Universal Service and Access Agency’s Strategic Plan 2007/08; ICASA Councillor Appointment

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
6 March 2007
UNIVERSAL SERVICE AND ACCESS AGENCY’S STRATEGIC PLAN 2007/08; ICASA COUNCILLOR APPOINTMENT

Acting Chairperson: Mr G Oliphant (ANC)

Documents handed out:
Presentation on Strategic Plan for Universal Service and Access Agency of South Africa

Universal Service and Access Agency of South Africa website

Audio recording of the meeting

SUMMARY
The Committee tabled the report on the appointment of Dr Marcia Socikwa to the Council of the Independent Communications Authority of South Africa. The appointment was accepted by the majority of members, with the DA recording a dissent.

The Universal Service and Access Agency of South Africa briefed the Committee on its strategic plan. It gave an overview of past performance, and listed the ICT Access Centres per province. The subsidies for Under Serviced Area Licences were listed. The Agency explained its new mandate as set out in the Electronic Communications Act, which was guidance and coordination of universal service and access, promoting the goals, undertaking research, advising on policy development, subsidising infrastructure development and undertaking electronic communication networks. The research strategy was geared towards that core business. The programmes for 2008 to 2010 were set out, and details of the project roll out were tabled. The organisational structure and staff demographics were explained. In the MTEF cycle the total budgets ranged from R21.1 million in 2007/8 to R23.4 million in 2009/10. It would need substantially more to meet the plans as set out, and intended to ask Treasury and the Department of Communications for assistance in increasing the budget once it had completed its restructuring process. It had confidence that it was on track for the future. The challenges included the implementation of the Act, setting up a mechanism for operators to pay into the Universal Service Access Fund, identification of the needs in the extended mandate of broadcasting, and human and financial resources.

Members asked questions on the Board, the motivation of staff, the amounts held in the Universal Service Access Fund, the definition of universal service and under serviced areas, and the e-rate and ability of schools even to pay at half rate. Members felt there should be no rush to award new licences, that there must be a complete review of existing licence conditions and assessment of the efficiency. They questioned the continued relevance of telecentres, the contingent liability reported in the Annual Report, the Auditor General's matters of emphasis about the lack of defined policies, capacity at the Agency, and what the digital hub would comprise. The apparent policy disconnect that arose from using operator's funds to service licensees, while the operators were also obliged to provide universal service obligations was noted. Members further questioned relocation allowances, the reason for a new strategic plan, entrepreneurship models, difficulties in definition, and the role of the Agency in managing the licensees.  Issues of staff and the budgets for additional appointments, money paid to consultants for a disappointing study, staffing policies and morale, the functioning of the audit committee and portal development were raised. Further questions were to be answered during the meeting in May.

MINUTES
Appointment of Councillor of Independent Communications Authority of South Africa (ICASA)
The Acting Chairperson reported that the Committee had been asked to consider the appointment of Dr Maria Socikwa to the ICASA Council, in order to make a recommendation to Parliament. The appointment would be made by the Minister. Dr Socikwa had been on the short list the previous year.

Ms D Smuts (DA) stated that she was not supporting the nomination, for reasons given last year.

The remaining eight members of the Committee resolved to accept the nomination and submit the report to Parliament.

Mr K Khumalo (ANC) pointed out that the objection of the Democratic Alliance would stand as per the discussions at the time of the previous appointment, as the name had been taken from the original list.

Universal Service and Access Agency of South Africa (USAASA): Strategic Plan Briefing
Ms Cassandra Gabriel, Chairperson and Acting CEO, stated that USAASA was in the process of finalising the short list for the appointment of a Chief Executive Officer. She reported that there was a new mandate for the organisation under the Electronic Communications Act (ECA). There had been a number of changes of the management team. One of the problems in the past had been instability under the old Act. The ECA had given USAASA a new lease of life, by making it a statutory body with long term objectives to meet. The vision of USAASA was to be the leading organisation in the promotion of the goals of universal service and access to ICT services for socio economic development and it would champion Government's agenda of using ICT to facilitate development. It wanted to facilitate access in partnership with all stakeholders towards the achievement of an information society. One of the weaknesses in the past was that USAASA had an adversarial relationship with other operators. Under the new strategic principle it would be working closely with operators.

