Issued by the Ministry of Communications
25 October 2001
Madame Speaker,
Honourable members.
We place before this honourable House a Bill - the Telecommunications Amendment Bill - for adoption. The process culminating into this Bill has been one of remarkable consultation and consensus building that has been described by some foreigners as most democratic and can make our country proud.
The process was open, transparent, and inclusive. Debates were vibrant, competing interests made sure of that. In the end, however, no one got exactly what they wanted because we had to balance competing interests and do what is best in the circumstances for the people of South Africa in the context of an asymmetrical society and unequal economy in an unequal world.
In January this year, Cabinet decided to go on a path of Managed Liberalisation of some key sectors of the economy, Telecoms being one of those. Such decision was not easily chosen; it was deliberated upon and arrived at because government had to walk a tight rope and balance the contradictions that exist in our economy and society and in the world.
The telecommunications sector is a major driver of the economy. It is a sector that is characterised by great dynamism and rapid technological change. The National Research and Technology Foresight Project undertaken by the Department of Arts, Culture, Science and Technology to reform South Africa's science and technology system, identified technologies and latent market opportunities that are most likely to generate benefits for South Africa. These in the main were found to run on telecommunications infrastructure. The project identified high priority and high investment areas, which should allow access. Here again telecommunications infrastructure was high among these. The President's Advisory Council on ICT re-emphasised this importance. The challenge is however to shape this sector in a manner that does not exacerbate the existing inequalities of lack of access, lack of participation, lack of ownership and control by those historically excluded or marginalised and yet on the other hand we have to ensure an environment for business that lowers input costs and makes it competitive in the world and deliver fair value.
The Bill thus balances:
(1) Universal access and universal service which include infrastructure and affordability;
(2) Local participation in ownership and control and management between small and big industry players yet allowing for foreign participation through injection of investment skills and new technologies that can assist in creation of new services, new opportunities and new jobs;
(3) The role of public as well as private sector recognising that it is impossible for the public sector on its own, to generate the huge resources required for infrastructure needed to bridge the gap between haves and have nots, between rural and urban communities, between black and white, the developed and underdeveloped areas and sectors of our country and region; and
(4) The progressive possibilities of convergence of technologies with the unintended consequences that can widen the digital divide if not managed properly.
Managed liberalisation allows the introduction of the Second National Operator which will leverage state assets through inclusion of Esitel and Transtel. It allows provision for a feasibility study which will introduce service-based competition. Such study will be done in 2003 so that such competition can be introduced by 2005.
Convergence of information and communication technologies have placed new challenges upon us. Accepting this era of convergence, Sentech, another state owned enterprise is being positioned to play a significant role in Africa as a carrier of carriers. We have expanded its role to include provision of international gateway service to operate as a carrier of carriers to provide multi-media services as a common carrier. We also have on a non-exclusive basis allowed VANS and ISP to provide aspects of multi-media. Sentech will provide such infrastructure as is required of any common carrier on an equitable non-discriminatory basis.
Such a direction may not please those whose view is that we should go the "big bang" route - open competition - that lets the market decide. History has taught us that the market can sometimes be imperfect. The current global situation is an example of such imperfection. And we must remember that we are a developing country, on the African continent and not a developed country.
Taking into consideration what has happened in Europe, where operators are debt ridden and auctions were used to sell 3G licences, as a way of raising the highest capital, which ultimately was a failure, we in South Africa have opted for granting such licences to existing operators.
Consumer interest and industry interests had to be balanced but these cannot be done in a vacuum. Timing is important. The conditions currently in the telecommunications sector globally place certain imperatives upon us in the choices we make. Industry needs certainty before they enter the arena of competition. Unless you have competition, the consumer does not come out the winner. However, the compromises made by different interest groups should in the long run contribute to some advantage. The thorny issue of pre-selection has been brought forward so that this service should be available by end of 2003 and number portability by 2005.
