ATC140711: Joint Report of the Portfolio Committees on Communications and on Telecommunications and Postal Services on their Deliberations on Budget Vote 27: Communications, and Entities of the Department of Communications, dated 11 July 2014
Sport, Arts and Culture
JOINT REPORT OF THE PORTFOLIO COMMITTEES ON COMMUNICATIONS AND ON
TELECOMMUNICATIONS AND POSTAL SERVICES ON THEIR DELIBERATIONS ON BUDGET VOTE
27: COMMUNICATIONS, AND ENTITIES OF THE DEPARTMENT OF COMMUNICATIONS, DATED 11
JULY 2014
The Portfolio Committees on Communications and on Telecommunications and
Postal Services, having considered the strategic plan of the Department of
Communications and its entities, report as follows:
1.
Introduction
Section 55(2) of the
Constitution of the Republic of South Africa, Act 108 of 1996, states that the
National Assembly must provide for mechanisms (a) to ensure that all executive
organs of state in the national sphere of government are accountable to it; and
(b) to maintain oversight of (i) the exercise of national executive authority
including the implementation of legislation; and (ii) any organ of state. In
terms of the Public Finance Management Act (PFMA) the Accounting Officers must
provide Parliament or the relevant legislature with their respective institutions
medium-term strategic plan and where applicable with its annual performance.
The
Money Bills Amendment Procedure and Related Matters
Act
was
promulgated in 2009, and provides Parliament
with powers to reject or recommend the approval of departments budgets. The
Act also makes provision for the implementation of recommendations emanating
from the committees oversight.
The Minister of
Communications tabled the Medium Term Strategic Plan of the Department of
Communications (the Department) and its entities on 27 June 2014. The Committee
received briefings from the Department and its entities on 1 July 2014, 4 July
2014 and 8 July 2014, respectively.
In performing its
constitutional mandate, the Committee scrutinised the alignment of the Department
and its entities strategic plans for the period 2014-2019 to the following key
government objectives:
(i)
the
2014
State-of-the-Nation Addresses (
SoNAs
);
(ii)
the
2014/15
Budget Statement;
(iii)
governments
five priorities i.e. health, education, employment, rural development, and
fighting crime and corruption;
(iv)
recommendations
made in the National Development Plan (NDP); and
(v)
the
objectives
outlined in the New Growth Path (NGP).
1.1
State-
of-the-Nation Address
In his first 2014 State of the Nation Address (
SoNA
) President Zuma dedicated the better part of the
evenings address not only
to the
government's achievements, but he
also
noted that thousands of kilometres of fibre had been laid by both the state and
the private sector, with more to come.
President Zuma said the 37 000km of fibre-optic cable that has been
laid by the private and public sectors in the past five years will be
"significantly expanded in the years ahead.
In his second 2014 State of the Nation Address (
SoNA
) President Zuma dedicated his speech on the economy,
particularly the successful implementation of National Infrastructure Plan,
which the department participates, both in the Infrastructure Development
Cluster as well as the Presidential Infrastructure Coordinating Commission
(PICC). The PICC launched a Strategic Integrated Project (SIP) 15 which impacts
on telecommunication and postal sector: Expanding Access to Communication
Technology in 2012.
He pronounced we
will expand, modernise and increase the affordability of information and
communication infrastructure and electronic communication services including,
broadband and digital broadcasting. Further, he stated in the same vein,
Postbank will be supported so that it can play a leading role in the expansion
of bank services to the poor and the working class.
The 2014
SoNA
also raised other contentious issues in the sector,
namely
the
cost to communicate which remains stubbornly very high.
1.2
National Development
Plan (NDP)
The
South
Africa Connect
, the national broadband policy gives expression to
South Africas vision in the National Development (NDP) of a seamless
information infrastructure by 2030 that will underpin a dynamic and connected
vibrant information society and a knowledge economy that is more inclusive,
equitable and prosperous.
As envisaged
in the NDP, at the core of the policy in responding to the NDP will be a
widespread communication system that will be universally accessible across the
country at a cost and quality that meets the communication of citizens,
business and the public sector and provides access to the creation and
consumption of a wide range of converged applications and services required for
effective economic and social participation.
President Zumas address highlighted
strategic objectives of the sector in line with the NDP which noted that there
should be an ecosystem of digital networks, services, applications, content and
devices integrated into the economic and social fabric of the country.
