Department of Communications on its Radio Frequency Spectrum Policy and Broadband Policy

Meeting report

Opening Statements
The Chairperson stated that he and the Committee were aware that the policies were still in draft format; however, Members felt that the two policies were very complicated and that a special briefing by the Department of Communications (Department and DoC) would be useful in helping the Committee to understand the policies.

Ms Mamodupi Mohlala, Director-General: Department of Communications (DoC), stressed that the policies were still in draft format and had been released for public comment so the discussions today would be included in the consultative process and considered as public commentary. This would be used in the finalisation of the policy. The Department would also be having further consultative processes in the form of a Broadband Colloquium. This colloquium would be restricted to discussions on the broadband policy.

Briefing on Draft Radio Frequency Spectrum Policy
Ms Rosey Sekese, Deputy Director-General: ICT Infrastructure Development, DoC, explained that Radio Frequency Spectrum (RFS) was the entire spectrum of electromagnetic frequencies used for communications; including frequencies used for radio and radar and television  The longer the wavelengths, the smaller the frequency was and vice versa. South Africa belonged to Region 1 as classified by the International Telecommunications Union (ITU). Region 1 included the whole of Africa and certain places in Europe. Each region received their own allocation of spectrum; therefore there had to be coordination with neighboring countries. (see presentation)

Spectrum Management was the combination of administrative and technical procedures necessary to ensure the efficient operation of radio-communication services without causing harmful interference. The goal was to facilitate the use of the RFS in national interest and to ensure that adequate spectrum was provided for all users. Spectrum Management Functions focused on planning and application, international coordination and cooperation, assignment and licensing, monitoring and enforcement, and standards specification and equipment type approval. She added that the Independent Communications Authority of South Africa (ICASA) had to monitor the use of spectrum so that they could see if it was being used illegally.

RFS was a limited resource; therefore the Department had to ensure its efficient use. The spectrum usage priorities would be determined. The policy would provide guidance in the development of the National Frequency Plan (NFP) as well as in the allocation of spectrum where there were competing services, ensure government objectives were met and that there was rational and effective spectrum utilisation. The policy would also promote national interests, establish principles for spectrum management and establish principles for spectrum fees.

Guidelines for the NFP included complying with ITU requirements and coordinating with neighbouring countries. The Minister was responsible for the approval of the NFP. Spectrum and land are similar in that they occur naturally in the physical environment, they are both scarce and cannot be reproduced, and they constitute a fixed stock able to supply a production flow indefinitely provided it is managed effectively. Spectrum pricing would depend on the purpose of the pricing, types of spectrum pricing, elements of spectrum pricing, setting of fees and the level of fees.

Spectrum would be used for security services, safety of life purposes, public protection and disaster relief, scientific research, and for new applications (see presentation). The policy would be implemented according to a RFS strategy and according to policy directions that would be given to ICASA. A spectrum audit would also be conducted. This would enable the Department to monitor the usage of spectrum and allow them to find ways to optimize the efficient usage of spectrum.

The draft policy was already approved by the Department of Communication (DoC) Executive Committee in August 2009 and presented to the economic cluster in September. Public consultations took place in September/October 2009. The policy would then be submitted to the economic cluster in January 2010 and to the Cabinet for approval in February 2010. 

Discussion
Ms P De Lille (ID) asked if this was the first time that a RFS policy was being developed. If a policy had been developed before, was it being reviewed and amended? She asked if the Department still had to do the spectrum audit or if it had been done already.

Ms Sekese addressed the issue of spectrum audits. One of the key principles that the policy was dealing with was “use or lose”. The audit would allow one to see how much of the spectrum was being utilised in comparison with how much was allocated. This would help the Department to determine the gaps between the two.

Ms Mohlala stated that no audit had been done thus far; however, ICASA would give them information on assignments that were undertaken. Unfortunately, the Department did not have a way of cross-referencing and confirming that these were actually correct and that there had been optimal utilisation of spectrum. The Department could not answer these questions without undertaking an audit. 

Ms Mohlala stated that this was the first policy for spectrum management. ICASA already had a “band plan”; however, the Department now believed that there was a need to comply with the requirements of the ITU and put in a place a policy that could inform ICASA’s decision regarding the assignment of spectrum.

Mr N Van den Berg (DA) wondered how South Africa managed before without a spectrum policy in place. There had to be specific rules in place in the past so that spectrum was not just “dished out”.

