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Date : 30/06/2004
Source: Independent Communications Authority of South Africa (ICASA)
Title: M Langa: ICASA four-year anniversary celebration


KEYNOTE ADDRESS BY, CHAIRPERSON OF INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA, MANDLA LANGA, AT THE FOUR YEAR ICASA ANNIVERSARY AND TEN YEARS OF COMMUNICATIONS REGULATION CELEBRATION, 30 June 2004

Honourable Minister, Dr Ivy Matsepe-Casaburri, Honourable Deputy Minister, Mr. Roy Padayachie, the delegation from the Parliamentary Portfolio Committee on Communications led by Mr MK Lekgoro, Members of Parliament, Leader of Industry, Councillors, Stakeholders, Media, Ladies and Gentlemen (all protocols observed). One does need to say this because it has happened that some eminent persons who haven't been mentioned in opening salutations have ended up in therapy.

I would like to extend a special welcome to the delegation of African regulators attending the ICT Africa Investment Summit. On behalf of the Council of ICASA, I would like to welcome you here tonight to this three-part celebration, a celebration of ICASA's four year anniversary, ten years of communications regulation and a decade of democracy - and to thank you for making the effort to join us here.

It is because of this notable `trinity' of concurrent celebrations that we decided to make a special evening of it and invite all our stakeholders.

Although South Africa has been, quite rightly, celebrating quite wildly and widely this year, we still felt it important to celebrate the strides we have made in the regulated communications sector over the last decade. Lest we forget, we have come a long way from a system based on secrecy, arbitrary decision-making and exclusionary policies.

Our regulation has evolved over the last ten years, from a time when no framework was in place, to a system based on transparency, fairness and public interest. Over the last ten years there have been skirmishes, victories, losses, gains, disappointments and triumphs. On the whole, I believe we have done well to protect the public interest, whilst establishing stability, growth and development in a strategic sector of the economy.

In 2000 Government decided that the time was ripe for the merger of South African Telecommunications Regulatory Authority (SATRA) and the Independent Broadcasting Authority (IBA). In the same year the Independent Communications Authority of South Africa (ICASA) was established as one of the first merged regulators in the world.

I have had the privilege of chairing the Council that has been charged with leading this organisation during these difficult but exciting years, as we tried to shape a coherent regulatory body that would deal effectively with challenges facing the communications sector.

I am pleased to say that ICASA's four-year birthday cake has been properly type- approved and baked for this occasion.

Although we are celebrating an organisational birthday, it is really a tribute to the mainly young men and women who work at ICASA that we are here in one piece tonight (with something to celebrate).

A little later I will thank three young and not so young outgoing Councillors, welcome and introduce three new Councillors and as well as our new CEO.

TEN YEARS OF INDEPENDENT BROADCASTING REGULATION

This year we also mark ten years of independent broadcasting regulation in South Africa and by so doing we can celebrate the creation of an exciting and competitive broadcasting industry forged in the crucible of the struggle against apartheid control, repression and censorship.

For over forty years broadcasting had been tightly controlled by successive apartheid regimes. This control was finally broken in 1994 with the establishment of the IBA.

The establishment of the regulator took place parallel to the creation of South Africa's first representative Board of the SABC as the playing field was levelled for equitable treatment of political parties before and during the first democratic elections in 1994. Our present Minister of Communication, Dr Ivy Matsepe-Casaburri, was the Chairperson of the first representative SABC Board.

In 1994 there was zero black ownership and control of the broadcasting industry This changed dramatically in 1996 when the Government and the IBA oversaw democratic South Africa's first privatisation of state assets, with the SABC selling six of its commercial radio stations. The Authority ensured that, in granting six new licences to successful applicants, the issue of ownership and control by historically disadvantaged groups was paramount.

A year later, IBA licensed eight new `green fields' commercial radio licences. Together with the SABC privatisations, these new licences helped to transform commercial radio sector through the creation of competition and new black-controlled broadcasting companies.

That same year new regulations promoting local television content, independent television production and South African music became effective and a policy and regulatory framework for community broadcasting was published. To date more than 80 community radio stations have been licensed to create one of the most significant and legally entrenched community radio sectors in the world.

In 1998 the television sector welcomed a new entrant in when the IBA ended South Africa's television duopoly by licensing Midi TV (trading as e.tv) as the national, free-to-air commercial television broadcaster. The establishment of this channel provided choice in television news and other programming in addition to further investment in television programme production.

Since the establishment of ICASA, the Authority has reviewed its regulations on local television content, independent television production and South African music.

