Convergence Bill: deliberations

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE

ANC Proposed Amendments on Chapter 1
ANC Amendments to Clauses 2 & 3 (up to Clause 9)
ANC proposed amendments: Chapters 3 (Clause 10 -19) [document awaited]
ANC Proposed Amendments to Chapter 4: Clauses 20-29
ANC proposed amendments: Chapters 5 - 8 [document awaited]
ANC Proposed Amendments of Chapters 9 to 12 (as of 7 September)
ANC Proposed Amendments to Chapter 12 - 14 (as of 9 September)
ANC Proposed Amendments to Chapter 15: Transitional provisions
Convergence Bill [B9-2005]

SUMMARY
In the morning session, the Committee considered the amendments Clauses 2 to 7 of the Convergence Bill Bill as proposed by the ANC. The definitions would only be discussed after the deliberations regarding the text of the Bill. The Object of the Act was amended in order to ensure that broadcasting, broadcasting signal distribution, and other services contemplated in the Act were consistently referred to. The Committee agreed to repeal Clauses 5(5) and 5(10). The DA proposed to delete Clauses 3(1) and 5(4). They were concerned that the latter would hold back entrepreneurs. The Committee further discussed public processes, the funding of the Independent Communications Authority of South Africa (ICASA), and advantages and disadvantages of managed liberalisation.

The Department briefed the Committee on Clause 5 that dealt with the licensing framework. Officials outlined the agreements that had been reached with respect to this Clause. It was a challenge to provide a framework that differentiated between the different licences. The Department proposed various criteria for individual, class and exempt licences.

In the afternoon session, the Committee considered the amendments to Clauses 8 and 9 of the Bill as proposed by the ANC, which amendments merely tightened up the formulation and reading of the provisions. The DA questioned the proposed deletion of "standard" in Clause 8(1) and the deletion of Clause 8(2)(d) that related to the nature of the communications service. The Committee agreed that the competition issues in Clause 8 should be relocated to a separate section, and that the views of ICASA and the Competition Commission be sought on the matter. The DA welcomed the ANC’s proposal that Clause 9(2)(e) be deleted, which required ICASA to obtain the Minister’s approval before approving a licence.

MINUTES
Mr J Mjwara, Deputy Director-General, advised the Committee to start the deliberations with Clause 2 and finalise the definitions only after they had gone through the text of the Bill. This would ensure the consistency of the definitions.

Ms M Smuts (DA) asked whether redrafting had commenced on the basis of agreements reached on various provisions.

The Chairperson replied that this session would deal with the actual redrafting. The Department and the state law adviser would only thereafter start with the redrafting process.

Ms Smuts suggested starting the deliberations with Chapter 3 because they had reached broad agreement there regarding the licensing framework. Chapter 2 might be difficult to discuss without the ICASA Amendment Bill because it addressed the relationship between the executive and the regulator.

Mr G Oliphant (ANC) remarked that there were issues that Members had to clean up in Clause 2 of the Convergence Bill.

The Committee agreed to start with the Object of the Act as outlined in Clause 2.

Clause 2: Object of the Act
Mr Oliphant said that in Clause 2(a), (f), (i), (k) and (x) "broadcasting" and "other services contemplated in this Act" should be added.

Ms N Mokoto (ANC) recommended that "women, youth, and people with disabilities" were included in Clause 2(g).

Ms D Tshepe, Cheadle Thompson Attorney, concurred with Mr Oliphant, and specified that in Clause 2(a), "broadcasting" should be inserted after "telecommunications", while "and other services contemplated in this Act" should be added after "broadcasting signal distribution". Similarly, in Clause 2(f) "broadcasting services" and "communications services" had to be added, and in Clause 2(k), "broadcasting services". The object of the Act was to promote and facilitate the convergence of telecommunications, broadcasting, broadcasting signal distribution, and other services contemplated in this Act.

Ms Smuts asked why Ms Tshepe suggested only inserting "broadcasting services" in Clause 2(k), and whether other services such as telecommunications were dealt with elsewhere. She queried whether they could not encapsulate all obligations of this kind by reference to the Black Economic Empowerment (BEE) Act. She asked why Ms Tshepe did not make any distinction between transmission and services.