Ms Mohlala stated that if there was a “policy vacuum” domestically, then the regulator had the right to the resource provided by the United Nations (UN), which in this case was through the ITU. Accordingly, ITU guidelines were used. South Africa needed to adopt the ITU guidelines into domestic policy so that ICASA did not always have to refer to the ITU.

Mr Van den Berg clarified that in the past South Africa had to ask the ITU for its guidelines as the country did not have a policy of its own.

Ms Mohlala stated that this was correct. It was based on decisions made at the World Radio Conference (WRC), which was held every four years. Here, the allocations were specified and agreed on by the member states. South Africa belonged to region 1 and was bound by whatever allocation was agreed upon at the WRC. These would then be implemented domestically. This was why the Department wanted a policy in place that would inform or incorporate what was agreed upon at the conference.

Ms J Kilian (COPE) stated that she had heard that there was something called a “white space” in between the entire spectrum that could now be utilised because of new technological developments. She understood that spectrum was becoming a very valuable resource and it was even considered that some spectrums would be auctioned off. She believed that the spectrum audit would help a lot because there were people who were licensed for specific spectrum that they were not using. This could not be allowed because spectrum was such a valuable resource. She asked how this situation could be handled. She asked if the Department had any idea of what the percentage of spectrum was allocated to the National Intelligence Services and the Department of Defence.

Mr Silulami Doyi, Deputy Director: Spectrum Management, DoC, noted that the concept of “white space” was a new phenomenon. In the United States, it was referred to as “holes” where “bands” were not assigned or being used by anyone. Scientists created cognitive radio systems that could scan the spectrum and see which spectrum was being used or not. This was on the agenda for the next WRC in 2012. It would also be looking at the regulatory impact of these issues.

Ms Mohlala stated that the Department had asked this question as part of a few written questions posed to the Minister. The Minister indicated that because of the sensitive nature of the allocation, he could not give out this kind of information.

Ms L Mazibuko (DA) discussed RFS management. She observed that pricing was an important component in RFS management and that it could be used as a tool to ensure that operators pay a fair value for spectrum usage through an appropriate fee system, and to either encourage or discourage spectrum users to apply for and/or operate in particular frequency bands. She asked the Department to clarify this. She also noted that in cases where there were competing services in a particular frequency band and where the decisions of an ITU WRC were not in the national interest, the Minister would issue appropriate policy directives to ICASA regarding the spectrum allocation. She asked how South Africa would suddenly be allowed to deviate from a decision made at the ITU WRC. She did not know whether ICASA or the Minister would decide that the decisions taken at the conference were against national interests. She thought this might result in there being a conflict of interest. She noted that the allocation of spectrum would be determined in consultation with the security services. She asked how security services would be prevented from the kind of hoarding of spectrum that the Department feared was happening in the market itself. What system would be put in place to prevent the police from saying they needed more spectrum than they actually did? She noted that the principles in the policy would be supplemented by policy directions; issued by the Minister on specific issues from time to time. She stated that given that South Africa was in a spectrum “policy vacuum”, this was the best time to address the issues contained in the presentation.

Ms Sekese addressed the first query. She gave the example of mobile operators. It was a known fact that mobile operators had made a fortune off spectrum allocations; however, the questions were how much they paid for the spectrum and whether there was value for money. One had to look at the commercialisation of all kinds of spectrum to ensure that operators were not allowed to buy spectrum, which was a scarce national resource, for peanuts. There needed to be a balancing of the different competing demands, as there were different demands depending on what the private operators wanted. However, there were also specific economic developmental issues in “under-serviced” areas where there was a lack of infrastructure. The problem was how the government and Department itself would ensure that spectrum pricing would encourage operators to go in to these areas and roll out broadband.

Ms Mohlala addressed the question concerning the WRC. In terms of the ITU, member states would have a discussion on a specific allocation. If there was a member state that was uncomfortable with that allocation, the state would put a footnote in the document prepared by the ITU to say it was not happy about that specific allocation and that domestically, the state had requirements that would not comply with what was being proposed for that specific region. The Ministry and ICASA would participate in discussions if they felt that they needed to deviate from recommendations proposed by the ITU WRC. However, in terms of UN Conventions and the ITU, only a political head could make a representation on behalf of a country - not a regulator.

The Department did not think it was likely that security services would hoard spectrum, as they were not allocated spectrum for commercial use. As the motivation for hoarding spectrum was from a competitive point of view and for profitability, Ms Mohlala could not imagine a situation where security services would want to hoard spectrum as they would not receive any profit from doing so. The security services allocation was discussed between the Ministry, security services and ICASA. The Ministry’s duties were in the initial phases, after which it would hand over the duty of finalising the allocation agreement to ICASA.