Ms Gabriel tabled the achievements from 2004 to 2007. USAASA had rolled out three models of access, being telecentres, cyberlabs (in schools) and digital hubs. In the last financial year there was a great deal of turmoil and a lull in roll out, as there was recognition of the need to review what the organisation was doing. The access centres were listed by province. There were 138 telecentres, some stand-alone and others at multi purpose community centres (MPCCs), 234 cyberlabs and 3 digital hubs. The telecentres were most successful where there was provincial support.

USAASA also provided a subsidy for the under serviced area licences (USALs). There were 14 licences envisaged for the next financial year Challenges included sustainability and subsidy issues. USAASA gave a R5 million subsidy when the licence was issued. A second tranche of R5 million would be paid on provision of a financial statement and evidence of roll out. A third tranche of another R5 million would be paid in the next year on the same conditions. Currently only one out of the seven licensed USALs was functioning properly, and another 2 were showing potential. The progress for each of the seven USALs was set out. Some tranches had been paid but the USALs had not contacted USAASA again. The main problem of the USALs was that they lacked money for operational costs and had been unable to raise the funding. USAASA was restricted to providing a subsidy only for infrastructure and not for operational costs. Its role was limited to trying to work with the USALs to assist them in fighting liquidation.

The total contractual obligations to the USALs were R59 million but it was unlikely that this would have to be paid in this financial year. USAASA welcomed the Minister's statement about re examining the policy. It believed there were too many unreasonable and onerous licence conditions that prevented the USALS from running a successful business. A study last year showed that more substantial subsidies would be required.  USAASA was working with the Department of Communications (DOC) and ICASA, and in the next month it would be able to report on progress and what processes would be put in place to make the USALs sustainable.

The expenditure trend for the universal service and access fund was listed. The appropriated budget had been based on a 10% increase per annum. Expenditure trends had risen and the surplus had been coming down as the organisation was able to spend more efficiently and effectively. There had been a slump in spending the last year for the reasons mentioned earlier.

Ms Gabriels set out the mandate of the USAASA as contained in the ECA. Firstly it was to provide guidance and coordination of universal access. It should promote this goal and do research to advance universal access. It must give policy and advisory development, and subsidise infrastructure development through the Universal Service and Access Fund (USAF). Finally it had a new mandate to provide electronic communication network services and broadcasting. In order to achieve this mandate USAASA had been working on a strategy that would address the legacy problems, and take it into the future. There was a four-core model, based on guidance and coordination, subsidising development, providing advisory services and undertaking research on all the other core mandates. In regard to research, there was currently no information on where the access gaps were. The Presidential Nodes and MPCCs had been identified for infrastructure development, and USAASA would need to put all the information together. Insofar as subsidisation was concerned, the ECA spoke of competitive tendering, so the USAF needed to be used to subsidise the roll out rather than USAASA doing the roll out itself, which would not be the core business of the Agency. A closer relationship was being developed with operators and the industry. USAASA would identify areas where services were needed, and identify the profitability gaps so that they could be funded. It would be able to leverage far more benefit in the roll out. The main operators had given support. Another challenge was the universal service and access levy that was paid to ICASA and thence to National Treasury. Presently the funds did not come back into the industry. USAASA was in discussion with DOC to try to unblock the funds, and would be asking for support from the Committee. The advisory role for provided many opportunities for USAASA to promote the important of access to the private sector and local government. The underpinning role was one of research, which had been a weakness in the past, when research projects had been funded but not the results not properly correlated and analysed. There had been huge changes in the industry since USAASA was formed. The research would inform the programmes by advising on needs and infrastructure.