Ms Tshepe replied that in Clause 2(k), communications services were already mentioned. In terms of categories of licensing services, it had been agreed that there were communication network services, broadcasting services and communication services. No agreement had been reached, however, regarding the definitions of these categories.

Mr Mjwara added that broadcasting had already had this requirement in terms of the Independent Broadcasting Authority (IBA) Act and the Broadcasting Act. It had probably been omitted by mistake.

Ms Tshepe answered with respect to the diversity issue that the Bill did not intend to deviate from current legislation. It had been proposed that there would be a reference either to the BEE Act or the ICT Charter in Clause 2(k).

Ms Mokoto suggested that Clause 2(o) also encompassed the International Telecommunication Union (ITU) standards.

Mr Mjwara remarked that if they included the ITU standards in Clause 2(o), they should add "as adopted by the republic".

Mr Oliphant noted that the ITU obligations were already dealt with under Section 3(1)(c).

Clause 3: Ministerial policies and policy directions
The Chairperson reminded Members that Ms Smuts had suggested starting with Clause 5, because Clause 3 and 4 might be difficult to discuss without the ICASA Amendment Act.

Mr Mjwara said that the Department preferred hearing the Committee’s opinion regarding Clauses 3 and 4 during this meeting. The Department could then consider their comments in the redrafting process.

The Chairperson stressed that they could discuss certain clauses again after having received the ICASA Amendment Act if Members felt it was necessary.

Ms Smuts recommended repealing Clause 3(1). Further, in Clause 3(2) the word "must" had to be substituted for the word "may". She proposed to insert "but is not bound by such policies or policy directions" in Clause 3(3) at the end of the phrase. In Clause 3(4)(a), "may" should be changed to "shall". She suggested including Section 13(a), Subsection 5(c) and (d), of the IBA Act in the Convergence Bill. These subsections outlined that no policy direction may be issued by the Minister regarding the granting, amendment, transfer, renewal, suspension or revocation of a licence; and that the Minister’s policy was not allowed to interfere with the independence of the Authority or affect the powers or duties of the Authority. Licensing should not be done by the government. Furthermore, a new Clause 3(5)(c) should be inserted that required the Minister to publish a final version of the policy direction in the Gazette.

Mr Oliphant disagreed with Ms Smuts that Clause 3(1) should be repealed, and instead proposed to delete the word "communications" and replace it with "ICT". In Clause 3(1)(a), "for the purposes of planning communications services" should be deleted. "Broadcasting services" should be added in Clause 3(1)(d). After 3(1)(g), a new clause (h) should be added that read "the control, direction and role of state-owned enterprises". He agreed that in Clause 3(2), the word "must" had to be substituted for the word "may". In Clause 3(2)(a), the reference to Section 17F of the ICASA Act should be taken out. He concurred with Ms Smuts on the newly inserted Clause 3(5)(c).

Ms Smuts noted that they should include the old requirement that someone had to guarantee financial support before ICASA would be asked to undertake an inquiry.

The Chairperson said that the government had to commit itself to funding for any inquiries that had to be undertaken. He asked for the opinion of Members and the Department on this issue.

Mr Mjwara remarked that the PMFA Act dealt with the funding of ICASA. The mechanisms of funding could thus not be outlined in the Convergence Bill. A reference to the PMFA Act would probably be needed in the Convergence Bill.

Ms Smuts agreed that they had to look into the PMFA Act. She asked for more information in this regard from the Cheadle Thompson attorney.

Ms Tshepe said that in Clause 3(4)(a), the word "must" should be used instead of "may".

Mr Oliphant agreed with Ms Tshepe’s proposal. He then proposed that in Clause 3(5)(b)(ii), "in no less than 30 days from the date of the notice" should be added at the end of the phrase. It was necessary to give timeframes. ICASA could comment on this proposal if they did not agree with it.