Together, these broadband elements provide a platform for economic enterprise,
active citizenship, connect public administration to the active citizen;
promote economic growth, development and competitiveness; drive the creation of
decent work and support local, national and regional integration.
Nothing
sums up the potential of both the current and future impact of technology on
Africa better than the insatiable appetite for connectivity.
Today it
is about the connections between human voices; in
future it will increasingly revolve around the data stream that
is made possible by these
connections.
To achieve the target of
100 per cent broadband penetration by 2020, as outlined in the plan, the
Department has developed the national broadband policy, strategy and implementation
plan, which ensures that the roles and responsibilities of key stakeholders in
the sector are clearly defined and maps the rollout of broadband infrastructure
across the country.
Together with ICASA, the
Department has prioritised several initiatives over the medium term in an
effort to reduce costs to communications, high demand spectrum, high level ICT
competition inquiry, and digital migration. These include finalising a data
portal on ICT statistics, such as pricing trends used in the departments
economic analysis, and conducting a broadband value chain analysis to promote
competition and address market failures.
2. The Department of
Communications (DoC)
The DoC is mandated to:
ensure that ICT policies are developed to create conditions for the accelerated
and sustained growth of the South African economy and the development of
robust, reliable, secure and affordable ICT infrastructure; contribute to the
development of an inclusive information society that is aimed at establishing
South Africa as an advanced, information based society; contribute to building
an ICT skills base in the country, ensuring equitable prosperity and global
competitiveness; strengthen the capacity of the ICASA to regulate the sector in
the public interest and ensure growth and stability; enhance the capacity of,
and exercise oversight over state owned enterprises; and fulfil South Africas
continental and international responsibilities in the ICT field.
The Departments strategic
goals over the medium term are to:
-
Enable maximum investment in the ICT sector and create new,
competitive business opportunities for the growth of the ICT industry;
-
Ensure that ICT infrastructure is accessible, robust, reliable,
affordable and secure;
-
Accelerate the socioeconomic development of South Africans
-
Facilitate the building of an inclusive information society through
partnerships with business, civil society and the three spheres of
government; and
-
Contribute to the global ICT agenda, prioritising Africas
development.
2.1 Expenditure
Trends
The spending focus over the medium term will be on preparing the
broadcasting digital migration call centre, implementing the broadcasting
digital migration awareness campaign on Digital Terrestrial Television (DTT),
expediting the rollout of infrastructure for DTT by providing a subsidy scheme
for the Set-Top Boxes (STBs), reviewing the ICT policies, and accelerating
access to ICT by coordinating the participation of the government in
specialised ICT agencies. Thus the bulk of the Departments budget over the
medium term is allocated to the Infrastructure Support programme, which
accounts for 43.6 per cent of total expenditure over the medium term and makes
transfers to the Departments public entities and state owned companies over
which the Department exercises oversight. In this regard, the significant
increase in spending on departmental agencies and accounts expected between
2014/15 and 2016/17 is due to the Cabinet approved additional allocations of R700
million to the Universal Service and Access Fund (USAF) for the broadcasting
digital migration project.
The broadcasting digital migration project was also the reason for
the significant increase in expenditure between 2010/11 and 2013/14 in the
Administration programme for the advertising campaign to raise public awareness
about the migration process. The advertising campaign is now subject to Special
Investigation Unit (SIU) investigations. Over the same period, spending on
transfers to public corporations and private enterprises also increased due to
the rescheduling of the transfer payment to Sentech, as funding was made
available to expedite the digitisation process in support of governments
target to switch off the analogue signal in June 2015. Spending on public
corporations and private enterprises is expected to decrease over the medium
term, mainly because the final allocation to Sentech for digitisation will be
transferred in 2014/15.
Through the 2013 adjustments budget, the Department received
additional allocations for the school connectivity project, which contributes
to the increase in spending on consultants between 2010/11 and 2013/14.
Transfers to departmental agencies and accounts increased significantly due to
an additional allocation in 2012/13 to fund office equipment and relocation
costs for ICASA, and for the adjusted allocation for the 2013 Africa Cup of
Nations to the SABC.
Cabinet approved reductions of R15 million over the medium term
have been
effected
on the 112 emergency call centre
project, and this is not expected to impact adversely on performance. In
2013/14, the Department finalised its organisational review process, which will
result in all critical vacant posts being filled.