Ms Mohlala did not understand the question concerning policy directions issued by the Minister of Communications. For the time being, the policy document was a broad guideline as to how policy should be regulated in respect to spectrum management going forward. There were specific elements in the policy that needed to be narrowed down in relation to how they had to be implemented by the regulator.

Ms De Lille stated that the whole concept of “national interest” was a little worrying unless the term could be defined. The Department stated in its presentation (page 5 – Benefits of Spectrum Policy) that the policy would ensure that government objectives were met. Her concern was that the government was also a player in the market. There were institutions like Infraco that were awarded some licenses. She asked if this was a conflict of interest. She argued that this was unfair competition as it meant that the government was also playing in the market. She asked how the Department would balance this.

Ms Mohlala stated that this particular area was ICASA’s competency. This was why ICASA was the independent regulator that was supposed to execute its mandate with relevant objectivity without taking into account either commercial or government interest into their particular consideration. The Department only dealt with issues of allocation of spectrum; not the specific assignment of allocations to operators. This was ICASA’s duty. In terms of national interest, the ITU did the specific allocations. On the issue of deviations from the ITU's WRC recommendations; she indicated that there could not be such a great deviation that it affected the international allocations of that specific spectrum. There were two levels to evaluate what could be perceived as national interest; this was evaluated at ITU level and also at ICASA level. The Minister would say what spectrum would be used for a specific operation.

Ms De Lille followed up by clarifying that the RFS policy that the Department was proposing would help the country in achieving liberalisation of the telecommunications sector.

Ms Mohlala thought that it would. This was related to the issue of investor confidence and predictability in the market. There had to be an understanding that, as a signatory to the ITU, South Africa was taking on and implementing recommendations and decisions taken at ITU level from a policy point of view. Over and above this, the industry would then know that when it approached ICASA in application for spectrum in a particular band, ICASA would be able to deny them spectrum in that specific band because it should be used for something else. So the policy gave a specific guideline as to what ICASA could allocate for; however, they also had to look at which operator would get what kind of spectrum and how much. Operators would have to motivate why they needed that particular spectrum. ICASA would make the final decision.

Mr E Kholwane (ANC) noted that the RFS policy stated that the policy would contribute to the promotion of national interests within the framework of government strategic objectives. He asked if dealing with socio-economic issues would be left with the regulator. He wondered how the government would handle the issue of spectrum so that it allowed those institutions that were emerging in the industry to benefit from it. Institutions that were established could already compete for spectrum at any price. South Africa was not a balanced country and it could not afford to act that way. He understood the problems the Department was having with the policy but wanted to know if the country had the capacity to acquire the technology that would be able to detect unused spectrum. He also wanted to know when the policy was first drafted and how the Accelerated Shared Growth Initiative for South Africa (ASGISA) fitted in to the policy.

Ms Mohlala stated that the Department looked at the government’s mandate to ensure that socio-economic developmental considerations were taken into account when looking at spectrum allocation and usage. This was why the Department stated that there would be interventions from the Minister that would deal with issues from a policy point of view. The policy would deal with issues of equal access, economic challenges, and the different size in operators, as some operators were smaller than other operators.

Mr Doyi stated that South Africa had not yet taken any position on technology for the detection of unused spectrum as the country’s studies on the subject were not yet at a “mature” stage. Ms Mohlala indicated that South Africa could deviate from a decision taken by the ITU; therefore, if the country felt it was not ready for that kind of technology, we would insert a footnote in to the document talking about the decision. This would protect the country from having to adhere to the ITU decision. 

Ms Anneke Groot, Chief Director: ICT Infrastructure and Applications, DoC, stated that if the Committee looked at the policy and looked at ASGISA, they would see that a lot had changed. However, the Department was trying to consider everything that happened and all the priorities. If one planned for spectrum and drafted a spectrum policy, one would have to look at long term planning - even though things were likely to change again. There were specific interventions by the Minister from a policy point of view that took in to account the socio-economic differentiation amongst the different population groups in South Africa.