The programmes for 2008 to 2010 were set out. Ms Gabriel stressed that whilst USAASA would very much like to run all the programmes, it would be limited by its budget allocation. The programmes included a review of the existing access points, exploring the ownership model (including an entrepreneurship model) and rolling out the MPCC access points, particularly to access government services. It was reviewing the USAL subsidies with DOC and ICASA as it did not have the budget currently to fulfil its contractual obligations, and since this was an area that desperately needed to be sorted out. It sought to subsidise infrastructure in under serviced areas and to understand the challenges on schools' connectivity. USAASA believed all schools must have cyberlabs and connectivity and was discussing this with the Department of Education. Operators had targets to roll out connectivity to 5 000 schools at the e-rate, but many schools would not even be able to afford those rates. The new mandate on broadcasting meant that USAASA must look to matters such as community radio. It did not currently have the skills and had not yet started consultation with the operators. It needed to understand what its role could be and was looking at the implications of digital migration. A programme to subsidise needy people, that would involve research and consultation, was required. It was engaging with the Department of Trade and Industry (dti) to see how to support small, medium and micro enterprises (SMMEs) to boost economic growth and development. Research was critical to achieve any objective. The COO was working on a Master's research project on telecentres internationally and was contributing a great deal. It was necessary to tailor make best practice to meet local conditions. Research was needed into the impact of the projects. In terms of coordination there was a programme of access mapping, in order to identify priority areas for roll out, from a single portal. Finally USAASA needed to reposition itself to achieve the new mandate. People issues were taking time and attention. The structure needed to change, different skills and expertise were needed and there must be performance management.

Ms Gabriel tabled the project roll out plan as submitted to the MTEF. Every project had been listed, and the total budget requested on the basis of these projects was R346.2 million. The allocation was R32.7 million, so the budget had drastically reduced the number of units and the work.  One of the reasons why USAASA did not get the full allocation was that DOC and NT wanted to see proper plans in place. Ms Gabriel admitted that USAASA had not previously had a good reputation but management had recognised the shortcomings and was addressing those challenges.

The organisational structure consisted of a Board and CEO, plus four business units. There were regional coordinators in most provinces. There was a total staff complement of 32 people. Additional profiles required would be research capability, fund management, financial analysts and project managers.

The operational budget for the next three years was tabled. There would be a shortfall of about R7 million in this financial year. The budgets were set for R21.1 million in this year, rising to R23.4 in 2010. It would clearly have to cut back on the projects, but it would provide time to get the systems in place. By 2008/09 USAASA would have engaged with Treasury to unlock the funds, and to convince stakeholders and shareholder of its capacity and capability to spend the money. Therefore although the budget was small, it would be able to achieve the strategic objectives and new mandate.

Ms Gabriel recapped that the challenges included the implementation of ECA, negotiations with ICASA to identify what the levy would be and to set up a mechanism for operators to pay into the USAF. Broadcasting was another challenge and human and financial resources and the image of the organisation needed to be turned around.

Discussion
The Chairperson asked for details about the Board.

Ms Gabriel said there were six Board members, of whom five were present today. The term of office of Mr Petzer, who was present, had ended in February. There was a vacancy that had not yet been filled and one vacancy for the CEO, who sat on the Board.

Mr S Nxumalo (ANC) asked what the current situation was. He asked for some detail about whether the staff was motivated at this stage.

Ms Gabriel replied that USAASA was over the worst. The new management team was motivated It had dealt with the transition from the old Act to the new. Staff had new contracts and the strategy would be rolled down to all staff. Management was working on having one vision. It was confident that there was a plan in place and all staff were working together.

Ms D Smuts (DA) stated that she was pleased with the amount of revisionist thinking. She noted that USAASA was working on the definitions. She asked how much money was sitting in the Universal Service Access Fund. It was ridiculous that operators had paid such large amounts that had not come back to the industry, especially as the funding was intended to subsidise needy people. She believed it would be useful to meet again with USAASA once it had had a chance to work matters out. The Committee wished to receive the progress report. She observed that the USALs had given reports that USAASA did not answer letters, but she noted that they too had been at fault. Presently the private sector was picking up on the State obligations.

The Acting Chairperson said that the Committee had decided to meet with USAASA, DOC and ICASA to discuss the way forward.

Ms Gabriel replied that under current conditions the operators had to pay 0.02% of revenues, which should amount to about R140 million per annum Under the ECA they could be asked to pay up to 1% of their revenues which would significantly grow the Fund to around R350 t0 500 million. There was a significant amount of money in the USAF.