R265 million over the medium term has been allocated for the
broadcasting digital migration project. Of this, R195.1 million is allocation
to the SABC for the digital library and a digital
playout
centre. Sentech is allocated R69.8 million in 2014/15 to finalise the rollout
of DTT infrastructure. These allocations do not include the R1.5 billion
allocated to USAF to subsidise STBs, antennas and installation.
3. Expenditure
Trends per programme
3.1 Programme 1:
Administration
The spending over the medium term will be on providing strategic
support to the ministry and overall management for the Department, and
supporting the implementation of the broadcasting digital migration through
awareness campaigns. This accounts for the significant spending projected over
the medium term on advertising and in the Corporate Services
subprogramme
, which was due to funds being reprioritised in
2013/13 and 2013/14 for the DTT awareness campaign. These funds were
reprioritised mostly from allocations to the 112 emergency call centre project,
which experienced implementation delays.
The Department also aims to upgrade its IT systems over the medium
term to improve efficiency. Service providers will be appointed over the medium
term to perform this task. This explains the expected increase in spending on
consultants over the medium term. The number of personnel in the programme is
expected to increase from 165 in 2012/13 to 177 in 2016/17, mostly in salary
levels 7 to 10 and 11 and 12, as the Department finalises its organisational
review.
3.2
Programme 2: ICT International Affairs and Trade
The spending focus over the medium term will be on: ensuring
alignment between South Africas international activities and agreements in the
ICT sector and its foreign policy through funding the countrys participation
by paying membership fees to international communications organisation;
participating in the global discourse within the United Nations system on
telecommunications, postal services, information society and green technology;
participating in engagements that result in e-skills development initiatives
for young South Africans and employment creation projects and pursuing
bilateral engagement with other countries. Thus the bulk of the programmes
allocation of the medium term is spent in the ICT Trade Partnerships
subprogramme
, which is responsible for membership fees.
Over the medium term, payments will continue to be made to organisations such
as the Universal Postal Union (UPU), the International Telecommunications Union
(ITU) and the African Telecommunications Union. The Department also expects to
submit five ICT position papers focusing on promoting South Africas national
ICT interests to relevant forums for international engagements each year.
Expenditure on goods and services decreased significantly between
2010/11 and 2013/14, as lower expenditure on travel and subsistence
was
incurred because the programme undertook fewer
international engagements. Expenditure on consultants increased by 86 per cent
between 2010/11 and 2013/14 due to the appointment of a service provider for
the Southern Africa Developing Countries (SADC) conference that the Department
hosted in February 2014. This programme had a staff compliment of 20 posts at
the end of November 2013, 18 of which are currently filled.
3.3
Programme 3: Policy, Research and Capacity Development
The spending focus over the medium term will be on providing
support to improve the functioning of information society and promoting the
development and use of ICTs through the Information Society Development
subprogramme
. Through the ICT Policy Development programme,
policies and legislation will be reviewed. Building on the Departments
previous work on the integrated ICT policy review, which resulted in the
production of the green paper on South Africas national integrated ICT policy,
over the medium term this
subprogramme
will develop
the white paper, which is set to be released by mid-2014.
Consultants are appointed to support the Department in the
plicy
and legislative making process. The significant
increase in spending on consultants in 2012/13 was mostly due to the
appointment of consultants to assist with the proposed transaction between
Telkom and Korea Telecom. This also accounts for the significant increase in
spending in the ICT Policy Development
subprogramme
in that year. The decrease in expenditure in the Capacity Development
subprogramme
between 2010/11 and 2013/14 was due to the
high expenditure on consultants in 2010/11, mostly for the e-skills summit,
which the Department hosted in July 2010. Expenditure on goods and services
also decreased from 2010/11 to 2013/14 as a result of cost cutting measures and
reprioritisation towards other programmes in the Department.
Spending on consultants is expected to account for a relatively
high
propotion
of the programmes budget over the
medium term to provide support to the Department in finalising outstanding
policies and legislation. This programme had a funded staff complement of 125
at the end of November 2013, of which 84 are currently filled.
3.4
Programme 4: ICT Enterprise Development and SOE Oversight
The spending focus over the medium term will be on continuing to
strengthen the Departments ability to exercise oversight over the public
entities, making transfers to public entities, and facilitating the development
of ICT SMMEs. Thus, over the medium term, the Department expects to continue
intervention such as establishing ICT hubs in underserved provinces such as
Limpopo and Free State. It will also focus on e-commerce, export readiness and
the broadcasting digital migration value chain. This also accounts for the
increases in the ICT Support and Small Medium and Macro Enterprise Development
subprogrammes over the medium term. The Department appointed service providers
to assist with the establishment of the ICT hubs, which explains the increase
in spending on consultants in 2011/12.