Ms Smuts asked about the ANC’s view on reinserting Section 13(a), Subsection 5(c) and (d) of the IBA Act. Mr Oliphant replied that they would come back to this issue after discussion.

The Chairperson remarked that a public process had to be accommodated, but they were sometimes an impediment for the regulator.

Ms Smuts said that the public processes as outlined in the IBA Act had served them well, and should thus not be taken out of the law.

Mr Mjwara felt that public processes sometimes prevented the regulator from acting fast. He stressed that the Department was not opposed to consultation, but asked for more flexibility in the Act. ICASA could then function more efficiently. ICASA should make decisions based on public consultation and not the Department.

Mr R Padayachie, Deputy Minister, explained that the form of consultation was not outlined in Clause 3(4)(b)(ii), and thus gave ICASA the power to specify the form in the notice issued in the government Gazette. Hence ICASA could, for instance, request written submissions instead of consultation that required the visit of distant areas.

Mr Oliphant remarked that the issue of public consultation required further discussion.

Clause 4: Regulations by Authority
Mr Oliphant requested to come back to Clause 4 in the afternoon session.

Department briefing on Clause 5
Mr Mjwara briefed the Committee on Clause 5 of the Convergence Bill. It had been agreed that communications network services, communications services and broadcasting services would be licensed. There had also been concurrence on the three categories of individual, class and exempt services that referred to the three areas of licensing. The objective of the Bill was to clarify who would be licensed, and to provide guidance to the authority and stakeholders regarding the licensing framework. It was a challenge to provide a framework that differentiated between different licences. Further difficulties arose with respect to defining criteria for individual, class and exempt licences.

The Department proposed various criteria for individual, class and exempt licenses. Individual licenses encompassed, amongst others, networks and services with significant economic and social impact, and communications networks of national and provincial scope. Class licences referred to medium size networks and services lacking the same social and economic impact, communications networks of local or municipal scope, and others. Small networks and services, non-profit communications services, and private communications networks were some of the criteria for exemption.

Clause 5: Licensing Framework
Mr Oliphant remarked that the Department’s proposals should be taken into account in Clause 5(2) and a newly inserted Clause 5(3) in order to provide clarification. He proposed to insert "and due consideration" after "application" in Clause 5(2). In Clause 5(2), (b) and (c) should be added, the former referring to broadcasting, the latter to communications services.

The new Clause 5(3) would read as follows: "Communications network services, broadcasting services and communications services that require an individual licence, include, but are not limited to a) communications networks of provincial and national scope operated for commercial purposes; b) commercial broadcasting and public broadcasting of national and regional scope whether provided free-to-air or by subscription; c) communications services consisting of voice telephony utilising numbers from the national numbering plan; d) any communications network service, broadcasting service or communications service where a state entity (directly or indirectly) holds an ownership interest of greater than twenty five (25%) percent of the share capital of the person providing such service; and such other services as may be prescribed that the Authority finds have significant economic or social impact".

Ms Smuts said that they could consider including exemption in Clause 5(1). Clause 5(4) and 5(5) should be repealed. She suggested adding the criteria on which the authority must base regulations for individual licenses in Clause 5(6). The class licences criteria required further discussion. She asked for criteria for exempt services. She queried whether Clause 5(8) had to make reference to the BEE Act. In Clause 5(9), an absolute discretion with respect to the period of licences had to be given to the regulator. They could not all be issued for 25 years. Clause 5(10) could probably only be finalised when they dealt with the difficult transitional measures.

The Chairperson asked why Clauses 5(4) and 5(5) should be deleted. Ms Smuts replied that the problem with those Clauses were that any entrepreneur who wanted to build a network would have to wait until the Minister had determined a date and geographical area within which network services could be set up. That seemed wrong. She referred to the submissions from Motorola and the Ulwazi e-learning Project that had stressed the advantages of new technologies such as wireless Internet services. This was a great opportunity for educational projects. The Department’s presentation had addressed some of their concerns, for instance regarding private telecommunications networks (PTNs). Particularly Clause 5(5) would prevent South Africa from taking advantage of the communications revolution.