Mr Linden Petzer, retired Board Member, USAASA said that the current definition of universal services was set on fixed line. It was necessary to review the whole issue, in light of mobile developments, and to move away from the definition bound to voice. There was a need to look to computer technologies. Perhaps different definitions would be required for voice and ICT services. It was work in progress and hopefully in the near future there would be definitions put forward for public comment.

Ms Smuts said that this had been work in progress over a number of years.

Mr R Pieterse (ANC) noted that the e-rate had not yet been determined. Therefore he doubted whether the rollouts would ever reach the schools, including farm schools, as they could not afford the rate. There had been no agreement as to who would pick up the remaining 50% costs.

Ms Gabriel confirmed that the e-rate had been identified as a major issue. The operators and ICASA were meeting every two weeks to look at the rate and roll out of the schools connectivity. USAASA was working with the Department of Education to assess what it would cost to subsidise the 50% and to identify who would be paying. A broad calculation showed that the costs would be about R8 to 10 million to cover the schools that would be connected in the first year. At present USAASA could not afford that.

Mr Pieterse noted that USALs were brought about to cover the "last mile" but the people continued to suffer. The mandates were given but had not been delivered upon and nobody else was rolling out. There was no guarantee that the new licensees would not repeat the mistakes of the past licenses. It was vital to do an analysis of the current model. He suggested that there should be no rush to award new licences.

Ms Gabriel replied that USAASA was working closely with the DOC and had identified that there was a problem. The Minister recognised that the policy needed to be reviewed. The policy makers did not foresee the problems that would result from such rapid changes. With the benefit of hindsight the new licences would not be issued in the same way. ICASA was now also on board.

Mr Pieterse commented that the current mandate in the ECA covered broadcasting and the Media Development and Diversity Agency (MDDA) was doing something similar. He asked if there was likelihood of a merger in future as the territories crossed.

Ms Gabriel could not comment on this.

Mr R Mohlalonga (ANC) noted that the telecentres had emanated from a concept a few years back. He wondered if in a converged environment telecentres were still relevant, or were now antiquated and should be replaced with other services. He also asked for clarity on the concept of a digital hub. Mr Winile Lamani, Senior Manager, Projects, USAASA replied that ideally in a converged world the telecentres should provide all facilities. However in the current situation there was a constraint in infrastructure. USAASA would be looking at the access technologies, what the telecentres could offer and what would be suitable. There must also be a needs analysis of the communities. Some centres might not be utilised and the digital hub could provide the services of the telecentre. The purpose of the digital hub was to provide a centre where all the services would be provided. . The aim was to have many centres as the small access centres increased.

The Chairperson asked what important services would be seen in the digital hub.

Mr Lamani replied that the model was applicable still. The underserviced areas would have small centres. In future broadband might be rolled out to the access points. There were some refinements in talking of USALs and USAASA would have to see how would one work with the other, both USALs and hubs, to ensure that more was done.

Mr Mohlalonga noted that the Committee had raised some concerns last year, which were reflected again in the Annual Report. A contingent liability of more than R22 million was rolled over from the previous year. He asked for a report. He also enquired if there was likely to be underspending this year.

Mr Keith Keys, Chief Financial Officer, USAASA said that indeed Treasury did allow a R22 million  roll over. However, it must be noted that although there was underspending there was in fact commitment to the USALS against this amount. The roll over should be reduced to R4.1 million, and there were plans in progress to reduce it by the end of the month.

The Acting Chairperson asked how this roll over would affect the R59 million contractual obligations mentioned earlier.

Mr Keys said that the commitments were in excess of the R22 million, which was why the budgetary process had taken the USAL funding out of the next budget.

Ms Gabriel added that the contractual obligations were not allocated to USAASA in the next financial year's budget. Therefore there was no funding to pay the USALs. DOC was aware of that, and it was looking at how to access the money directly from Treasury for the USALs.

Mr Pieterse asked if this meant that if the USALs fulfilled all the requirements and called for their second and third tranche, it would not be available.

Ms Gabriel confirmed that this was correct. The contingent liability was included in the preliminary budgets but no allocations were made. She indicated that she would check up on the reasons why the money was not granted, and would revert to the Committee on this point.