During the last financial year, ICASA completed several key policies. These are:
1. The review of ownership and control of broadcasting services and existing commercial sound broadcasting licences. This policy includes recommendations to the Minister to amend broadcasting ownership laws as well as plans to licence seven new commercial radio stations in the next two years;
2. Policy and regulations on exclusive sports broadcasting rights for national sporting events;
3. A policy and licensing framework for public regional television; (the Authority is currently considering applications from the SABC for two public regional television channels).

The Authority also played a role in ensuring that the 2004 elections were free and fair. Through its Broadcasting Division, ICASA monitored almost 45 thousand broadcast items throughout the election period. The total data capture error ratio of 0, 15% was achieved for the duration of the project. This was the third set of elections the Authority has successfully monitored and we have managed to improve our systems every time.

In addition to these developments, the Authority will ensure that its priority projects will chart a new course for broadcasting and set policy and licensing frameworks. These projects this year include:
* Amending all SABC radio and television licences to ensure compliance with the IBA Act and the Broadcasting Act, 1999;
* Proposed amendments to M-Net's broadcasting licence; and
* A policy and licensing framework for subscription broadcasting in South Africa.

In the space of a decade we believe that the regulator has helped transform the broadcasting sector from state monopoly control and a censorship regime to a vibrant, competitive and increasingly black-owned and controlled sector that plays a vital role in the promotion of South African content and freedom of expression.

As with any administrative body charged with making decisions that affect people's lives and livelihoods - and since there are so many vested interests in broadcasting - we have had some of our decisions taken on review. But that's par for the course. Some of this has been a drain on our resources, which has focused our minds on strategies to ready the Authority for such contingencies, especially in light of the fact that the regulatory budget, of most operators, which includes legal, aggregates the operational budget of ICASA.

TELECOMMUNICATIONS REGULATION

The transformation of telecommunications (`telecoms') regulation took a few years longer than broadcasting. In 1996 Parliament passed the Telecommunications Act that led to the establishment of SATRA and the Universal Service Agency (USA). SATRA was charged with the difficult, but critical, task of regulating the telecoms sector. At that time the sector consisted of:
* Telkom SA, the fixed line incumbent, which had been granted a 5-year exclusivity on Public Switched Telecommunications Services (PSTS);
* MTN and Vodacom who in 1995 had been issued mobile cellular telecommunications licenses; and
* A handful of VANS and PTN licensees. SATRA had amongst its functions the task of putting in place regulations to lay the foundation for fair competition amongst industry players and the encouragement of choice for consumers. These initial regulations included those on fees and charges, interconnection and facilities leasing, anti-competitive behaviour, and human resource development. SATRA saw to the determination of levels of contributions by telecoms licensees to the Human Resource Development Fund (HRF), geared at encouraging skills development in the sector, and the Universal Service Fund (USF), meant for the encouragement of universal service and access in the country.

The Universal Service Agency was established with a five-year lifespan and a very specific task. The Agency's mandate was to see to the attainment of universal service and/or access in South Africa through the administration of the USF and through policy actions such as the determination of definitions for "Needy People' who should be given subsidies from the USF, and through the definition of under-serviced areas. Therefore, during the period 1996 to 2000, a foundation was laid for the regulation of telecoms sector in South Africa.

Noting the benefits of cooperation amongst countries in the region, SATRA also made contributions to the encouragement of the development of regulators in the SADC region and was a founding member and the first Chairperson of the Telecommunications Regulators' Association of Southern Africa (TRASA).

Today ICASA is player on the international regulatory front. In addition to TRASA, ICASA supports and subscribes to the ITU, ATU, RIARC, and Southern African Broadcasting Association (SABA) and participates in international ministerial meetings.

Under the umbrella of the ICASA Act, the new, merged regulator continued to regulate the telecoms sector in terms of the Telecommunication Act. A major milestone in the sector has been the first amendment of the Act in 2001. The Amendment Act made provision for the end of Telkom's exclusivity and ushered in the managed liberalisation of the telecoms sector by proposing the introduction of competition in several sectors including:
* The licensing of an Second National Operator (SNO) as a competitor to Telkom in the fixed line market; and
* The licensing of Sentech (Pty) Ltd ("Sentech") as a "carrier of carriers" (with its own international gateway), and as a multimedia licensee, which acts as a common carrier for multimedia services.