The Chairperson noted that the size and significance of an operator had to be taken into account when issuing licences.

Mr Oliphant said that they would consider deleting Clause 5(5). Clause 5(4) should however not be repealed but read as follows after the amendment: "In consideration of the implementation of the managed liberalisation policies, the Authority may only accept and consider applications for individual communications network services licences as per a policy determination issued by he Minister in terms of section (3)". He was unsure whether Clause 5(1) should include exemption, as the latter was specifically dealt with under Clause 5(6).

Ms Smuts stressed that Clause 5(6) referred to radio frequency spectrum licences, but that there might also be network and communications services categories that the regulator wished to exempt. She encouraged Members to look into the Motorola submission regarding this issue.

Mr Mjwara agreed that they could not delay the introduction of new services. He pointed to Italy as a bad example where anybody could at any time put up an infrastructure. An orderly introduction of competition in the market was needed, instead of allowing the market forces to control the process. There would be exempt classes that would not require licences. Those entrepreneurs, however, who had a huge economic and social impact had to be managed. Clauses 5(4) and 5(5) referred to individual licenses.

Ms Smuts remarked that the market structure to date had not been successful, as Telkom had controlled it. She asked what harm would be caused if an entrepreneur wanted to build a network, addressed the regulator on the matter, and let the latter decide on the approval of the application. She did not understand why it was necessary for such developments to await the policy direction of the Minister.

The Chairperson highlighted that the national policy was managed liberalisation. Entrepreneurs should approach the relevant authority when having an innovative idea. The Minister would only intervene if the innovation did not comply with the national policy.

Mr K Khumalo (ANC) added that communications network services had national implications and had thus to be controlled by the Minister.

Mr Oliphant said that the Minister was responsible for making national policy. Both applicants and the authority worked within the scope of that policy. The Minister had no interest in hampering economic development. Section 192 of the Constitution demanded the independence of the authority. The amendment of Clause 5(4) had to be viewed in this context.

Clause 5(6)(a)(i) would be amended to "the process and procedures for applying for or registering, amending and renewing one or more of the licences specified in subsections (2)"; and (ii) to "the documentation that applicant or registrants in the case of class licences must include with their applications or registrations". Further, in Clause 5(6)(a)(iv), "demonstrations" would be inserted after "testing purposes".

Ms Smuts asked what was meant by demonstrations. Mr Oliphant explained that it had to be demonstrated that the new technology was working.

Mr Mjwara said that Clause 4 and 5 had to be linked with the South African policy of liberalisation regarding communications services. Managed liberalisation was required.

Ms Smuts expressed concern that Clause 5(5) would hold back entrepreneurs in the industry.

Mr R Pieterse (ANC) said that managed liberalisation was important, because entrepreneurs were biased in terms of profit. As a result, poor, rural and under-serviced areas would not receive adequate services. The Minister’s intervention was thus required.

Mr Oliphant concurred with the DA that Clause 5(5) should be deleted. He proposed that in Clause 5(7), "or registrant" should be inserted after "applicant". In Clause 5(7)(b), "a company" had to be substituted for "juristic person". In Clause 5(8)(a), "broadcasting services" had to be included. In Clause 5(8)(b) "groups" should be substituted for "persons", and "in accordance with the requirements of the ICT Charter" be added at the end of the phrase.

Ms Smuts asked whether the ANC took the Black Economic Empowerment (BEE) Act into account. Mr Oliphant answered that the BEE Act was quite limiting. They had to address the needs of the "presently" disadvantaged.

Clause 5(9) should read as follows: "Individual licences may be issued for a period not to exceed twenty (20) years unless a shorter period is requested by the applicant or designated by the Authority at the time such applicant applies for the licence". He further proposed to repeal 5(10).

Ms Smuts asked whether Members could receive a draft of this discussion, including the different positions of the ANC and the DA. The Department should submit their proposal for Clause 1 and 2. The Chairperson agreed.

Mr Oliphant noted that in Clause 5(12), "or" should be substituted for "and".