Mr Mohlalonga noted that USAASA was re-defining universal service. However, at the moment the USALs were being licensed. He felt there was a policy disconnect. USAASA should be a leading player in setting out what needed to be done. A further problem arose with the USAF. The operators had to pay a percentage of turnover into the USAF and universal service obligations were being imposed as part of their 3G licences. USAASA was to roll out telecentres and subsidise the USALs from operator contributions. The USALs were essentially in competition with the operators. Mr Mohlalonga also found this model confusing and thought USAASA should be able to provide guidance of what would be the best model for universal service and access.

The Acting Chairperson added that this also illustrated the need to have a detailed report on the definition of under serviced areas, what was provided and what was ideal. The reason for these questions was that the Committee had done oversight over the telecentres and had seen problems. USAASA should not be tentative but must state firmly what it intended to do in terms of its standards.
 
Ms Gabriel said that the Minister issued the licences and ICASA was the regulator. She agreed that there re was some disconnect on the USALs and this was part of the discussions in how to move forward. She could not give an exact answer in relation to the 3G licences, but suggested that perhaps clarity could be sought from DOC.

Mr Mohlalonga referred to the Annual Report and asked about the R180 000 re-location allowance paid to management.

Ms Gabriel said that USAASA had taken legal opinion that had suggested that steps must be taken to recover the funds. Letters of demand were being sent to the relevant employees.

Mr Mohlalonga said that the Auditor General had raised a matter of emphasis on the lack of documented policy and procedures, and on lack of identification of policies on bad debts. Finally he had said that there was no data backup for the USAF. These issues had not been mentioned in the presentation yet were clearly important in order to stabilise the organisation and allow it to fulfil its mandate.

Mr Bheki Maduna said that the policies had gone through the processes and had been approved, but the signature of the Chairperson was only appended to the policies after year-end. The audit committee had raised the matter with the Auditor General but he had insisted that this was a technical irregularity that should be reported upon.

Mr Mohlalonga hoped that this year's financial report would show an improved situation. He also noted that the USALs had complained that they did not get assistance from USAASA due to lack of capacity.

Mr K Khumalo (ANC) referred to the service of universal access. The international Telecommunications Union had said that access and service had to do with cost-effective processes. He too was concerned about the licence obligations. He thought that National Treasury (NT) was keeping the money because it believed USAASA did not have the capacity to deal with it. If the operators were giving money to ICASA, and USAASA was passing it on to the USALs who were not able to account for it, this meant that universal access could not be achieved, and that those operators providing the funds would also not be able to roll out.  He asked why operators should continue to pay this money if it was not reaching appropriate institutions. USAASA should be developing capacity. He understood that the money had been committed.

Ms Gabriel said that this was a major question. There had not been a joint solution from the industry, nor any joint agreement or task team, and it was high on the agenda of USAASA. This very issue was already being  discussed with many of the operators. A joint team was needed to talk to DOC and Treasury. USAASA had already asked NT what proof of competence it would require in order to unlock the Funds. USAASA had recently awarded a tender to a consultant to go out and monitor what was happening on the ground, so that suggestions for the future could be made. The information received back was insufficient, and there was currently a dispute over payment of the consultancy fee. She agreed that the inability of the previous Universal Service Agency and USAASA to project manage tightly and determine sustainability issues had been problematic.

Mr Khumalo noted that there was a complete departure from the previous strategy plan and wondered why. this was so. he noted that the strategy plan should be built on previous Annual reports. Mr Khumalo noted that the vision and mission did not say anything about the original expectations

Ms Gabriel noted that USAASA had had to make a radical departure from its previous strategies, in order to address what it had done and what it was achieving.

Mr Khumalo noted also that under the new ECA there was provision for voice, digital and data. He asked  what was provided by USAASA  in the cyberlabs, the digital hubs, and the telecentres. He was worried that there would be duplication as the cyberlab should be able to do data, video conferencing and so forth. Broadband was the key issue to reach under serviced areas. Data should be transmitted in a variety of ways. He enquired specific details of numbers of telephones and terminals, of whether the cyberlabs were really working, of whether SMMEs running the centres were receiving other subsidies and loans and what criteria wee used to allow entrepreneurs to run the telecentres.