Mr J De Lange (ANC) welcomed the policy. Since his experience in the communications sector, the one thing that concerned him was that most legislation in the sector was not very clear where the policy was and where the operation and implementation was. Communication was a national competence that should lie with National Government. Some of the implementation of policies was placed mainly with regulators and not the government. He welcomed the fact that the Department was in the process of clarifying where the policy would lie. It was clear that the policy had to be done by public representatives while a body had to put in place to avoid conflicts and so on. He was also worried that the communications sector had huge problems with implementation. When he heard that ICASA would implement the policy he became worried, as the Committee was aware that the regulatory body had many problems. When he looked at the policy document, he noticed that there was half a page written on how it would be implemented and no mention was made of ICASA. If ICASA was going to play a major role in the implementation of the policy then the Department and the Committee had to spell out very clearly what was expected of them. He also wondered when an audit would be done on ICASA to see if the regulator would be able to implement the policy. The Department stated that they had allocated thirty days for comments from the public; however, the spectrum audit still had to be done. He was concerned that the Department was trying to pass a policy on something they did not have all the information on. Once the audit was done and the impact of the audit information was analysed, the Committee and the Department might have to re-look at the policy.

Ms Mohlala stated that the Department would take the Member’s comments and incorporate them in to the policy. All comments and suggestions would be considered and included in the final document.

Ms Mohlala stated that it was a bit of a challenge for the Department to assess ICASA’s capacity in terms of whether they would be able to implement the policy. The Department could ask ICASA to make specific inputs regarding whether the regulator was in a position to undertake the implementation of the policy. From the Department’s understanding, it was part of ICASA’s plan to implement the policy.

Ms Sekese stated that the spectrum audit would look at the usage of spectrum from certain institutions. The Department would look at outcomes in terms of policy directives. She did not think that finalising the policy would be premature. Dealing with the outcomes of the audit would inform the Department of mechanisms that it might need to put in place.

Ms Mohlala clarified that the policy was there to incorporate guidelines from the ITU into the domestic policies. The ITU gave allocations, which were the broad framework for the policy and ICASA then dealt with the specific assignment of spectrum. The audit would help the Department to see if the assignments made by ICASA were correct and it would help to assess whether there was optimal utilisation of spectrum. If there was not optimal utilisation of the assigned spectrum, then a policy directive intervention would be required.

Mr De Lange thought that the audit had to be done first so that the Department knew what spectrum existed. The audit had to be done first before the audit was finalised. If the audit was done last, the Committee would have to look at the policy again. As a policy maker, he was uncomfortable with creating a policy about spectrum while not knowing more information about spectrum.

The Chairperson asked how long it would take to complete the audit.

Ms Mohlala stated that it would take up to a period of three years. This was because there were certain elements of the “band plan” that were more concentrated than others. The intention was to start the audit in areas that were less concentrated and to end with the areas that were highly concentrated. Another factor was that the assignments that would be done by ICASA would be done on what the ITU has identified as “allocation”. There was some methodology that was utilised based on what has been agreed to by South Africa and the ITU. The likely impact of the policy was not going to be of such a catastrophic nature that it would change what was already allocated to entities. The audit would confirm the exact manner of utilisation of spectrum, which could then be corrected by issuing a policy directive.

Mr De Lange asked how it was possible that the audit would take 3 years.

The Chairperson stated that these kinds of audits could not be done by an accountant; they had to be done by engineers.

Mr De Lange stated that he was still worried that the Department would be willing to go ahead with a policy that was partially correct and was happy to fix it as they went along. He also did not understand how an audit of any kind would take three years. He thought the Committee needed to “flag” this issue, as the Committee could not go along with a policy that was only partially correct.

Ms Mohlala explained that there were different bands within the spectrum. The Department knew there were cost implications with doing an audit and decided to divide the band in to three elements. This meant that the Department would undertake the audits of the different elements of the band over different periods. Each audit would cost R12 million. To do the audit in one financial year it meant that a substantial amount of money would have to be spent. The audit was not a simple exercise; the surveillance was not a once-off surveillance as utilisation of spectrum had to be checked on the different days during the week and at different times of the day. The assessment was done over a given period of time to show that the spectrum was being properly utilised for the purpose it was intended for.

Ms De Lille asked if the ICASA was monitoring the utilisation of spectrum at the moment as they had told the Committee that they only had one person who could monitor spectrum.

Ms Mohlala stated that she could not answer the question on behalf of ICASA.

Mr Kholwane noted that South Africa had been participating in the ITU without having any policy. 