AS such, 93.5 per cent of the programmes allocation over the
medium is transferred to the Departments public entities and enterprises,
while a significant portion of the balance is spent on consultants who provide
critical skills, particularly with regard to ICT research, implementing ICT
hubs around the country and the broadcasting digital migration projects in
2016/17.
Expenditure on transfers to public corporation and private enterprises
decreased significantly between 2010/11 and 2013/14, due to the final
allocation to the SABC for the technology programme in 2010/11 and the South
African Post Office in 2012/13 for universal access. Expenditure on transfers
to departmental agencies and accounts increased between 2010/11 and 2013/14 due
to allocations in 2012/13 to fund office equipment and relocation costs for
ICASA and the National Electronic Media Institute of South Africa (NEMISA)
implementation of e-skills programmes. The transfer for the e-skills programmes
included a once off additional allocation of R15 million, which is why
expenditure on transfers to departmental agencies is projected to increase at a
slower rate over the medium term.
The allocations to USAASA for the broadcasting digital migration
project have been shifted to the Infrastructure Support programme. This has
been done to create better transparency in reporting by consolidating the
funding for the project in a single programme. This programme has a funded staff
compliment of 16 posts, 12 of which are projected to be filled at the end of
2013/14.
3.5
Programme 5: ICT Infrastructure Support
The spending focus over the medium term will be on implementing
the broadband policy, finalising the broadband implementation plan, and making
transfers of the STB subsidy for poor household through USAASA. The transfer to
the agency is the reason for the significant spending projected over the medium
term in the DTT
subprogramme
. Between 2011/12 and
2013/14, R690 million was transferred to the agency to cover the subsidies for
the STBs. These funds remain unused due to a delay in finalising the criteria
to determine qualifying households and the court case around the STB mechanism.
The funds have been retained for use over the medium term. An additional R700
million has been made available under the DTT
subprogramme
to enable the agency to roll out STBs, antennae and installation over the
medium term.
Funds have also been reprioritised towards planning for the
broadband rollout, which accounts for the strong growth in the Broadband
subprogramme
over the medium term. The Department also aims
to finalise governments policy on radio frequency spectrum in the next few
months. The release of high demand spectrum has the potential to play an
important role in improving access to wireless broadband. The large increase in
external audit costs in 2012/13 is due to performance audits carried out on the
national frequency spectrum in order to determine if it was used effectively.
Spending on travel and subsistence is expected to increase to R5.7
million in 2016/17 due to increased travelling relating to the implementation
of the DTT project. This project also increased spending on transfers to
Sentech between 2010/11 and 2013/14, as funding was made available for
digitisation in support of governments target to switch off analogue signal in
June 2015. Over the medium term, expenditure is projected to decrease
significantly due to the final allocation to Sentech for DTT in 2014/15.
The national cybersecurity policy framework was approved by
Cabinet, and mandates the establishment of a cybersecurity hub in terms of the
justice, crime prevention and security cluster. The Department entered into a
memorandum of understanding with the Council for Scientific and Industrial
Research (CSIR) to establish this hub, which further accounts for the large
increase in consultants in 2011/12. Expenditure on consultants increased
significantly between 2010/11 and 2013/14, due to an additional allocation
received through the adjustments budget for school connectivity, and for
service providers who assisted the Department to develop the report on baseline
data on broadband coverage, penetration, speed and cost, and implementing a
testing centre for STBs. In addition, the increase in spending on goods and
services over the medium term, particularly on consultants, is as a result of
funding from the 112 emergency call centre project being reprioritised to the
broadcast digital migration project, which will include a call centre to deal
with queries related to the migration process.
To give effect to Cabinet approved budget reductions, R15 million
over the medium term has been reduced from spending on consultants. This
programme had a staff complement of 47 funded posts at the end of November
2013, of which 38 are envisaged to be filled by 2014/15.
4.
Departmental
Budget 2012/13 R1.6 billion
4.1
Programme 1:
Governance and Administration R216. 4 million
The purpose of
this programme is to provide strategic support to the ministry and overall
management of the Department. In the 2014/15 financial year, programme one has
been allocated R 216.4 million compared to R216.1 million in the previous
financial year. This programmes amount constitutes about 14 per cent of the
overall allocation.