Ms Gabriel replied that the entrepreneurship models had worked where the entrepreneurs added value to the  community. Although USAASA had not decided to turn the telecentres into entrepreneurship models or put them out to tender, she personally was inclined to recommend that route. USAASA could not micromanage and run every telecentre. MPCCs needed to be managed by a committee. There were insufficient resources to have large project management teams at USAASA. It was vital to involve local government. The dependency factor was another problem, and at present USAASA would be called out to fix minor problems such as a jammed disk drive, as there was not sufficient independent capacity. 

In so far as the telecentres, cyberlabs and digital hubs were concerned, she could not give the Committee a clear picture. There was a baseline of standards, but the realities on the ground were unknown. In theory a telecentre should allow for normal calls and have broadband for internet. Some had video conferencing facilities and some did not. Some facilities were not working. USAASA did not have its finger on the pulse and this was a shortcoming that it sought to address as a matter of urgency.

Mr Khumalo said that the difficulty in definition raised earlier by Mr Petzer had highlighted that no one knew the effect of mobi-density, nor how to calculate universal services, nor how to do the broadcasting. He commented that all these issues should be taken into account when doing the strategic plan.

Mr Khumalo said that USAASA should be sending out a rescue team to try to assist the USALs to do what was expected. He understood that licence conditions were onerous. USAASA should be giving specific recommendations. He asked what specific steps were used to determine which of the USALs needed assistance.

Ms Gabriel said that when USALs were finding it hard to run a sustainable business USAASA could not assist as it did not have the skills. Partnerships were being set up with operators who did have the skills. She confirmed that USAASA should have followed up more closely on the USALs and recovered the funds, some of which had now gone missing. USAASA was discussing its legal remedies with its lawyers. It was a long process but the Public Finance Management Act (PFMA) must be met. USAASA reiterated that its hands were tied as it could not give infrastructure funding.

Mr Khumalo summarised that he believed the discussions should have been broader and there should be a better attempt to define the role of USAASA in the context of the environment.

Ms Gabriel said that she would welcome engagement at a more detailed level and appreciated the guidance of the Committee.

Mr M Kholwani (ANC) noted that the financial plans were in place up to 2010, but there had been no mention of what would be done with those telecentres that were not operating properly, especially since they had raised expectations in the communities that services would at last be provided. He noted that the ECA had broadened the role of USAASA but there was no clear indication what it was doing in regard to the telecentres.

Ms Gabriel replied that indeed some of the telecentres were not operating properly. USAASA did need assistance in finding solutions. There was only one person in each province to check up on them, but no budget to appoint any more people. The outsourced study had been mentioned, but this had not produced conclusive results. One person in the office had now been tasked with a complete review of the telecentres, cyberlabs and hubs. There was unfortunately no easy solution to community expectations. Before making application for budget USAASA would obviously need to undertake feasibility studies, which would include enquiring as to the local community's needs. USAASA would conduct consultation and work with local government to try to reach sustainable solutions where the telecentres were not operating properly.

In regard to the broadened role of USAASA Ms Gabriel said that it had budgeted already for operational costs and training in the new budget and this included training for 200 people to run and co ordinate the telecentres. This was done because dependency on USAASA technicians in the main centres to fix small hardware problems had caused difficulty.

Mr Kholwane said that when the Committee had engaged with the communities who did not have access to SABC or even to radio, there was an expectation that the facilities should be built up. That was an area that required to be looked at as part of the access requirement. It seemed that in many cases USAASA had been concentrating in areas where access already existed.

Mr Kholwane asked for a definition of the "needy people" that USAASA was supposed to be assisting.

Ms Gabriel responded that this was one of the terms that would need to be properly defined. It would doubtless include disabled and unemployed people. There would need to be discussion on whether "people" would include "entities" such as schools that were unable to afford the e-rates.

Ms Gabriel stressed that USAASA did not have all the answers. More work still needed to be done on the strategy to inform key decisions, review programmes and find ways to make the centres more profitable.