Mr Van den Berg wished this discussion had taken place when Members first came to Parliament in May 2009 as a lot of things would have been clearer now. He wanted to publicly apologise to ICASA for calling them a “lame duck” and not doing their duty of regulating. He now understood the difficult position they were in. It was difficult for them to regulate because they did not know what they were regulating. He made the presumption that there were people using spectrum illegally, as neither the Department nor ICASA knew about the utilisation of spectrum. Now the policy was being formulated and there would be players in the market with vested interests in the spectrum. He thought the government would be facing a lot court cases in the future because of the late issuing of the policy.

Mr Mohlala thought it was important that the Committee understood that ICASA still had a duty to monitor the allocation of spectrum. ICASA assigned allocations to specific operators based on who the operator was and whether it was utilising its spectrum. The operators had to motivate and justify why they needed the spectrum. After they receive their allocation, ICASA still had a legislative duty to monitor the spectrum usage. 

Mr De Lange stated that he was worried about how the Department perceived the whole spectrum matter. The ITU was an international agreement that had no legal binding effect on South Africa. It was “no force of law”; it was like every other international agreement that the country signed. The international agreements were not binding until they are turned in to domestic law. What the Department did domestically was that they operated within a vacuum. There was no policy that existed. There was a bigger issue that the audit had to look at. Were these spectrum assignments legally made? Did ICASA have the legal authority to make them? If they were made, in the Department’s assessment of the policy now domestically, if they made assignments in a vacuum, they were not in line with the policies that the Committee and Department wanted in the country. What allowed the Department to change this now? About a month ago there were people explaining these things to the Committee and they explained how some spectrum that had been allocated should actually be moved to another spectrum as they were being used for completely different purposes. When the Department spoke about auditing they spoke about whether it was being properly used. When he spoke about auditing he spoke about whether it was being properly used, whether it was legally allocated and how the policy allowed the Department to reallocate the spectrum. The policy was a much bigger thing. The policy could not be developed before the audit was conducted. He did not know if the Department was just going to look at the spectrum that was not being fully used or if they wanted to resolve the spectrum matter altogether and fix mistakes that were made in the past. 

Ms Mohlala agreed with the Member saying that a country had to adopt international conventions in to domestic policy before it could be accepted within a domestic context. It was a legal convention that one could not have a legal provision that applied domestically unless it was adopted domestically. It was also important to take not of the provisions in the Electronic Communications Act (ECA) about RFS. Section 32 of the Act specifically said that in controlling, planning, administering, managing and licensing in the use of RFS, authority had to comply with applicable standards and requirements of the ITU and its radio regulations as agreed and adopted by the public. This provision obliged ICASA to keep within the parameters of the ITU and whatever conventions that were adopted by South Africa as a country. After certain concessions and agreements were made at the ITU WRC the Minister would write a letter to ICASA to say they should note the allocations that were agreed upon in the international context and they should implement this in line with this context. Even though there was no specific policy the practice was to send this specific communication to ICASA.

In terms of reallocating spectrum and the illegal assignment of spectrum, it was self-explanatory. The illegal assignment of spectrum if undertaken would not stand. This person could not go to court and claim to have a right to that specific assignment because it was illegal in its nature. The illegal use of spectrum was when the spectrum that was being used had not been assigned by ICASA. With spectrum that was assigned by ICASA but was not in line with the ITU provisions, ICASA would have to explain why they were in breach of the provisions made by the ECA. The Act stated that ICASA had to act in line with decisions made in the ITU. If it was found that the assignment of spectrum was not in line with ITU provisions, the operators would then be expected to migrate from that specific spectrum to another spectrum allocated to the specific service that they were entitled to utilise. The Department was not simply going to rubber stamp what had already been done regarding spectrum. They wanted to look at whether there had been compliance with the ITU.

The Chairperson stated that the policy was a draft discussion document at present and it was good that the Department was taking all these concerns in to account. The policy was a work in progress.

Briefing on Draft Broadband Policy
Ms Sekese stated that there was a need for a Broadband policy because there was extremely low Broadband penetration in South Africa. Broadband was a powerful transformative force and was the foundation of the information system. Broadband was difficult to define quantitatively and definitions varied internationally. South Africa defined Broadband as an always available, multimedia capable connection. The policy would facilitate the provisioning of affordable access to Broadband infrastructure to citizens, business and government. It would also stimulate the usage of Broadband services at national provincial and municipal levels.