4.2
Programme 2: International Affairs
R36.8 million
The purpose of
this programme is to ensure alignment between South Africas international
activities and agreements in the ICT sector and the countrys foreign policy.
It has since
become a norm for this programme as evident from the previous three financial
years and the current financial year, is allocated the least amount, which
constitutes an average of 2 per cent of the total budget. In the current
financial year programme 2 is allocated R 36.8 million compared to the previous
years adjusted allocation of R33.3 million.
4.3
Programme 3:
Policy, Research and Capacity Development R98 million
The programme develops
legislation that supports the development of an ICT sector that creates
favourable conditions for accelerated and shared growth of the economy. It also
develops strategies that increase the uptake and use of ICTs by the majority of
the South African population in order to bridge digital divide.
4.4
Programme 4: This programme
known in the outer year as
Broadcasting
and
Communication Regulation Support
has been altered to ICT Enterprise Development and SOE Oversight R719.1
million
The
purpose of this programme is to oversee and manage governments shareholding
interests in the ICT public entities. This programme also facilitates growth
and development of Small Micro Medium Enterprises (SMME).
In
the last financial year, the programme was allocated the most funds which constituted
45 per cent of the total Communications budget. During the 2013/14 financial
year it was allocated R1. 2 billion compared to the 2014/15 allocation of
R719.2 million.
4.5
Programme 5:
ICT Infrastructure Support R523 million
The purpose of this
programme is to promote investment in robust secure reliable ICT infrastructure
that supports the provision of a multiplicity of applications and
services.
This programme has received
the second largest allocation which amounts to R523.0 million which translates
to 32.82 per cent of the Departments total budget of R1.6 billion.
5.
Entities of the
Department of Communications
The following entities and
agencies report to the Minister of Communications and the ICT regulatory
authority.
5.1
South African Post Office R0
SAPO is a schedule 2 public entity in terms of the
PFMA. It is a government business enterprise established to provide postal and
related services to the public, and derives its mandate from the South African
Post Office SOC LTD Act (Act No 22 of 2011) and the South African Postbank
Limited Act (No 9 of 2010). The Postal Services Act (Act 124 of 1998) grants
SAPO the exclusive mandate to conduct postal services. This Act further makes
provision for the regulation of postal services and the operational functions
of the postal company, including
Postbanks
universal
service obligations and associated financial services.
SAPOs strategic goals over the medium term are to:
·
maintain
good corporate governance principles;
·
remain
customer centric by providing quality services;
·
invest in
employees by building capacity and implementing transformation programmes;
·
attain
financial sustainability while delivering on governments social mandate;
·
provide
affordable postal and related services that meet the needs of customers;
·
remain
environmentally conscious by promoting green practices;
·
provide a
secure, efficient and integrated infrastructure for better responses to its
stakeholders; and
·
continue
the
corporatisation of Postbank and the upgrading of its banking system.
In addition, the key focus areas will be on: property
evaluation, balance sheet structure, funding solutions, capital adequacy,
implementation of turnaround plan, and Postbank Corporatisation.
5.2
Sentech R69.8 million for digitisation
Sentech Limited is an SOE established in terms of the
Sentech Act (Act No 63 of 1996) and is listed as a schedule 3B public entity in
terms of the PFMA. Its mandate is to provide broadcasting signal distribution
for broadcasting licensees, with a particular focus on accelerating the
implementation of government ICT interventions within the framework of the NDP
and the strategic integrated project for expanding access to communication
technology.
Sentechs strategic
goal over the
medium term are
to:
-
align its strategic roadmap with
shareholder programmes to enable the development of open access government
participation in the communications industry through infrastructure based
investment;
-
continue working to support and realise
governments ICT vision and goals, including innovation in broadcasting
and media services and content management distribution;
-
create solutions that enhance the customer
experience and are in line with governments mandate of providing all
citizens with access to communication services; and
-
repackage
social responsibility interventions and
create community social investment ICT programmes that improve lives,
create value and are sustainable.
5.3
Universal Service and Access Agency of
South Africa R62.1 million and USAF R240 million
USAASA
was established in terms of section 80 of the Electronic Communications Act
(ECA) (2005) as a statutory body and is listed as a schedule 3A public entity
in terms of the PFMA (1999). Its sole mandate is to promote universal service
and access to electronic communication services, electronic communications
network services and broadcasting services.