Mr Kholwane asked whether it was intended to come up with a clear plan in the current or the next financial year.

Ms Gabriel confirmed that this would be done by the end of this current financial year.

The Acting Chairperson indicated that the Committee would be undertaking oversight visits in May and might include a visit to USAASA to check on some matters.

Ms L Yengeni (ANC) said that she was most concerned that USAASA had not been able to give a detailed response on why Treasury had declined to award the full budget figure. The USALs had already indicated that they were not able to function properly because of the disorganisation within USAASA and the fact that questions going to the heart of the organisation could not be answered would seem to corroborate these concerns.

Ms Hawa Khan, Board Member, USAASA indicated that USAASA did not engage directly with National Treasury and that all communications were channelled via the DOC. Even if DOC were to call for funding from NT they may not receive it and it was not necessarily unusual that the request had not been met. All engagements and discussions were done by DOC.

Ms Yengeni noted that USAASA had budgeted for 150 cyberlabs. She pointed out that if it was not aware of the status and functioning of the existing labs no further funding should be allocated to this project.

Ms Khan indicated that this question tied in with the USALs as well. USAASA had been told that even with the USALs support and the telecentres it was still not doing enough. It was unlikely that the USALs would function properly, no matter how much money was allocated to them, so the issue did not really turn on the budgets but rather on where the core functions of USAASA lay. It was necessary to find a balanced view. The Department of Trade and Industry and other stakeholders would also need to be involved.

Mr Andy Mooke, Board Member, USAASA added that two companies had already been instructed to look into the functioning of the telecentres, as previously described. Another had been appointed to undertake an IT project to ensure that the centres' equipment was properly functioning. One of the strategies used in the past was to equip the centres with refurbished computers, which would assist local people to acquire computer technician skills. This policy had been revised as the costs of refurbishment exceeded the costs of purchasing a new computer. Workshops had also been arranged to try to assist the USALs with management and administration skills and programmes were being drawn, tailor made to their needs, to try to assist further.

The Acting Chairperson noted that the comments about the abortive study into the telecentres gave the impression that USAASA had not yet found its feet and was not yet fully in charge. The enormous variance between the budget request and the allocation was another indicator. He felt that the capacity and accountability needed to be far tighter.

Mr Mohlalonga suggested that as advances had been paid USAASA must look into recovery of at least part of the funding.

Ms M Morutoa (ANC) commented that the service models for MPCC should take into account rural conditions.

Ms Morutoa also enquired about the gender policy, and enquired whether women would be considered "needy".

Ms Gabriel indicated that the organisation was very balanced and there was full employment equity.

Mr Pieterse asked whether USAASA employed any disabled people. He commented also that the lack of facilities for disabled people at MPCCs was a poor reflection on them and was very insensitive.

Ms Gabriel replied that there was one employee and that USAASA had needed to instal special lifts in its new building.

The Acting Chairperson enquired how many times the Board had met, the attendance and the focus of its discussions. He asked that this information be available during the May visit. Other issues that he requested be raised and discussed during the May visit were:
- whether the staffing situation was now stable
- clarification of the relationship with MDDA and how the broadcasting mandate in the converged environment could be clarified
- future treatment of the USALs, since funds could not continue to be given to them indefinitely, nor could USAASA be a conduit for money without dealing with accountability.
- discussions with the Department of Education on cyberlabs and the proactive steps taken by USAASA

- further clarity on the contractual obligations that had not been budgeted for, an indication of the exact problem, and a comment upon why operators should be expected to contribute to them, especially at the higher rates
- whether any research had already been done, and whether research had been done into USAASA itself in terms of its mandate and accountability.
- how far the licence conditions for mobile operators had gone
- what informed the decision to roll out in certain areas

The Acting Chairperson asked how many vacancies there still were in the organisation, apart from the CEO vacancy. He noted that stability of USAASA was vital and it should be aware of and be able to manage staff resignations, and to be able to tell the Committee if there were staff problems apart from the dispute on the relocation allowances.

Ms Gabriel replied that there were currently eight vacancies. The vacant posts were the CEO post, which had already been advertised, a new post of Senior Manager of Research, four managers' posts that would be filled following resignations and two new managers' posts.