Broadband influenced economic development and GDP growth as well as socio-economic development. It would stimulate Small Medium and Micro Enterprises (SMME's) and co-operative growth, increase employment, reduce the cost to communicate, improve the marketability of regions and encourage investment. In terms of socio-economic growth, Broadband would result in the improved quality of education, health services and government services. The Department's key priority areas concerning Broadband focused on access, affordability, usage, the roles it would play in the different spheres of government and the private sector, and its implementation.

National departments, provincial government and the public would be consulted in the drafting and implementation of the policy. A Broadband colloquium would be held from the 18-19^th November 2009, all inputs in to the draft policy would be consolidated by the end of November and the policy would be submitted to Cabinet for approval in February 2010. 

Discussion
Ms De Lille stated that the draft policy document really indicated the challenges that the country faced in terms of accessibility and affordability. The document also showed what the government wanted to achieve with the Broadband policy, which was to establish South Africa as an advanced information society in which information and ICT tools were the key drivers in the economy and social development. In terms of affordability and high costs, it was noted that the government would intervene to expand networks in to “marginal areas” where the provision of Broadband services had a prohibitive cost. This would be done in consultation with the Universal Service and Access Agency of South Africa (USAASA). She stated that USAASA, the government and the private sector working together was an interesting combination. She asked if the Department had approached the private sector already to say that they would need their help in looking at affordability of Broadband. She noted that the draft policy also stated that each citizen in South Africa had the right to have access to basic Broadband. South Africa was very far from this point. The draft policy also dealt with the role of the state in rolling out Broadband and stated that the government would also be developing national, provincial and municipal Broadband strategies and coordinating implementation on a continuous dynamic basis. She asked if there was any kind of mechanism in place that would try to achieve this coordination. The Department wanted to create an enabling environment for the private sector to develop infrastructure, services and applications. The Department also stated that the government should not operate directly in retail services provision, but leave these markets to the private sector players. She asked if the state was currently involved in any retail services. She noted that the Department stated that the policy would be developed by national government; however, it would be left to the provincial and local governments to decide what they could afford. She asked how the Department was going to ensure that there was coordination between the three spheres and that provincial and local governments complied with national policy. She also noted that the Department was going to establish a Broadband Steering Committee. She asked if this would happen after the adoption of policy and what mechanism was in place to assist with this kind of coordination. The Department stated that South Africa's economy was in a transitional phase just like many economies around the world. An investment in Broadband was crucial and South Africa wanted to progress in to knowledge-based economy. She asked the Department to expand on this.

Ms Mohlala answered the questions concerning coordination. She stated that the Department just had a framework. The Department was national and did not have provincial competencies. The Department coordinated with the premiers of the different provinces who then delegated functions to the Members of Executive Council (MEC's) responsible for economic development. Whenever there were policies or new developments that occurred within the ICT sector meetings were convened within the context of the intergovernmental relations forum where they would talk to the different MEC's about the new policies being put in place. The Department already held a working group meeting in which they solicited further information about the policies that were currently on the table.

With regard to the Broadband Steering Committee, currently they did not have one. Going forward, this was an important developmental tool. The Department needed to speak to different stakeholders continuously with regard to the policies on Broadband and the challenges that would follow. All countries were still grappling with the implementation of Broadband and how it would be rolled out to rural areas. This was the kind of interaction that was anticipated that the Steering Committee would deal with.

Ms Groot stated that the Broadband infrastructure that was in the country currently was built by the private sector. The Department also recognised that there were many under-serviced areas in the country that did not have access to Broadband infrastructure. This was because the private sector had not built any infrastructure there. It was important to understand why private institutions had not built infrastructure in those areas. It was because they did not believe these areas to be financially viable. She noted that the Member found it interesting that the Department spoke of USAASA, the government and the private sector working together. If the Committee looked at the role of USAASA in providing universal access and services, they would note that USAASA could provide subsidies to the private sector to build infrastructure in under-serviced areas.

Ms Groot stated that the Department was also asked if the state was involved in the retail service provision. She stated that Sentech had a wireless retail project; however, they were stepping back from this retail space. The draft policy needed to set the guidelines as to where the government could operate in terms of Broadband services.

Ms Groot noted that the policy document stated that the policy left the decision to buy from a network service provider or to construct their own network to provincial or local government. In many of the provinces and in some local municipalities there was the development of Broadband policies and strategies as well as ICT strategies. The provinces were at various levels of development and looking for funds for what they needed to do. This was why the draft policy did not state a specific way in which provincial and local government had to do certain things. The Department had to consider that there might have been other initiatives that had already taken place. The provinces wanted the Department to put a guideline in place regarding Broadband, its policy and the roles that different stakeholders would play.

