASA is subject) which requires all public monies to be paid into the National Revenue Fund (the "NRF"), bar a few exceptions which do not apply to lCASA.

7.10.2. As things currently stand, Section 15(1) of the ICASA Act provides for ICASA to be financed from money appropriated by Parliament. The ICASA Amendment Bill does not seek to amend the existing provisions of section 15, but proposes to introduce a new section, section 15(1A), which makes provision for ICASA to receive money determined in any other manner as may be agreed between the Minister and the Minister of Finance, and approved by Cabinet.

7.10.3. One of the factors that has compromised the independence of ICASA has been the fact that it is under-resourced, and has had insufficient finances to fulfil its statutory and constitutional mandates. Unfortunately, the PFMA does not allow ICASA to retain the monies that it receives by way of licence fees and the like, which would have been the optimal way to ensure the independence of the regulator from the executive arm of government.

7.10.4. However, we are concerned that proposal to give the line ministry to which ICASA accounts, the Ministry of Communications, such a strong say over the budget that is allocated to ICASA, particularly given the multi4aceted role that the Ministry plays within the industry and the structural conflicts of interests that this places the Ministry in. In this regard, it would have been preferable for the ICASA budget to be set directly by the Minister of Finance without reference to the line ministry. It is therefore suggested that section 15(1A) should be amended to allow ICASA to receive money in a manner determined by the Minister of Finance only and approved by Cabinet.

7.10.5. Given the fact that ICASA remains under-resourced, we are concerned that certain protections in the existing legislation (such as section 90 of the Telecommunications Act, for example, which requires telecommunications forums to be funded out of funds made available by Parliament, in consultation with the Minister) have not been repeated in the ICASA Amendment Bill.

8. COMMITTEES (CHAPTER III)

8.1. General comments

8.1.1. Much of section 17 of the ICASA Act has been deleted, and new sections 17A to 17H have been inserted. These sections are intended to create the CCC, which was anticipated in the Convergence Bill as a quasi-tribunal to adjudicate disputes. Presumably, the CCC was meant to alleviate many of the administrative delays that have been experienced to date with the current system of adjudication of complaints by ICASA.

8.1.2. Up until now, the resolution of disputes has been hampered by the fact that there is no tribunal structure that is separate from the Council. Although the current section 17 of the ICASA Act permits the Council to establish standing and special committees for the purposes of adjudicating complaints, at least one councillor must sit on each committee, which slows down the decision-making process.

8.1.3. Unfortunately, the proposed CCC structure does not resolve the problem. This is because the CCC will ultimately still be constituted effectively as a subcommittee of ICASA rather than as a decision-making body in its own right. The ICASA Amendment Bill contemplates a two-tiered decision-making process in terms of which the CCC will investigate, adjudicate and make recommendations to ICASA with respect to complaints, but ICASA will take the final decision. As the ICASA Amendment Bill currently stands, it is proposed that the CCC will function as follows:

8.1.3.1. The CCC must be established by ICASA, and one of its members must be a councillor, and the chairperson must be a high court judge, magistrate, advocate or attorney. It is not clear whether the CCC will be constituted on a permanent or an ad hoc basis.

8.1.3.1. Complaints relating to non-compliance by licensees must be directed to ICASA, which in turn must direct the complaint to the CCC for consideration.

8.1.3.2. The CCC must make a finding on the complaint and must recommend to ICASA what action should be taken against the licensee.

8.1.3,3. ICASA must then take a final decision on the matter. Unfortunately, the introduction of this second tier in the adjudication process will not ease ICASA's current burden or mitigate any of the administrative delays currently being experienced by ICASA.

8.1.4. An alternative model to constituting the CCC as a subcommittee would have been to establish an independent tribunal to adjudicate complaints, along the lines of the Competition Tribunal. We reiterate that it is a great pity that a formal green paper I white paper process was not followed beforehand for the purposes of ascertaining a more optimal complaints adjudication mechanism for ICASA.

8.2. Establishment of the Complaints and Compliance Committee (section 17A)

8.2.1. Section 17A of the ICASA Amendment Bill states that ICASA must establish the CCC. However, it is not clear how the members of the CCC will be selected. We assume it will be up to the Council of ICASA, once appointed by the Minister. If this is the case, then the CCC, like the Council, will not be fully independent of the executive arm of government either.

8.2.2. The selection criteria for appointment to the CCC are set out in section 17A(4). It is suggested that CCC members should not be permitted to have a financial interest in the sector - similarly to sections 6(1 )(f) and 6(1 )(g) of the ICASA Act in relation to councillors. It is also suggested that CCC members should not be public servants, members of parliament or of any provincial legislatures or municipal councils - similarly to sections 6(1 )(c) and 6(1 )(d) of the ICASA Act.

8.3. Functions of the Complaints and Compliance Committee (section 17TB)

Section 17B gives the CCC the jurisdiction to adjudicate on all matters referred to it by ICASA, on complaints received by it and any other allegations of non-compliance with either the ICASA Act or the underlying statutes. In addition, section 17B(b) entitles the CCC to make recommendations to ICASA on the subject matter of section 4B inquiries, which are out of place in this section, as this blurs the different purposes of the section 4B inquiry and section 17 adjudication processes. It is accordingly suggested that section 17B(b) be deleted.