In
order to contribute to the achievement of government priorities and outcomes;
USAASA is to pursue the following strategic goals over the medium term:
-
facilitate the rollout of broadband
infrastructure in the 250 identified underserviced areas;
-
ensure that all targeted needy households
are subsidised in the switch to digital broadcasting;
-
ensure the effective and efficient
administration of the USAF;
-
enhance the strategic and operational
capacity of the agency and maintain good corporate governance;
-
facilitate connectivity in primary health
care facilities and government institutions; and
-
facilitate
connectivity in all schools, including
schools for people with disabilities.
5.4
Ikamva
National e-Skills Institute (
INeSI
) R37.8 million
NEMISA was established as a
non-profit institute of education by the Department of Communications in terms
of the Companies Act (1973) and is listed as a schedule 3A public entity in
terms of PFMA (1999). Formed as part of government initiative in 1998 in
response to the White Paper on Broadcasting Policy, the institutes main
purpose is to train previously disadvantaged individuals, particularly women,
to equip them with the necessary skills to play significant roles in the
constantly changing broadcasting environment. The institute offers hands-on
training in electronic media, including content design and production,
technical operations and content transmission.
The institutes ongoing
activities included offering national certificates and short courses in the
areas of television production, animation and radio production. The institutes
programmes are structured to enhance the market readiness of students in a wide
range of broadcasting disciplines.
INeSI
tabled its
strategic plan before Parliament for the first time after the merger and it
acts as a national catalyst and change agent for the development of e-skills
supported by the following four programmes: Administration; Multi-Stakeholder
Collaboration; e-Astuteness Development; Knowledge for Innovation and
Aggression.
5.5
South
African Broadcasting Corporation R227.1 million
The SABC was established in
terms of the Broadcasting Act (Act No 22 of 1936) as a government enterprise to
provide radio and television broadcasting services to South Africa. As per the
Broadcasting Amendment Act (Act No 64 of 2002), the SABC has since October 2004
been incorporated into a limited liability company with two operational
divisions i.e. public broadcasting, and commercial broadcasting services.
Further, the SABC is listed
as a schedule 2 public entity in terms of the PFMA. Its mandate is set out in
its charter and in the Broadcasting Act (1999), which requires it to provide
radio and television broadcasting services to South Africa.
The SABC has the following
strategic goals to be pursued over the medium term:
-
Ensure access of its services to all citizens
throughout the country;
-
Inform, educate and entertain and provide
services in all official languages;
-
Reflect both the unity and diverse cultural
and multilingual nature of South Africa and all of its cultures and
regions, to audiences;
-
Provide programming for children, women, youth
and people living with disabilities, and broadcast national, developmental
and minority sports;
-
Develop talent and showcase South African
content;
-
Provide independent news of high quality
standards;
-
Ensure the financial sustainability of the
corporation through the cost effective use of budgets and resources;
-
Implement the digital content strategy; and
·
Complete the digital migration and
multi-channel offering.
5.5.1
Expenditure
Trends
The corporation generates
revenues from television license fees, advertising and sponsorships, as well as
a transfer from Department of Communications. Over the medium term, revenue is
expected to increase from R7.3 billion in 2013/14 to R8.4 billion in 2016/17,
due to increase in advertising revenue in line with the new multichannel
environment created by the expected rollout of Digital Terrestrial Television
(DTT).
The spending focus over the
medium term will be on realigning the organisations operational model with the
digital broadcasting requirements, with an emphasis on audiences, editorial
integrity, developing local content, and telling authentic South African
stories. Expenditure is expected to increase from R7.3 billion in 2013/14 to
R8.6 billion in 2016/17, mainly due to activities involving improving the
corporations services offered around radio, television, news and sports
content. The increase in spending between 2010/11 and 2013/14 was due to higher
broadcasting costs, signal distribution costs, and the remuneration of
freelance artists. Moreover, higher revenue collection also contributed to the
increasing costs over the same period as the corporation attempted to improve
liquidity. At the end of December 2012, the entity had achieved a positive
liquidity ratio of above R1 billion and was further able to settle its bank
loan by September 2013, 14 months earlier than the expected loan term. This
saved the SABC R17 million in interests.