The Department would look at the term “transitional phase”. The Department was trying to say that things were changing rapidly in the ICT sector and if one looked at the uptake of ICT and broadband, the country was transitioning towards a knowledge-based economy. Access to knowledge meant access to the Internet and the best way to achieve this was through Broadband infrastructure.

Ms Mazibuko stated that the Department spoke about Broadband penetration in South Africa being low due to the unavailability of telecommunications infrastructure and the high costs of Broadband services. To her mind, the problems that the country faced regarding penetration quite clearly mirrored the problems in telecommunications, where there were high costs, lack of competition and lack of liberalisation. The Department's references to competition emerged very late in to the draft policy. She asked why the Department had not included the question of the lack of competition and the need for liberalisation in the sector in the definition of the problem at hand. It would inform the whole purpose of the policy. The Department identified the Broadband policy objective as the need to facilitate the provisioning of affordable access to Broadband infrastructure to citizens, business and government and also to stimulate the usage of Broadband services at a national, provincial and municipal level. When the Department spoke about infrastructure, she understood the focus on expanding networks and increasing access, however, when the Department spoke of the usage of Broadband services she did not see any reference to hardware that would be needed for accessibility purposes in the draft policy document. She asked if it was not a necessary part of the policy to deal with this issue. This matter was not addressed at all in the draft policy. The reduction in the cost to communicate had to be the overall “thrust” of the policy. She said she saw the importance of getting the government more involved in the supply side if not necessarily the retail side of things. There was a need to legislate and regulate for the liberalisation of the sector, which she imagined to be the most important focus, not just defining how the government interacted with ICT's. She asked if it was the Department's aim that Broadband would be considered a basic service such as education and water for all citizens. She wondered how much control the government could have in providing this service given the high costs of hardware and the fact that unlike water an education, this was a resource that was very much driven by the market. She noted that the Department recently issued a policy direction on Broadband Infraco regarding the removal of the Electronic Communications Network Services (ECNS) licenses. The aim was so that they would only be involved in wholesale operations and not engage in retail activities. Her understanding of convergence as it was dealt with in the ECA was that there was no distinction between the two. She asked why it was a necessity to take away Broadband Infraco's ability to engage in the market and if it affected its ability to function in other ways. She noted that the Department wanted to ensure demand stimulation and uptake of ICT's, especially in education and health. She got the sense that the Department was suggesting that the government could stimulate the market by getting involved in the market by using public funding. She wondered if this was an efficient objective or if it was better to focus on liberalising the sector. She noted that the draft policy stated that government institutions had to have access to affordable Broadband as it would ensure demand stimulation and uptake of ICT's by departments especially in education and health. She wanted to know what the Department meant by demand stimulation and if this meant the government would be more involved in the market. If so, was this an efficient solution as it was more important to focus on the liberalisation of the sector and increasing competition? She noted that market forces would determine the role of the private sector and where there was market failure the state would intervene to create an environment that was conducive to private sector investment and participation. She asked the Department to elaborate on how this would happen.

Ms Mohlala looked at the idea of e-government services stimulating demand for Broadband. She thought this draft policy had to be developed in context of other policies being developed. Currently, the government had a strategy in place to develop Set Top Boxes (STBs) to facilitate digital migration. One of the competencies of the boxes was to provide accessibility to e-government services for people in rural areas. There was a subsidy scheme in place to facilitate this exercise. The Department believed it would improve e-literacy so that people would be able to utilise Broadband and the extent to which people understood how Broadband could bridge the digital divide by bringing services to rural areas. This would stimulate the broader population in to wanting access to electronic or Broadband services for their day-to-day services. The Department believed it was important for the government to be in the driving seat in regard to this as e-government services were an immediate “deliverable” which South Africans could see the value in, in order to stimulate the take up of Broadband services.

Ms Groot clarified the issue of lack of hardware raised by the Member. There was a reason that many people did not use broadband, and this was simply because they did not have a computer. Because there were first world and third world components in the country, it made it difficult in terms of access. The first world part of the matter spoke to affordability; however, to talk about services was complicated. The Department always said that there should be access before there could be services. She stated that people should not under-estimate the use of phones, as one did not need a computer to be able to have access to the Internet.