8.4. Procedure of the Complaints and Compliance Committee (section i7C)

8.4.1. Section 17C(1)(a) gives the CCC the jurisdiction to adjudicate complaints relating to non-compliance by licensees. However, section 17B(a)(iii) empowers the CCC to investigate, hear and make findings on all allegations of non-compliance", not only in relation to licensees. A current lacuna in the Telecommunications Act, ICASA is that section 100 does not give ICASA any jurisdiction to investigate and adjudicate instances of non-compliance by non-telecommunication service licensees. It is suggested that the CCC be given the jurisdiction to adjudicate complaints of non-compliance by non-licensees as well as by licensees.

8.4.2. The ICASA Amendment Bill does not state the time period within which a complaint must be submitted. Neither does it state who will have the standing (locus standi) to refer a complaint under this section. Section 17C(2) states that when the CCC hears a matter, it must afford the licensee and the complainant a reasonable period of time to respond and to reply to the response respectively. For ease of compliance, it is suggested that specific time periods be incorporated into this section. The ICASA Amendment Bill also needs to stipulate whether the CCC will have the power to condone the late filing of complaints and/or responses. It is suggested that the power to condone late submissions be included in the legislation rather than be prescribed by way of regulation.

8.4.3. Section 17C(3) requires the CCC to hold oral hearings. In the case of minor complaints, it may not always be necessary to hold oral hearings before the CCC makes a finding. In order to ease its administrative burden, it is suggested that the CCC only be mandated to hold oral hearings where one or more of the parties to the complaint requests this. However, the CCC should be obliged to inform the parties to the complaint of their right to request an oral hearing.

8.4.4. Section 17C(5) empowers ICASA to prescribe regulations relating to the handling of urgent complaints. It is suggested that the broad powers of ICASA to dispense with the ordinary time periods in the case of urgency be captured in the principal legislation and that ICASA be empowered to prescribe more detailed regulations relating to this if needs be.

8.5. Findings by Complaints and Compliance Committee (section 17D)

Section 17D(1) obliges the CCC to make a finding within 90 days from the conclusion of a hearings. Although the incorporation of such a time period is commendable, it is unclear what the consequences will be if this time period is not met. For example, will the parties to the complaint be permitted to approach the High Court to compel compliance on the part of ICASA / the CCC?

8.6. Decision by Authority (section 17E)

Section 17E permits ICASA to take a decision based on a recommendation received from the CCC. However, this section does not oblige ICASA to take a decision based on a recommendation received from the CCC. This section also does not oblige ICASA to take punitive action in the event of a finding of non-compliance. This needs to be clarified.

8.7. Powers of Inspectors to enter, search and seize (section 17G)

Section 17G(2)(a) permits inspectors to enter premises and demand the production of a licence issued in terms of the underlying statutes. It is suggested that "licence" be expanded to refer also to other permits and authorizations including temporary permits, which would be wide enough to encompass things like type approvals that are not strictly licences.

8.8. Offences and penalties (section 17H)

Section 17H(2) quantifies the fines payable in respect of a breach of the ICASA Act. In order to keep pace with inflation and to make the penalties meaningful so as to discourage wrongdoing or non-compliance, it is suggested that the penalties should escalate annually by CPIX or at least CPI.

9. TRANSITIONAL PROVISIONS (CHAPTER IV)

As indicated above, the provisions of section 14B (Transfer of staff) should be housed in Chapter IV rather than in the operational sections of the legislation. Moreover, consideration needs to be given to whether it is necessary to make transitional arrangements for other matters pertaining to the Postal Regulator, other than staff transfers.

10. GENERAL (CHAPTER V)

10.1. Short title and commencement (section 25)

This section refers to section 18(2), even though section 18 has been repealed by the ICASA Amendment Bill. We presume that this is a drafting error.

10.2. Schedule 1 (laws amended)

Schedule 1 proposes to amend a number of the provisions in the Postal Services Act, which we have not dealt with in this submission.

ANNEXURE A

1. Introduction

As indicated above, the SNO is of the view that the move in the ICASA Amendment Bill to compromise the independence of ICASA is contrary to international best practice, examples of which are set out below.

2. OECD

2.1. According to the OECD regulatory independence is typified by the presence of one or more of the following factors:

2.1.1. providing the regulator with a legal mandate (covering also the cases and procedures for overruling its decisions);

2.1.2. ensuring that the regulatory structurally separated and autonomous from the government;

2.1.3. enforcing a multi-party process for appointments to the regulator;

2.1.4. protecting the members of the regulator from being arbitrarily removed from their office (for example, by introducing a fixed term of office for them);

2.1.5. defining the professional standards according to which the regulator will function and allowing for adequate levels of remuneration for its staff; and

2.1.6. designing a reliable source of funding (for example, by permitting the regulator to be funded from fees received from the industry)41.

2.2. Enforcing a structural and financial separation of powers between the executive and the regulator is essential in order to reassure investors that operators are likely to be treated in the same way, and that the regulatory framework will be objectively implemented free from political influence.

3. United Kingdom

3.1. In the UK, OFCOM (Office of Communications) has responsibility for regulating broadcasting, spectrum, telecommunications and content. OFCOM is also empowered to exercise powers derived from the Competition Act, 1998, and the Enterprise Act, 2002, across the