The
corporation had a funded establishment of 3 720 posts, of which 3 621
were filled at the end of November 2013. The number of filled posts is expected
to increase to 3 661 over the medium term, which explains the subsequent
increase in spending on compensation of employees by 6.4 per cent between
2013/14 and 2016/17. The additional appointments are to meet the requirements
for implementing DTT and the organisations strategy to expand regional content
and thus contribute to job creation.
5.6
Independent
Communications Authority of South Africa (ICASA) R376.2 million
ICASA was established in
terms of the ICASA Act (2000), as amended, and is listed as a schedule 1
constitutional institution in terms of the PFMA Act (1999). The authority makes
regulations and issues communications licences in terms of the Electronic Communications
Act (2005) and Postal Services Act (1998). Enabling legislation also empowers
the authority to monitor and enforce licensee compliance with licence terms and
conditions, and protects consumers from unfair business practices and poor
quality services, hears and decides on disputes and complaints brought against
licensees, and controls and manages the frequency spectrum.
As part of delivering on
the requirements of the NDP, the authority has identified the following five
strategic goals over the medium term:
-
Promote competition by removing bottlenecks,
ensure that South African ICT retail prices fairly reflect costs, ensure
effective participation by historically disadvantaged individuals and in
terms of Broad-Based-Black Economic Empowerment (BBBEE);
-
Facilitate nationwide broadband penetration by
2020, and promote the development of public community and commercial
broadcasting services in the context of digital migration;
-
Promote the efficient use of spectrum
resources by establishing innovative approaches to technology usage, and
support the rapid uptake of new ICT technologies;
-
Promote consumer rights and ensure universal
service and access; and
-
Modernise the authority through improved
operational processes and performance.
5.6.1
Expenditure Trends
The spending focus over the
medium term will be on enhancing regulatory capacity, improving access to
broadband services and optimizing the use of the radio frequency spectrum to
extend access to affordable ICT services to all South Africans. The increase in
expenditure between 2009/10 and 2012/13 was mainly due to funding made
available in 2013/13 for projects relating to DTT, the provision of broadband
services and additional commercial radio services, and the broadcasting of the
2013 African Cup of Nations soccer tournament. The projected deficits over the
medium term are due to major projects that have been delayed in previous years
that will now be executed over the medium term.
The allocation and
efficient use of broadband spectrum will play an important role in the rollout
of broadband services in the country. The authority will acquire core modules
to manage customer relations and spectrum management on the use of new spectrum
by licence holders. In order to improve spectrum management, core modules of
the new spectrum management system will be implemented. Hand held spectrum
analysers will be bought and test equipment upgrades will be made in order to
support digital technology. These and other projects account for the large
increase in acquisition of assets in 2014/15, and the deficits over the medium
term.
The number of posts
decreased from 413 in 2012/13 to 405 in 2013/14 as a result of the decision to
place a moratorium on non-core or less significant vacant posts until such time
that the authority has finalized the organizational review. Over the medium
term, staff numbers are expected to increase to 410, mainly to support the
monitoring and enforcement function of the authority.
6. Observations and Recommendations
6.1 Observations
The Committee
noted:
(i)
the vacant
positions at the SABC of the Group Chief Executive Officer, Chief Financial
Officer and Chief Operations Officer which were assumed by individuals on
acting capacity as this created uncertainty
and leadership instability at the Corporation;
(ii)
with
concern the public broadcasters inability to effect
television programmes that target people with disabilities;
(iii)
that
despite previous undertaking by task team (Sentech,
SABC, DoC) there are still a number of areas that are not able to access SABCs
broadcasting despite the fact that universal access obligation mandate of
rolling out low power transmitter lies with the SABC. In addition, no entity can
say where the low power transmitter mandate resides;
(iv)
that
the current funding model of the public broadcaster
(3%) is insufficient to fulfil its public mandate and to ensure DTT
preparations;
(v)
with
regret that corporate governance at the USAASA had in
the past deteriorated to an undesirable stage. The Agency acquires services of
one service provider to rollout ICT Hubs and
Telecentres
across the country. The service provider managed to rollout 10 per cent of the
required contractual agreement, but the Agency paid the service provider more
than 85 per cent for the service rendered;
(vi)
the
original mandate of USAASA, which was relevant during