Every regulator takes pride in its capability to usher in competition. It was with a great sense of mission that ICASA welcomed this possibility, with the processes that flowed from the Telecoms Amendment Act of 2001, which outlined the route that should be taken to licence the SNO. On 31 July 2002 ICASA concluded the 19 percent process and recommended Nexus as the preferred black empowerment consortium to the Minister. We then embarked on the 51 percent process, twice, where our recommendation was that the bidders had provided substandard bids and we couldn't recommend them to the Minister as suitable candidates for the controlling stake in the SNO, which entails running a 25-year marathon with Telkom. Our second recommendation was made in August last year. This process is therefore now out of our hands, but we hope that, following the Minister's promise to Parliament during her Budget Vote, the SNO will reach clarity by August.

In addition, provision was made in the 2001 amendment Act for the introduction of competition in areas with less than 5% fixed line penetration through the creation of a licence category for Under-Serviced Area Licensees.

On 19 December 2002 the Minister issued an Invitation to Apply (ITA) for the provision of telecommunications services in under-serviced areas. The ITA was in respect of the first 10 areas identified by the Minister as being under-serviced. We received 15 applications and after a lengthy public process ICASA decided last month to recommend to the Minster that seven of the applications be granted and that the other eight either be refused or disqualified. Earlier this month the Minister decided to approve the recommendations by the Authority but referred back three of the applications for further clarity. We have now provided the Minister with the necessary clarity and we await her response and/or decision in this regard.

The 2001 Amendment Act also required that ICASA make regulations on:
* Carrier pre-selection (enabling consumers to pre-select or choose their fixed line operator);
* Supplementary interconnection and facilities leasing guidelines to accommodate the introduction of new players in the sector; and
* Ownership and control limitations in the sector.

These regulations were completed before Telkom's Initial Public Offering (IPO) in March 2003.

Furthermore, the 2001 Amendment Act provided for the granting of 1800 MHZ and 3G spectra to existing licensees in the telecoms sector. We are hoping that South African mobile operators will continue their remarkable success by utilising this spectrum efficiently and in a way that continues to innovate and improve services.

In the past year, on the telecommunications policy front, we have:
* Finalised regulations on COA/CAM for mobile operators;
* Finalised regulations on PSTN-to-PSTN interconnection;
* Reviewed Carrier Pre-Selection regulations;
* Developed guidelines for the trial and launch of new services,
* Developed guidelines for the legality of wireless local area networks (WLANs); and
* Commenced with the development of number portability regulations.

Apart from the licensing of USALs, during the past financial year, ICASA has amongst other licensing activities:
* Developed a comprehensive framework for the licensing and regulation of VANS and PTNs;
* Developed a Numbering Plan that will encourage competition within the sector;
* Amended the WBS licence and Sentech licences after a public process; and
* We are in the process of dealing with access to 1800MHz and 3G frequency spectrum bands by the mobile operators.

At the same time, apart from legislative issues, ICASA has to keep abreast of developments in the sector and ensure that the appropriate regulatory framework is in place to encourage growth in the sector and the utilisation of communications technologies for socio-economic development.

Regulation is an ongoing process. As the telecoms market evolves so must regulation, so while much has been done in terms of establishing a regulatory framework, ICASA still has several major tasks ahead of it. The last decade in the history of the telecoms sector in South Africa has been marked by several key changes, and a shift in the focus of the sector to the provision of services to all South Africans, at affordable rates, whilst maintaining high standards. Telecommunications has been recognised as a critical tool for the encouragement of socio-economic development, and therefore ICASA's ongoing role is a critical one.

ICASA is still committed to ensuring that our rate regime regulation is effective in promoting the objectives of the Telecommunications Act. The current Rate Regime, to which Telkom's prices for public switched telecommunication services are subject, is laid down in a regulation passed on 24 October 2002. In the Authority's view, there is no evidence that the current level of productivity-offset factor (level of X) reflects any productivity improvements by Telkom.

Telkom was supposed to have submitted its Chart of Accounts Cost Allocation Manual (COA/CAM) to the Authority by close of business today. This was according to an agreement between Telkom and the Authority. Telkom has broken this agreement and the Authority will be deliberating as soon as possible on the course of action to take. We view this behaviour as grist to the mill of those observers and commentators who believe that Telkom cannot be regulated. However, we strongly believe that no operator is beyond regulation.