Ms Mohlala did not think this was the correct forum in which to discuss the matter concerning Broadband Infraco because the Department was asked to discuss the Broadband policy. It had to be understood that the ECA made provisions for two types of licenses; and ECS and an ECNS. The infrastructure part of the Broadband services would be done through an ECNS and the retail part would be through an ECS. It was expected that after there was sufficient penetration of network services, then there would be competition at a services level. Even in the context of the ECA, it anticipated that there would be networks and there would be services. Once there was sufficient proliferation of the network, then competition would be stimulated in relation to the nature of services. Demand for specific types of services would drive the roll out of specific services in line with the needs and requirements of the specific consumer. Currently, South Africa was still grappling with issues of competition from a network operator point of view.

Ms Sekese addressed the issue concerning demand stimulation. The government could play two roles, it could either supply Broadband or it could stimulate the demand for it. The Department was talking about government as a user of Broadband. By stimulating demand, the government was contributing to stimulating the supply side of Broadband.

Ms Mazibuko wondered how government would be able to buy so much bandwidth in order to stimulate demand without addressing the problems of high costs and lack of competition.

Ms Sekese stated that there was a Programme of Action (PoA) in terms of costs to communicate. This process had to be understood parallel to the process the Department was conducting which looked at the cost to communicate. The issue of Broadband costs would be looked at holistically as a consolidated process.

Ms Mohlala added that they would take back comments made on affordability. They admitted that maybe they should not have left it to issues of competition and shared infrastructure; the Department had to look beyond this. The Department's assumption was that because they had this PoA, it was more of an operational implementation phase in relation to bringing down the costs to communicate. The Department would consider comments made by the Committee going forward. 

Ms Mohlala stated that the intention of the policy was to make Broadband a basic right so that people could have access to Broadband services. The Department believed that Broadband would be a key catalyst to development. This meant that Broadband had to be a right for all children and schools so that they could compete equally in the economy whether they were educated in a rural school or urban school. This was what the policy aimed to achieve and would be done in consultation with USAASA on issues such as affordability and needy persons.

Mr De Lange agreed that competition had a place to help with affordability; however, if there was only affordability and competition then the strategy would not work, especially if there was collusion. Nowhere in the document was there any other mechanism to contribute to affordability. Nothing was said about tariff regulations or control of high costs. He was not denying that competition and the sharing of infrastructure could regulate costs to some degree; however, if this was what the Department was relying on then the policy was “doomed to failure”. If the Department was only going to rely on the market then the policy would fail. Ideologically, he did not have a problem with state involvement; however, the Department stated in the draft document was that involvement by the state would be focused on investment where instances of market failure were prevalent. This had never worked as investing money in areas where the market has failed as far as Broadband was concerned. If the state wanted to invest, he wanted to know how it was going to do so. The Department has only focused on investment as a solution; however, other solutions could include how the Committee used its legislative power, how they used the awarding of licenses and how they regulated costs. People were given licenses; however, proper conditions were not put in place to state that licenses could stop operating if certain conditions were not met. Investing in areas where there was market failure would not work; the government could not invest in areas where there were no markets. There were a lot of other mechanisms that could be used; however, the mechanisms had to be set out more clearly.

Ms Mohlala stated that the draft document was still in its consultative phase. There were issues of affordability that were raised by the public. The Department identified from the output that they had received that they had to come up with other mechanisms to resolve the affordability issue instead of leaving it to competition and shared infrastructure, as what could be perceived as competition was not necessarily competition and would not make services more affordable to users.  

There was an intention to align the role of government to the Department's Programme of Action (PoA) that was recently adopted by Cabinet on the overall strategy to bring down the cost to communicate. In view of that history and what the Department has learned in that context, they wanted to prevent similar problems going forward. One of the issues concerned were tariff regulations and the Tariff Advisory Body that would be set up in the context of ICASA. There was an intention to include this in the ECA. The Department was now aware that they needed to be more specific in regard to the role of the state so when there was a need for an intervention the Department could actually intervene.

Ms Mohlala stated that licensing was an ICASA competency. In terms of the ECA, the Minister could not get involved in licensing, as ICASA made the decisions on conditions and terms of licenses as well on transgressions of licensing conditions.

The Chairperson stated that a champion was needed to drive the policy. This was perhaps what was lacking in the country.

Ms Mohlala responded that the Department believed that it was important to have some uniformity with regard to Broadband. It was also important to be able to define Broadband. The Department was in discussion with USAASA, so once the policy was in place they would devise a plan as to how Broadband could be accessed by different communities.

The Chairperson thanked the Department and noted the draft policy document was a work in progress. The Committee looked forward to the final policy.

The meeting was adjourned.