Hon Chair, hon Ministers and Deputy Ministers, hon members of the House, leaders of the ICT sector and state-owned companies, and fellow South Africans, I am pleased to lead the policy debate for Budget Vote No 27 - Communications, which was introduced in Parliament in February this year.
After the renewal of the ANC government's mandate in the May 2014 elections, His Excellency President Jacob Zuma reorganised the state to implement policy more efficiently and faster, in order to achieve the National Development Plan outcomes we have set for ourselves for the next five years.
The newly formed Department of Telecommunications and Postal Services will draw on this budget until we conclude the new budget processes or the adjustments estimates. This transition will enable us to transform current government programmes so as to be in line with the new Medium-Term Expenditure Framework.
Last month, His Excellency President Zuma announced in his state of the nation address that in the next five years:
We will expand, modernise and increase the affordability of information and communications infrastructure and electronic communication services, including broadband and digital broadcasting.
This Budget Vote is significant, as we are a mere two days away from celebrating Mandela Day. Let us continue to honour the memory of our icon Mandela, so that the world will reverberate with the greatness of his humanity for centuries to come.
In 2009, via video link, Mandela informed the International Telecommunication Union, ITU, Telecom World that:
... information and communication technologies are the single most powerful tool we have for human progress ...
He implored the ITU to "support efforts to connect the world and bridge the digital divide".
His words continue to guide us today to "take action" and "inspire change", which is why on Friday we will devote 67 minutes, and more, to cleaning classrooms and bridging the digital divide by launching an ICT laboratory at the Mshadza Secondary School in White River, Mpumalanga. [Applause.]
Telecommunications revenues were a mere R2 billion before democracy. They grew to approximately R179 billion by 2011, and are expected to reach R187 billion by 2016.
The mobile sector was introduced just before 1994 with two operators. Through our regulatory and policy measures, including spectrum allocation and the raising of call termination rates, we supported the incubation and massive growth of these operators. In the last 10 years, we have introduced two additional cellphone providers. It is in this vein that we should collectively continue to support new entrants to the market, as we strive to increase competition and decrease costs.
We present to you a Budget Vote signifying more focused attention on infrastructure roll-out; the creation and acceleration of the expansion of e-government services; the co-ordination and streamlining of public entities in the sector; and a reconfigured department, which will ensure policy and regulatory certainty in the ICT sector.
The rapid deployment of fast and affordable broadband infrastructure remains a powerful lever to create an internationally competitive knowledge economy, to improve productivity and expand access to new markets, and to bring about social development.
Currently the backbone of broadband infrastructure, which is fixed-line fibre, stretches to 170 000 km, linking cities and small towns. We will focus on closing the infrastructure gap with respect to the urban and rural divide, and access networks which will facilitate fibre to the home.
We must move away from overreliance on mobile broadband, as it will not be sufficient for ensuring effective e-service delivery in schools, health facilities and other government institutions. Our national broadband policy, South Africa Connect, places the department in a position to co- ordinate and support the roll-out of broadband infrastructure and services across the country, to achieve a 100% broadband penetration by 2020.
In the current financial year, R20 million has been allocated to the finalisation of the first phase of the broadband policy implementation plan. By the end of this month, the business case that seeks funding to connect 580 clinics, 4 444 schools, 182 police stations, and 572 other government offices in the medium term will be finalised.
In fulfilling its co-ordinating role the department is engaging with industry to establish its broadband roll-out plans in order to avoid infrastructure duplication. There are multiple broadband initiatives by various spheres of government, state-owned entities and the private sector, which must be co-ordinated to maximise efficiency of investment.
As the chair of Strategic Integrated Project 15, we plan to use this platform to co-ordinate the role of public institutions in the roll-out of this infrastructure and these services. We will establish and operationalise a platform engagement in order to facilitate the alignment of these plans.
The role of Sip 15 is to expand access to communications technology, aim to create new jobs, unlock business opportunities, transform the ICT sector landscape, and support our integration into African economies.
To this end, we will focus on local production of content and manufacturing; research and innovation; content and applications development; ICT skills and human resource development; funding for the roll-out of the infrastructure; co-ordination across government departments and the private sector; and broadcasting digital migration.
We recognise that government cannot achieve this alone. The National Broadband Advisory Council is a critical platform for engagement in order to forge partnerships between government, the private sector, academia and civil society. All role-players must align their plans to meet the South Africa Connect targets.
Duplication of public and private infrastructure poses a challenge, as it contributes to high deployment costs, which are ultimately passed on to consumers. To address these bottlenecks, we will seek to direct the Independent Communications Authority of South Africa to formulate regulations for the sharing of infrastructure and facilities. These regulations will relate to how the public networks can be offered on a common carrier basis so as to facilitate cost savings, the entry of many players, and the enhancement of competition.
Government is committed to the establishment of an open access regime that allows those without access to critical public input resources, like the spectrum, wayleaves, rights of way and high sites, to enter the market under the same conditions as those who own the infrastructure. To this end, by October this year the department will finalise a study on open access networks that will inform how critical resources can be leveraged to ensure a competitive and open market that will unleash competition to drive down the cost to communicate in South Africa.