Clause 6: Licence Exemption
Mr Oliphant said that Clause 6 required major improvement. Sub-clause 1 would be amended and would then read as follows: "Subject to subsection (2), the Authority may prescribe the a) type of communications services that may be provided; b) type of communications networks that may be operated; (c) the type of communications network services that may be provided; and d) radio frequency spectrum that may be used without a licence".

A new Sub-clause 2 would further be added: "The communications services, communications networks, communications network services and radio frequency use contemplated in subsection (1) may include, but are not limited to a) communications services provided for a not-profit basis; b) communications services that are provided by resellers; c) private communications networks used principally or integrally related to the internal operations of the network owner, except where the private communications networks’ additional capacity is resold the Authority may prescribe terms and conditions; d) small communications networks such as local area networks; (e) uses of the radio frequency spectrum that were permitted without a licence prior to the coming into force of this Act and uses of the radio frequency spectrum that the Authority finds would not cause harmful interference with radio frequency spectrum licensees such a low power uses; and f) and such other services deemed to be exempted, as may be prescribed by the Authority".

There would also be a new Sub-clause 3: "Any regulations prescribed by the Authority pursuant to this section may contain terms and conditions applicable to the exempted communications services, communications networks, communications network services and radio frequency use and declare contravention of the regulation an offence subject to section 68".

Ms Smuts said that the new amendments sounded great, and requested a written document of these proposals.

Clause 7: Prohibition of provision of service without licence
Mr Oliphant said that Clause 7 had been amended to: "Except for services exempted pursuant to section 6, no person may provide any service without a licence".

Chapter 3: Licensing Framework
Clause 8: Terms and conditions for licences
After the lunchbreak, Mr G Oliphant (ANC) presented the document that contained the ANC’s proposed amendments to this clause. He stated that most of the amendments merely tightened up the formulation and language of the provisions.

Ms M Smuts (DA) questioned the ANC’s proposed amendment to Clause 8(1) and whether the word "standard" should be retained.

Mr Oliphant replied that the proposed formulation read much clearer, as "standard" was considered too generic. He requested that the Department consider this matter further. The Chairperson agreed.

Ms Smuts sought clarity from the ANC on its proposed inclusion of "broadcasting services" in the current Clause 8(2)(j) in a provision that dealt with the protection of public health.

Mr Oliphant replied that a broadcaster used radio waves that could also have harmful effects on the health of the community, and the ANC proposed the amendment to accommodate that concern.

Mr P Mashile, Independent Communications Authority of South Africa (ICASA) Councillor, agreed that it was better to err on the side of safety by regulating on the harmfulness of radio waves. He thus agreed with the proposed amendment.

Ms Smuts expressed concern with the new proposed Clause 8(2)(l), as she was not sure that that was the proper place to house the provision. She questioned whether it would not be better placed in the objects clause. Furthermore, it would be unrealistic to expect every single holder of a licence to "cater for all language and cultural groups and provide entertainment, education and news", whereas that could be expected of a monolithic entity such as the SABC.

Mr Oliphant responded that the ANC proposed the insertion of the provision as a result of submissions made during the public hearings which called for the diversity within South Africa regarding "entertainment, education and news" to be taken into account in the Bill. He proposed that the amendment remain as the new Clause 8(2)(l) and that an appropriate place be found for it at a later stage of the deliberations.

Ms Smuts asked whether the insertion of "subscribers" in the new Clause 8(2)(d) as proposed by the ANC meant the same as "end users", as was currently contained in the Bill.

Ms D Tshepe, Department consultant from Cheadle, Thompson and Haysom Attorneys, replied that she understood the two terms to be used interchangeably. She proposed that the Bill refer to one of the terms exclusively, so as to avoid confusion.

Mr Oliphant contended that "subscribers" was a more accurate term, whereas "end users" was far more general in its definition. He proposed that this matter be considered in greater detail during the formal deliberations on the Bill. The Chairperson agreed.

Ms Smuts asked why the deletion of the current Clause 8(2)(d) was proposed. Mr Oliphant replied that the ANC believed that the current Clause 8(2)(d) was spelt out in the new proposed Clause 8(2)(a). The current Clause 8(2)(d) thus became obsolete.