It is significant to note that we did not have Telkom's cost information when the current Rate Regime was established. The Authority can assure stakeholders and the public that Telkom will submit its regulatory statements and accounts. This information will form the basis of the forthcoming Rate Regime review, which we intend finalising during the current financial year. The Authority will analyse the information from the statements to determine, amongst other things, any productivity improvements by Telkom. This information will then be used for the determination of fees and charges as well as appropriate level of X. We are mindful however of the national priority to ensure that administered prices do not end up contributing to inflationary pressure on the economy. When reviewing the Rate Regime, the Authority will be soliciting the views and participation of all stakeholders, including those charged with managing the economy of our fair republic.

Our Engineering and Technology Division continues to be vital in a sector where spectrum issues are often paramount.

During the last financial year, the Authority:
* Published the Annual Terrestrial Broadcasting Frequency Plan;
* Issued 4800 frequency spectrum licences to radio communication operators bring the total number of licences issued to 89 000;
* Processed approximately 500 type-approvals; and
* Vigorously pursued its mandate to ensure compliance with the law and to stamp out illegal spectrum usage.

We are also excited to be co-operating with the Department of Science and Technology and the National Research Foundation (NRF) in preparing SA's bid for Square Kilometre Array (SKA) Project. The proposed SKA will be a unique radio telescope that will make a revolutionary break with today's radio telescopes and will be built by an international consortium of governments, universities and research agencies. The decision on the location of the SKA as well as the basic technology choices will be made in 2005. The estimated construction costs are US$1 billion (which would constitute significant direct foreign investment in South Africa).

As a regulator we have to continue to ensure that the consumer is protected, particularly in an environment where operators become stronger and wealthier, year-on-year. During the past financial year our Consumer Protection Department held road shows in the Eastern Cape, Northern Cape and Mpumalanga where people are educated on their rights in the telecommunications space. On this note, we were pleased to sign a Memorandum of Understanding with the telecommunications operators on the handling of consumer complaints.

FAREWELL AND WELCOME

When you are a regulator in a democracy it means that there is no such thing as Councillor- (or dare I say it, Chairperson)-for-life. It is important that while there is continuity there is also change. Councillors have worked incredibly hard over the past few years. Tonight we bid farewell to Councillors Julia Hope, Mbulelo Ncetezo and Gerhard Petrick and wish them good luck with their careers post-ICASA. Looking around the room and noting how our former Councillors and staff have populated the industry, I think I can say with some degree of confidence that there is life after ICASA.

At the same time, tonight I want to welcome the three new Councillors, who assume office tomorrow after being appointed for four-year terms by the President. They are Dr Tracy Cohen, Mr. Paris Mashile and Mr. Zolisa Masiza. We wish them well and look forward to working together as we deal with the challenges of regulating this complex, interesting and sometimes demanding sector.

Tonight we also have great pleasure in welcoming our new CEO, Ms Jacqueline Boitumelo Manche who takes office tomorrow. Jackie comes highly recommended from the Department of Provincial and Local Government where she was deputy director-general (DDG). She has a strong policy and financial background in the local government sector.

Our new CEO will be familiar with one thing about ICASA and this is our constant need for more funding and the need for a revision of ICASA's current funding model. In case you are wondering, we did get a good deal on this venue tonight...

Nonetheless adequate funding is imperative for an effective and independent regulatory agency. A few weeks ago, we explained to the Parliamentary Portfolio Committee on Communications that an appropriate funding model would amongst other things:

* Allow ICASA to respond to the dynamic regulatory requirements of managed liberalisation;
* Enable ICASA to hire and retain the right personnel and minimise the risk of regulatory failure;
* Ensure independent analysis and prevent reliance on the industry for critical regulatory data;

We therefore proposed the amendment of the law, as it relates to ICASA's funding, along the lines proposed in the Draft Convergence Bill in December last year.

CLOSING REMARKS

In conclusion, this has been a roller coaster, which has spanned four years; it has been difficult in given instances, to map out a course that solidly protects the public interest. In this regard the public has been justifiably concerned that self-interest and super-profits may have triumphed over consumer benefits.

There used to be a tradition in the ANC of declaring and naming specific years according to a programme of action. For instance, there was the Year of the Women, the Year of the Youth and the Year of Unity in Action etc. In this regard, I would like to declare this the Year of Consumer Protection.

While the Authority's mandate is to promote investment, innovation and development, all the legislation underpinning the Authority exhort it to pay due regard to the public interest. In this new era we shall ensure the supremacy of consumer protection and rights in all their manifestations. Our stance will therefore be extremely intolerant of measures that seek to undermine this commitment.

I thank you.

Issued by: Independent Communications Authority of South Africa
30 June 2004
Source: Independent Communications Authority of South Africa (www.icasa.org.za)

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