We acknowledge the efforts of industry in reducing prepaid mobile costs, and the reduction in mobile termination rates. However, our high costs of communicating remain an impediment to ICT uptake and usage by the citizen, business and government. They contribute substantially to input costs, which discourages investment. We therefore appeal to the industry to continue on this path. Government seeks to establish an environment in which the cost to communicate will be affordable to all South Africans.
There are other problems in reducing the costs of communicating. Our Cost to Communicate Programme has four elements.
Firstly, the department and Icasa will conclude the broadband market value- chain study. The outcome of the study will be used to assist Icasa to develop regulations for broadband pricing.
Secondly, in the course of this financial year the department will undertake a national roaming study to determine cost implications, including discriminatory behaviour, particularly for new entrants and smaller operators.
Thirdly, by September this year I will direct Icasa to develop regulations on pricing transparency, to enable consumers to have a clear understanding of the true costs of the services they pay for. In this manner, the true rate for a service will be disclosed upfront to enable consumers to exercise their choices.
Lastly, we intend to direct Icasa to develop regulations in respect of premium content. This aims to regulate how different broadcasters will access premium content for their services. This premium content relates to content such as sports rights, films and other content previously accessed through exclusive terms.
For us to have a sustainable and thriving sector, we need to ensure that there is a policy and regulatory environment that is conducive to the entrance and sustainability of new players in the market. It is in our national interest to grow the sector and promote competition in order to drive down costs and create more job opportunities.
There is no doubt that our digital migration process has faced many challenges. The June 2015 deadline looms ahead of and we dare not let our people down. I have taken the decision to move forward with the broadcasting digital migration programme, BDM. By the end of this month, we intend to finalise and gazette the BDM policy, which has been the subject of public consultation.
Within the next three months we will designate the date for the start of the digital switch-on. This designation will allow the industry, manufacturers and television-owning households to prepare accordingly, in order to purchase and install set-top boxes that will make the digital switch-on possible.
The benefits of this will include facilitating the release of the spectrum, which we need so much; increasing the number of television channels available to the public; and stimulating local electronics production. The ring-fenced budget for broadband digital migration currently stands at R2,97 billion.
The postal sector can make a larger contribution to the GDP, as well as advance universal services and access goals. The current market structure, which consists of the reserved market - referring to packages of less than 1 kg - and the unreserved markets, is not adequately regulated. This results in challenges in enforcing policy and regulations.
There is an indication that the reserved market, which is currently a monopoly area for the SA Post Office, Sapo, is highly saturated with unlicensed or illegal operators. This practice needs urgent attention by the regulator, working closely with other law-enforcement agencies.
The ICT Policy Review process will also make recommendations by the end of this financial year in respect of the market structure and other regulatory measures.
A massive post office network has been rolled out, reaching more than 2 433 outlets, of which more than 1 700 are located in small towns or rural areas. This provides a multiplicity of services to the marginalised communities.
The SA Post Office is currently facing financial and sustainability challenges, with a number of its subsidiaries incurring financial losses, coupled with numerous labour strikes. I have directed Sapo to develop an overall turnaround strategy, which will be finalised by the end of November this year. The department is tasked with overseeing the development of this overall turnaround strategy.
It is critical that we use the Sapo infrastructure footprint to provide affordable financial services to the underserved and unbanked, especially in the rural areas. Therefore, the successful turnaround of Sapo is critical to the corporatisation of Postbank, taking into account that Sapo is the holding company. The department will facilitate the registration of Postbank as a company in terms of the Banks Act by December this year. Government is moving towards rendering its services and giving information to the public using electronic means in order to optimise service delivery. Our objective is to provide and maintain transversal information systems and to develop e-government platforms for use by departments to deliver services online to citizens. In this regard, the department will co- ordinate work with other frontline departments to provide these services to the public. Through the SA State Information Technology Agency a significant number of government services will be available online over the next five years. Of course, the success of this is highly dependent on the massive deployment of e-skills. The Deputy Minister will deal with this.
In ensuring that our network infrastructure is safe, secure and robust and that individuals and businesses have confidence in using this ICT infrastructure, we will finalise the establishment of the Cybersecurity Hub by the end of this year. The function of the hub is to promote best practice and compliance with standards and procedures, and to develop related cybersecurity policies to assist both the public and private sectors.
In this financial year, we will be taking initial steps to address our global competitiveness in this sector. In this regard, we will continue to collect and collate information on the ICT sector and report timeously on it.
We will also continue with our oversight over state-owned enterprises and companies, and the department itself. To this end, we have developed a new memorandum of incorporation, which, for Sentech, the National Electronic Media Institute of South Africa, and Sapo has already been concluded. We will also enter into performance agreements with the boards of all these entities.
As members may know, we will also continue with our international agenda, where we will be pushing the African agenda. We will ensure that we benefit from and use these international organisations for the development of our own people.
We will ensure that the current investigations which are being done by the Special Investigating Unit are concluded. Our task will be to take appropriate action, where necessary.
I would like to thank all members of the committees, particularly the chairpersons, who have been working very hard, for supporting and guiding us. I would also like to thank my Deputy Minister, Dr Hlengiwe Mkhize, who has been very hard at work, and the senior management and the director- general of the department, as well as all our staff, who work so tirelessly every day to make our work easier.
Let us join hands and move South Africa forward. [Applause.] Let's make the ICT sector affordable to all South Africans. I thank you very much. [Applause.]