Ms Smuts stated that both she and several stakeholders had indicated that they did not understand the precise meaning or aims of Clause 8(2)(a), and clarity was therefore needed.

Secondly, she stated that she was fundamentally opposed to the deletion of Clause 8(2)(o), but suggested that if it were to be retained the word "allocated" must be replaced with "assigned". The difference between "allocated allotment" and "assignment" was clearly spelt out in the Motorola submission.

Mr Oliphant responded that the ANC proposed the deletion of Clause 8(2)(o), but the matter could be considered in greater detail at a later stage of the deliberations.

Mr K Khumalo (ANC) stated that the Committee had gone through Motorola’s submission and he would have expected Ms Smuts to motivate either for allotment or assignment, yet she merely restated Motorola’s view.

Ms Smuts responded that this was not the first time that the Committee had raised this matter, and proposed that the matter be discussed under the spectrum clauses. The Chairperson agreed.

Ms Smuts stated that, with regard to Clause 8(3), she was "absolutely in favour" of introducing significant market power into the legislation, as was currently accommodated in the provision. Yet she questioned whether this provision was the proper location for this issue as it dealt with long-term terms and conditions for licences. The Competition Commission submission indicated that the provision merely equated market power and dominance, which was not the way it worked in competition law, and thus a proper definition of "significant market power" was needed. This would entail the identification of the market as well as an economic analysis to ascertain which players within the market in fact had "significant market power" as defined. She proposed that this should be done by ICASA together with the Competition Commission, because the Competition Commission had the necessary skills. She proposed that the competition issues be placed in a dedicated section of the Bill.

Mr J Mjware, Department Deputy Director General: Multi-Media, informed the Committee that ICASA and the Competition Commission were supposed to submit a report on the matter before the Department could take the matter forward. He agreed with Ms Smuts that the competition issues be placed in a dedicated section in the Bill.

Mr Oliphant agreed that the competition issues should be grouped together. He presented the ANC’s proposed amendments to Clauses 8(3) and 8(4), as contained in the document. The amendments proposed the deletion of Clauses 8(5) – (7) as it was decided that the competition issues would be dealt with in a separate section of the Bill. He proposed that the Committee insist that ICASA and the Competition Commission address it on the issue as soon as possible.

Ms Smuts agreed with the proposed amendments. She asked whether the Committee was able to bind the Competition Commission by a law that dealt with the communications industry.

The Chairperson stated that both ICASA and the Competition Commission had been informed of the Committee’s request that it address the Committee on what would be acceptable to them and what would be possible within the framework of the law.

Mr Oliphant stated for the record that the Committee had called both ICASA and the Competition Commission a total of nine times yet they had still failed to respond.

Mr Mashile informed the Committee that ICASA had had discussions with the Competition Commission, but the results of the discussions had first to be passed by their principals before addressing the Committee. ICASA had written a letter both to the Committee and the Department that indicated the common understanding reached between itself and the Competition Commission and it should have arrived yesterday.

Clause 9: Application for and granting of individual licenses
Mr Oliphant presented the ANC’s proposed amendments as contained in the document. Most of the amendments merely tightened up the formulation and language of the provisions. There were consequential amendments that would have to be effected to the numbering as a result of the proposed amendments. The most notable proposed amendment was the deletion of Clause 9(2)(e), which would remove much of the objections raised with this clause.

Ms Smuts welcomed the deletion of Clause 9(2)(e). She asked Mr Oliphant to explain the reason for the 30% threshold in Clause 9(2)(b). It was a pity that the ANC only wanted people to be granted individual licences "upon invitation of the Authority" in its amendments to Clause 9(1), as that would exclude entrepreneurs with a brilliant idea from approaching the Authority. She thus proposed the retention of the original formulation.

Mr Oliphant replied that Clause 9(2)(b) would be discussed in greater detail at a later stage. He stated that the prescripts of the ICT Charter would prevail in this matter.

The meeting was adjourned.