period of voices telephony, needs to be reviewed in line with the modern
broadband and data services;
(vii)
that
for the first time, USAASA presented two Strategic
Plans, one for USAASA and one for USAF;
(viii)
with concern
that USAASA has not shown any sense of urgency regarding its own work towards
the Broadcasting Digital Migration through identifying 5 million indigent
television-owning households/ beneficiaries;
(ix)
in many
instances ICASA does not perform partial or full Regulatory Impact Assessment
(RIA) when embarking on regulatory processes and therefore the proposed
unbundling of the Local Loop Unbundling (LLU) must accompanied by a RIA;
(x)
the
new proposed reduction in the Mobile Termination Rate
(MTR) has not come about as a result of the Court Order;
(xi)
that
the ICASA, amongst other things, reported that it was
constrained by its budget to fulfil its mandate. In addition, the Committee
noted that presentation of ICASA included different types of funding models;
(xii)
the
persistent
legal challenges to regulatory processes;
(xiii)
with
concerns the lack of asset replacement plan of the ICASA
which results in the regulatory utilizing redundant equipment leading to poor
performance;
(xiv)
that despite
the undertaking or reassurance by the SABC to present two separate Strategic
Plans as per the provisions of the Act which indicates that the public and
commercial service divisions must be separately administered and a separate set
of financial records and accounts are to be kept, the SABC has still not
complied with the Act;
(xv)
the
underperformance of the SABC 3 Channel which has
witnessed a decline in audiences and revenues, as well as brand integrity
erosion continues, however, the current strategic plan does not cater for
turnaround strategy in place to deal with this;
(xvi)
that
there was no planned implementation of low power
transmitters despite the fact that there are targets which were omitted in the
past; and there are still no planned mechanisms or indications by the SABC to
redress the target short-fall of the previous financial years;
(xvii)
that
there was no allocation or subsidy for SAPO for Universal
Service Obligation;
(xviii)
with
regret that the department and all entities still do
not have an IT storage or Disaster Recovery Plans as per the Auditor-General of
South Africa (AGSA) report;
(xix)
that SAPO has
projected a net loss of R249 million and this could increase given the licence
and mandate obligations, the gradual conversion of contract workers to permanent
employees as well as the impact of strikes;
(xx)
that
additional R3.5 billion is required by SAPO for
Postbank Corporatisation as well as SAPO operations;
(xxi)
that
the process
of Postbank Corporatisation is on track; and
(xxii)
with
concern that
INeSI
existence
is not highly publicised to the general public who stands to benefit from its
offerings. Furthermore, the Committee noted that
INeSI
was not properly funded.
6.2 Recommendations
The
Committee recommends that the Minister:
(i)
ensure
DoC and all its entities fill all funded vacant positions especially
those at Senior Management Service (SMS) level;
(ii)
ensure the
finalisation of new policy directive on Transparency Pricing Policy to an
effort to deal with the cost of communications;
(iii)
ensure the
finalisation of new policy directive National Spectrum Policy that will support
the digital dividend;
(iv)
ensure that
sub-programmes, Research, Market and Economic Analysis are allocated sufficient
resources;
(v)
submit a detailed
report with timelines on how to address negative audit findings by the Auditor-General
of South Africa (AGSA) in the past financial years, as well as in both the
Budgetary Review and Recommendation Reports (BRRRs) and the fourth Parliament
Committees Legacy Report;
(vi)
should ensure
that the mandate and funding of SABC, funding model and budget of SAPO and
funding of ICASA are reviewed;
(vii)
should provide
Parliament with a detailed report on the Public Protectors recommendations on
SABC once the matter has been finalised and a report submitted to the Public
Protectors office;
(viii)
should ensure
that all entities include timeframes against their targets;
(ix)
ensure that the
Department and its entities have existing Disaster Recovery Plans;
(x)
ensure that
USAASA mandate is reviewed to be in line with the modern broadband and data
services;
(xi)
ensure that
INeSI
review the ratio of the spending on salaries versus
operational costs; and
(xii)
ensure
that
INeSI
develops new marketing
strategy to ensure that more people are aware of the e-skills initiative.
The
Committee is satisfied with the Strategic Plans 20142019 and Annual
Performance Plans for 20142015 of the Department of Communications, USAASA,
SABC, ICASA,
INeSI
and Sentech and accordingly
supports its implementation.
The Committee recommends that the 2014-15 budget allocation of the
Department of Communications and its entities be approved.
The Democratic Alliance reserved is position on the report.
The Economic Freedom Fighters expressed its dissatisfaction with the
Strategic Plans and Budgets of the Department and its entities.
Report to be considered.
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