Li Peng - President, Eastern and Southern Africa Region Huawei Technologies Co., Ltd.

Sameer Malik - Deputy CTO, Huawei Fixed Network Business Unit

Richard Hurst - Senior Analyst, Ovum Telecoms Consulting

Dan Martin - Senior Solution Architect, Huawei USA

Alan Hu Senior - Director of Carrier IP Solution Marketing, Huawei USA

Ladies and Gentlemen

Good Morning

 

Introduction

Friends and colleagues, the department and myself congratulates Huawei Technologies for organising this summit which gives us an opportunity to learn about the latest ICT solutions. We must also applaud you for being the leading Information and Communications Telecommunications Solution Provider in the world, serving 45 of the world’s top 50 telecommunications operators.

The theme for your fifth year summit is: “Software-Defined Networking (SDN), Providing a Better Connected Experience in Africa”. Your theme is almost a response to our South Africa Connect Policy which was passed in 2013, and it has four pillars: Digital readiness, Digital development, Digital future and Digital opportunity which are for better connected society.

ICT GLOBAL MONITORING

This summit takes place at a time wherein we are interrogating the latest report from the World Economic Forum. According to the World Economic Forum 2015 Report, despite having an unchanged score from last year, South Africa has dropped from 70th to 75th position out of 143 countries. Our ranking on general state of ICT readiness remains very low at position 102nd, this is because of the result of the poor quality of ICT-related infrastructure which is ranked at position 85, and notably the limited International Internet bandwidth where we are ranked at 128 position.

The cost of ICTs in South Africa has also been noted to be too high with South Africa ranked at 107 position out of 143 countries. Nonetheless, individual usage has improved with an improvement to 10 places to reach 68th position. However, government ICT usage still lags behind with South Africa ranked at position 105th out of 143 countries, earning very low marks in terms of online services provided to the population with South Africa ranked at 82nd positon which highlight that the e-government services need to be further strengthened.

Overall, this is an indication that the potential of ICTs has not been fully unlocked. The ICT social impacts have not yet fully materialized, and the government will need to significantly improve access to basic e-services where the country is ranked at 101 or further facilitate citizens’ e-participation which is currently ranked at 88th position.

Irrespective of the challenges we are still rated one of the best countries in Africa. On the whole, the Report has noted that Africa’s overall performance on the index has been “particularly disappointing” as 30 sampled countries from the continent appear in the bottom half of the Network Readiness Index rankings. Our conversations this year will be about the turn-around strategies aimed at reversing the situation.
The department’s South Africa Connect: Broadband Policy creates opportunities and also ensures inclusion of the previously disadvantaged groups into the mainstream economy. South Africa’s Broadband Policy gives expression to South Africa’s vision in the National Development Plan to create “a seamless information infrastructure by 2030 that will underpin a dynamic and connected vibrant information society and a knowledge economy that is more inclusive, equitable and prosperous”. The policy aims to ensure universal service and access to reliable, affordable and secure broadband services by all South Africans, prioritising rural and under-serviced areas and stimulating economic growth.

South Africa’s National Development Plan: Vision 2030 implementation

The NDP sets clear targets for the ICT sector in line with our South Africa Connect Policy, the vision for broadband is that by 2020, 100% of South Africans will have access to broadband services at 2.5% or less of the population’s average monthly income. A four-pronged strategy, with both supply- and demand- side interventions will close the identified gaps between the current status of broadband in the country and the vision in the NDP. With regards to Digital development, the purpose is to catalyse broadband connectivity, aiming to provide access to broadband to 50 per cent of the population by 2016 and 90 per cent by 2020.

The NDP states that, the state’s primary role in the ICT sector will be to facilitate competition and private investment, to ensure effective regulation where market failure is apparent, and to intervene directly to meet specific social goals. Direct involvement will be limited to interventions to ensure universal access and to help marginalised communities develop the capacity to use ICTs effectively.

To achieve its ICT goals, South Africa must have a coordinated, enabling ICT strategy and plan. Key aspects of this are:

• The development of a national e-strategy that cuts across government departments and sectors. The Department in its annual performance plan has committed to develop and implement an e-strategy in the 2015/2016 financial year.  

• Reviewing the market structure and analysing the benefits and costs of duplicating versus sharing infrastructure, given that the radio spectrum on which mobile networks depend on is limited.

• Establishment of a common carrier network, possibly by structurally separating Telkom's backbone operations from its retail services.

• Applying open-access policies to encourage sharing of certain elements of the backbone fibre network, without discouraging private long-term investment. I will elaborate shortly on progress in this regard.

• Development of a strategy for the local loop to ensure that quality improves, costs are reduced and fixed line coverage is expanded to meet demand for high-speed telecommunications. The department has committed to developing such strategy by 2016/17. 

I have been requested to talk about: “Cultivating a Better Telecommunications Environment for South Africa”. Given the current popularity and the rising importance of the ICT sector this is a crucial area to address. We all know how important the ICT sector has become given its cross-cutting nature. 