The Acting Chairperson asked if there had been any budget for the additional expertise required, as set out in the presentation, and how USAASA intended to get the appointments.

Ms Gabriel confirmed that the additional costs had been included in the budget. USAASA was also looking at the possible restructuring to accommodate the new posts or to adjust the job descriptions in old posts. The changes would be phased in over the next two financial years. Four of the posts had already been filled and the new appointees would start after serving out their resignation period. Advertisements had already been sent out for researchers but not all appointments could be made in the next financial year. The phasing in was being done to try to establish an interim structure. During this year USAASA was focusing on fixing the problems, turning around the organisation and addressing the poor perceptions, and would be skilling itself fully in the next year.

The Acting Chairperson asked for a further explanation of the remark that the refusal by NT to award the  full budget requested was "a blessing in disguise".

The Acting Chairperson asked how often the Audit Committee met, how functional it was, and whether the members of the Committee would attend regularly.

Ms Khan replied that the Audit Committee comprised three chartered accountants. The Chair of the Committee had been the Head of Internal Audit at the Road Accident fund, and another member was Head of Audit at a large municipality. Another was experienced on PFMA matters. There was therefore a wealth of experience on the Committee. The Committee met regularly and had also undertaken weekend operational work to try to train the staff in financial management and accounting principles.

The Acting Chairperson asked that the dates, minutes, issues discussed and plans for the year should be sent through to the Committee secretariat.

Mr Mohlalonga stated that the Annual Report had indicated that some members of the Committee had not attended meetings regularly and some had attended only one or two meetings in the year. He asked why this was so and what steps had been taken to improve.

Mr Maduna stated that although USAASA had experienced problems with some members, the statistics were a little misleading as some of the Board had been appointed only late in the year and thus were not able to attend more than two meetings. There should have been a note on the financial statements. The DOC had taken quite some time to appoint the new members to the Board.

The Acting Chairperson asked how far USAASA had gone on the portal development with the Human Sciences Research Council (HSRC). He asked what the terms of reference were, what was being examined, whether there were formal programmes in place and what was sought to be achieved.

Ms Gabriel noted that there had already been work done to develop a portal between HSRC and USAASA. The portal was housed at HSRC with a link to USAASA. There was still information to be inputted, including infrastructure maps and the information would be accessible at all cyberlabs. it would take a while to get all the information in but the system was up and running.

Mr Khumalo warned that USAASA must be careful not to lose sight of its key mandate and responsibilities in moving from one strategy to another. He also noted that several of the matters raised should be discussed in the Annual Report.

Ms Gabriel replied that the old strategy had been very limited because it had focused on the roll out of the telecentres only. A review was needed and this commenced last year under the former CEO. Having defined what was needed the new ECA had redefined the mandate and USAASA needed to be more creative. In light of the fact that the telecentres were not working it was necessary to find a system that could also deal with convergence. The broad mandate was how to use the funding most efficiently and to work more effectively with stakeholders and operators.

Mr Pieterse felt that the USALs could not work in their current form. He suggested that public private partnerships could work well, and that municipalities could become involved.

Mr Mohlalonga enquired if there was any objection to the Chairperson of the Board acting as the CEO pending the new appointment.

Members felt that there was nothing objectionable since the Board would appoint the CEO, it was clearly a temporary position and this addressed a crisis situation.

Mr Kholwane indicated that many of the USAASA problems before had emanated from a weak Board. The Committee must know exactly where the problems lay. It was necessary to have performance contracts for all people. He indicated that he would prefer to see longer-term progress and planning. Time lines should be included to allow the Committee to monitor progress.

Ms Yengeni noted that Ms Gabriel had accepted that problems did exist and had not adopted a defensive attitude.

Ms Gabriel summarised that USAASA was clear on its roll out, but there was a clear need for discussions between the Agency, DOC and Treasury. USAASA would have to be transformed and to be able to access funding.

The Chairperson concluded that there needed to be a rethinking of plans in view of the converged environment. There was further a need to strengthen the Board and the audit committee.

The meeting adjourned.