There are areas in South Africa, where teledensity, the number of fixed lines per 100 people is less than 5%. These are referred to as under serviced areas co-operatives. Co-operatives or consortiums in these areas will be granted licences to provide voice over IP, fixed-mobile services and public pay telephones. By law, due regard will be given to applications from previously disadvantaged individuals, groups or women from those groups, who own manage and control their entities. I am particularly proud of the provision in this part of the Bill which makes it mandatory for women applicants to own, control and manage their consortiums. This is in line with our objective of empowering women in the telecommunications sector.
It gives me particular pleasure to state that there is something in this Bill providing for co-ordinated action to assist the sick, the injured, the distressed, through our creation of the Public Emergency system for the good and the public. For the first time South Africa will have a nation-wide accessible single emergency number. Everyone in the country old or young, rich or poor must know this number. Teach it to your children. The number is 112. My 90-year-old aunt will remember it though she is likely to comment that it does exercise her mind. We thank the Minister of Finance for allocation of funds of R80 million for the realisation of this.
Despite widely held perceptions that powers and functions of the regulator were being undermined by trying to "fix something that was not broke", it is important that the relationship between government and the regulator be clearly understood. The powers of the regulator to take decision independently, not only from government but also from other interests including the media, are crucial. We need to ensure that the regulator is guided by Policy and that it implements policy. The processes by which it does that should also be simplified. Whilst the former has been excluded from the Bill to be dealt with in the substantive act on ICASA, this Bill gives powers to ICASA to make final rather that "intended" recommendations (now removed) which had been streamlined and discretionary powers have been granted to hold hearings and ability to make regulation has been entrenched. The regulatory processes have been shortened as requested by all stakeholders.
At the meeting of the President's Advisory Council on ICTs, great emphasis was placed on education. The access of schools to Internet is an important aspect of this. The Bill allows for a dedicated education network. A laudable achievement of this Bill is the 50% discount (e-rate) on calls being given to public schools and further education and training institutions.
Our government, committed to the transformation agenda and the Reconstruction and Development Programme, remains fully conscious of its role in meeting the objective of economic empowerment. This has been achieved in this Bill through set asides of up to 30% for economic empowerment in all major licences.
The Universal Service Agency is to be restructured and the Universal Service Fund will be utilised to assist in expanding universal access by financing projects and subsidising, through a contribution of not more than 0,5%, a roll out of Public Information of Terminals - the first 100 of which were launched in all nine provinces last week. SMMEs, co-operatives etc. will be involved in projects facilitating this universal access.
Madame Speaker,
All we have achieved in this Bill, has been achieved despite the fact we had to move from a market structure that has previously entailed an exclusivity period for Telkom and had to move it to an Initial Public Offering. Secondly, South Africa is a signatory to the WTO and in 1997, it had indicated its intention to liberalise trade in basic telecommunications. This Bill, despite some views from some corners is consonant with our country's general trade policy and specific obligations as signatories to WTO and to our telecoms partners.
To achieve all this was no easy feat. I wish to particularly thank all the parties that participated in the public processes held by the Portfolio Committee on Communications. They were tenacious, sometimes unyielding. But this made the outcome a product; I hope, we can all live with peacefully. Stakeholders that were active were DBSA - an infrastructure funder, ICASA the regulator; Telkom and future competitors Esitel and Transtel; cellular operators MTN, Cell C and Vodacom; VANS, SAVA, Multichoice, Sentech and many others.
My special thanks goes to the chairperson, Nkenke Kekana, who had to manage these various interests and focus on achieving the best product in the circumstances for all. I wish also to thank the members of the Portfolio Committee, many of who were the voice of the consumer for burning the midnight oil on many occasions to ensure the best result they could achieve. Their role makes us proud of our democracy and parliamentary processes in representing the interests of the majority of the people.
To the Director-General in the department, Deputy Directors-General, advisors and staff, I wish to say a big thank you. This huge task could not have been achieved unless you focused on the strategic importance of this sector, this country and this region in policy; unless you gave of yourselves to walk the extra mile. Your accepting, in humility, that sometimes there was another way to achieve what this country needed.
A special thanks goes to the young black lawyers we dragged into the process, fortunately not kicking and screaming. We hope the exercise was an empowering one and that we have laid the foundation for new expertise in this sector.
Ka Leboha
Contact: Robert Nkuna on 082 887 6874