E-Government

e-Government refers to the government’s strategy to transform both internal and external governmental relationships through the use of ICT. The Department has recognized and undertaken to appropriate the use of technology to ensure that the Citizen of the country are able to have seamless access of the services of government. It is also equally important for a seamless inter-departmental communication for effective service delivery. It has to be noted that SITA, our State Owned Company (SOC), will play a meaningful role in ensuring that the department is able to achieve full e-government objectives. This will be achieved in collaboration with the rest of the strategic government SOCs. We will continue strengthening SITA and refocusing this entities.

One of the department initiatives that will ensure that the Citizens are able to access government services within government departments is the effective ICT infrastructure through the current Broadband rollout project.
Broadband Roll-out

Through the implementation of the Broadband Policy and Broadband roll-out the department is committed in promoting digital inclusion, where individuals and communities will be able to access and use ICTs. Making use of the study conducted by CSIR, we have identified the areas where there is little or no broadband availability.

The 2015/16 financial year will see the implementation of the first phase of the digital development pillar, which is providing broadband connection services to schools, health clinics and other government facilities in 8 districts where the National Health Insurance (NHI) is being piloted. The Implementation plan for Phase 2 of Digital Development will also be developed.

Other projects include the Rapid Deployment Policy, ICT Capacity building programmes, and development of a roadmap for the establishment of a wholesale open access network.

During his State of the Nation Address, the President Jacob Zuma said: “The year 2015 will mark the beginning of the first phase of broadband roll-out. Government will connect offices in eight district municipalities.
These are Dr Kenneth Kaunda in North West, Gert Sibande in Mpumalanga, O.R. Tambo in the Eastern Cape, Pixley ka Seme in the Northern Cape, Thabo Mofutsanyane in the Free State, Umgungundlovu and Umzinyathi in KwaZulu-Natal, and Vhembe in Limpopo.”

Economic Benefits of ICTs

The economic benefits of ICT are primarily anchored in improved market efficiencies derived from reduced asymmetries of information.

Some examples of these benefits include:

- Reduced friction costs in finding and applying for jobs
- Every 10% increase in broadband penetration increases a country’s GDP per capita by 1,28% 
- Every 10% increase in broadband penetration increases a country’s employment by 0,28%
- SMME’s that use email or websites grow 50% more than SMME’s that don’t
- Agricultural SMME’s that access online info and markets increase income, ranging from 13% to 40 – 50% in some cases 62%
- Nurses that have access to e-learning material are up-skilled 9 times faster, easing the health care workforce training burden by $320 - $460 per nursing graduate
- Reduced inflation due to lowered cost of living

As government our role is to develop a policy environment that’s fosters economic growth, social inclusion and a vibrant competitive market environment that will benefit all South Africans. We have fundamental policies which in turn gives the provision to develop more specific policies, such includes the National Development Plan, our Vision 2030 and South Africa Connect: National Broadband Policy.

Open Access policy

The National Broadband Policy “South Africa Connect” advocates for a “wholesale open access regime”. The wholesale open access regime will enhance service-based competition that will better meet the pent-up demand for affordable broadband services in the country. This will be accompanied by a regulatory regime that ensures that principles of open access are applied to ensure that access is open to any operator or service provider on a cost-based, including fair rate of return, non-discriminatory basis.

Regulation will further enable the commercial sharing of infrastructure and pooling of resources, including spectrum, to reduce wholesale costs and encourage service-based competition in the market.

It is necessary to create an appropriate Open Access Policy Regime to change the market structure of the sector to reduce entry barriers, address market dominance by ensuring sharing of infrastructure and scarce resources. This includes the determination of an appropriate pricing framework to drive down costs, finalisation of the broadband value-chain analysis, determination of uncompetitive segments of the market and imposition of appropriate remedies.

Open Access Policy was also one of the ICT Policy Review Panel recommendation. The panel have just concluded their work and some of their recommendations include:

• Construction of a single National Broadband Network (NBN) built as a unified infrastructure on open access principles that include municipal level. An open access network is a network which satisfies all of the following:
o Offers effective access to the infrastructure:
o Offers transparent services:
o Offers access in a non-discriminatory manner:

• The market should be restructured into an open access regime in which all players with significant market power (SMP) are required to offer services in line with open access principles and to interconnect with other networks.

• The Panel recommended that last mile infrastructure gaps may also be addressed through policy on open access principles. The regulation of infrastructure sharing and mandating open access on all access platforms, including fixed, wireless and fibre is necessary.

The Panel also recommended that the following policy objectives must be pursued in promoting an open access regime:

• Creating a clear access regime that is enforceable and supports the reduction of the universal access gap.
• Creating a uniform access regime that takes into consideration all technologies and services.
• Ensuring a fair return on investment.

Mergers And Acquisitions In The Context Of Market Consolidation

Mergers and Acquisition by telecommunications operators is a natural phenomenon across the globe, which result in market consolidation.  Consolidation of markets is a natural consequence of convergence and competition. Consolidation needs to be allowed but at the same time the risks associated with oligopolies such as collusion and the reduction in competition, which is likely to increase costs for consumers, needs to be balanced.

A number of consolidation-type transactions are currently pending in the ICT sector. They are still awaiting approvals from ICASA and the Competition Commission. These transactions are well in line with international trends.

As indicated, the NDP state that, the state’s primary role in the ICT sector will be to facilitate competition. Some of the other considerations include the effect of the proposed transactions on spectrum policy objectives and empowerment objectives.

Sector Transformation

B-BBBEE Policy

We are working with our sister Department, the DTI to ensure full implementation of the Black Economic Empowerment Policy based on the Amended Broad-Based Black Economic Empowerment Act passed last year. As the ICT sector, we have adopted the ICT BEE Sector Code. We are also working with the stakeholders to establish the ICT BEE Sector Council which is expected to be in place by June this year.

Women Empowerment

We are working with our Women in ICT Forum to promote women inclusion as part of women empowerment. We are also calling the industry to take pro-active steps to promote women empowerment including skills development; leadership in companies; ownership and control, and other aspects of empowerment. We must work closely together to address inequality in the market also implement the employment equity policy to ensure that we meet the set equity targets.

The expansion of capabilities of Women depends on the real opportunities those ICTs provide for them and their living conditions. The capability and functioning will also depend on Women’s freedom to choose the life they want to lead. The “commodities and functioning” are crucial for South African women’s development. The expansion of Women’s capabilities through the use of ICTs will have a direct impact on the functioning and their development.
The International Telecommunications Union (ITU) has established GEM-TECH to eradicate the gender digital divide. To respond to this, the Department has in the previous year opened an ICT Centre in Tlhabane where Women can have access to information and knowledge that will ensure that they are empowered. The centre was opened with the contribution from Deloitte, Telkom and Intel who established a website which will assist to push the agenda of Women ICT forward. Our other sponsors to this project, Huawei and Landbank gave the women computers and laptops. We encourage other private sector companies to also assist in promoting women empowerment in the sector by contributing to programmes aimed at women inclusion and empowerment.
The Techno-Girl Programme is facilitated by an NGO called Uweso Consulting. This organization places girl children in participating companies over a three year programme. At the end of the three year period each participating company should enable learners to select a field of specialization in the ICT sector, identify an institution of higher learning to further their studies and assist the learners with the application of bursaries to study towards a formal qualification in ICTs or any high tech sector.

SMMEs Development

The work around the electronics industry has since been incorporated into our industry development programme where it will be dealt with within the Small, Micro and Medium Enterprise (SMMEs) component.  We have through the scoping gazette released last year and the ICT SMMES workshop earlier in March 2014, engaged the SMME sector with the purpose to understand the peculiar challenges they face and how they think we can assist as government.  The outcome of these engagements will, as contained in this year’s Annual Performance Plan result in the establishment of a Ministerial ICT SMME Advisory Panel and the finalisation of the ICT SMME support programme which includes the electronics sector as well.  ICT SMMEs need a voice.  One of the critical area of the support programme is the mechanisms to leverage on our strong portfolio of public entities in the ICT sector such as Broadband Infraco, Sentech, State Information Technology Agency (SITA) and NEMISA to spur the development of ICT SMMEs.

We urge multinational companies to work with these SMMEs, take them through incubation processes, and develop them for the betterment of the industry. Bringing your manufacturing operations down to South Africa will also be a huge contribution to SMMEs development and the sector as a whole.

Skills Development

Innovation and the uptake of ICTs are important components for government’s agenda of socio-economic development and job creation. The contribution of ICTs to the South African economy is fundamental for the development of a productive and knowledge-intensive products and services. It is therefore important for the country to address issues related to ICT skills in order to respond to the growing demand for highly-skilled ICT practitioners, ICT user skills, e-literacy skills and e-business skills.

The Department has directed focus on stimulating demand by promoting e-literacy, instituting ICT rebates and incentives and developing ICT applications in sectors such as health and education as well as on the supply-side infrastructure and institutions. The department to date has developed a National Framework for e-Skills Research.  The Integrated iKamva National e-skills Institute (iNeSI) was officially launched In February 2014. The Department’s performance plan reflects that planning is underway to do ICT Capacity building programmes focused on supporting community development, health and education sectors, programmes focusing on IT literacy for educators; government officials and health care workers for all identified sites as per the Digital Development programme.

The availability of broadband and the uptake gives rise to opportunities for both the government and the private sector.  As our skills bases increase, the private sector must also be prepared to absorb these individuals.

Conclusion

Through this age of the Internet of Things we ought to make sure that the values of our constitution are preserved. Our livelihoods and the use of big data must be in line with the values entrenched in our constitution.

The issue of information security is also of critical importance. It is for this reason that government has prioritised and placed all cybersecurity policy frameworks under the oversight of the Justice, Crime Prevention and Security Cluster. As a department, we have already begun to implement some aspects of the National Cybersecurity Policy Framework including the establishment of the National Cybersecurity Advisory Council and a Cybersecurity Hub.