Telecommunications Amendment Bill: briefing and hearing

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
11 November 2003
TELECOMMUNICATIONS AMENDMENT BILL: BRIEFING AND HEARING

Chairperson

Telecommunications Amendment Bill [B65-2003]
Sentech submission
Sentech presentation
Telkom submission
Telkom presentation
ICASA submission

SUMMARY
The Committee decided to interview Mr Maralack for the SABC Board following two legal opinions from Parliament's legal advisors. This candidate had been on the interview shortlist for the SABC Board but had withdrawn his candidature only to request reconsideration once the Committee had completed interviews.

Following the Department's briefing on the Bill, the Committee heard from three stakeholders: Sentech, Telkom and ICASA. Discussion of the Bill focussed on the quest by Sentech to be declared a public operator in order to provide interconnection at affordable prices. Important points of discussion were the need for interconnection and facility leasing at competitive rates and the definition of a public operator.

MINUTES
Decision on correspondence: Andrew Maralack
The Chairperson referred the members to the written communications of Andrew Maralack. After Mr Maralack had withdrawn his nomination to serve on the SABC board on 15 September due to personal reasons, he had subsequently on 23 September requested to be reconsidered due to a change in circumstances. The matter was referred to the parliamentary legal advisors for legal opinion. From the legal opinion, the Chair said that it could be concluded that the Committee was competent to interview him and make a decision on whether to appoint him or not. Such appointment by the Committee would apparently not prejudice the other candidates who were also shortlisted.

Discussion
Ms M Smuts (DA) was surprised by the "keen interest" shown by the ANC to interview Mr Maralack. It appeared that the ANC was determined to effect his appointment and she argued that such decision would prejudice the other candidates who fully participated in the interview process. She advised against any suggestion to recall him for an interview. She asked if Mr Maralack had any special personal qualities or if there were any special reason why he should enjoy this special privilege.

The Chairperson indicated that he was merely doing what he was supposed to do i.e. allow and invite discussion on the matter. He asked members to indicate if the Committee should interview the candidate or not because he was not aware of any sinister reason for the candidate's recall.

Ms S Vos (IFP) declared that her party would oppose any decision to interview Mr Maralack because the Committee has been through the process. For her, it would be strange to interview a candidate who had withdrawn from the process and now requested to be reconsidered. She suggested that the Committee thank Mr Maralack for re-availing himself but explain to him that his request would not be considered.

Ms M Morutoa (ANC) said that since legal advice had been sought, there was no reason why Mr Maralack should not be recalled for an interview because he might bring much needed skills to the board.

Mr Maziya (ANC) explained that the ANC favoured Mr Maralack to be interviewed because it appeared from his communications that he had resolved his "problems". The intention to interview the person did not mean that he would be appointed to the board.

Ms Smuts said that Mr Maziya addressed the point indicated by the legal opinion for the Committee to establish a valid basis for the decision and change in circumstances under which Mr Maralack wanted to be reconsidered. She wondered if Mr Maziya could enlighten the Committee because he appeared to be familiar with the candidate's background.

After further argument by Mr R Pieterse (ANC) in favour of bringing Mr Maralack back to be interviewed, the Chairperson requested a show of hands. The vote favoured a recall of Mr Maralack for an interview.

Telecommunications Amendment Bill: briefing by Department
Mr P Pongwana (Deputy Director General: Communications), explained that the two amendments essentially sought to facilitate that all operators be declared public operators. The catalyst that effected the amendments flowed from court action, subsequently withdrawn, between Telkom and Sentech. The main reason for the court action was the untenable situation Sentech experienced because they did not have public operator status.

Submissions by stakeholders:

Sentech
Mr D Dube (Sentech), in support of the Bill, dealt with two issues. Firstly, whether Sentech deserved to be declared a public operator for both its Carriers of Carriers and Multimedia Services licences and secondly, whether Parliament has the power to declare Sentech a public operator with immediate effect. Mr Dube argued in favour of both the above sentiments because public operator status would facilitate interconnection and facilities leasing. Central to Mr Dube's argument was his contention that without public operator status, Sentech would be unable to provide affordable services because they could not obtain facilities at competitive prices (wholesale prices).

He further supported his argument for public operator status, by referring to the draft guidelines outlined in the Government Gazettes, Notice Number 358 of 15 March 2002 and Gazette No 23458, Notice 784 of 24 May 2002.

On the second issue of whether Parliament has the power to declare Sentech a public operator, he argued that ICASA was responsible for regulations and parliament for policy. But, should regulations exclude Sentech as a public operator, parliament was at liberty to effect the opposite through policy.

Mr J Raath (Sentech) then explained the transmission network diagrams in their presentation and why Sentech should be included in Section 40(2). Essentially he argued against the duplication of facilities and for interconnection facilitation at wholesale rates to be considered.

Section 40 (2) should not be seen as a stand-alone from Sentech because it was tied to them being declared a public operator. The main consideration appeared to be competitiveness to ensure better service to the customer. public operator status for Sentech would in a sense level the playing field through interconnection to optimise the use of the telecommunications networks and infrastructure.

Telkom
Ms R Singh strongly expressed an opposing view to that of Sentech in the Telkom submission. Although she welcomed and supported Sentech's role as a provider of a wider range of telecommunication services in the interest of the economic growth and development of the country, she outlined Telkom's reasons why Sentech should not be declared a public operator, in particular, through legislation. They were of the opinion that the Amendment Bill was in conflict with the regulations promulgated by ICASA, the regulatory body who should be entrusted with this matter. Telkom discouraged interconnection and the carte blanche lease of facilities. Ms Singh also cited the definition of a public operator by OFTEL, the UK Telecommunications Regulatory Authority (UKTRA). She concluded that Sentech not be declared a public operator in respect of either of their licences.

ICASA
Mr M Langa (ICAS Chairperson) presented the ICASA submission which supported the Bill because ICASA as the regulatory body was not opposed to Sentech being declared a public operator. However, he emphasised that such status be accorded through legislation because of this unique situation.

Discussion
The Chairperson asked if Ms Singh's interpretation of the definition contained in the legislation and OFTEL's definition informed her understanding of what a public operator was and if, because Sentech did not reach the end user, her understanding dictated they not be declared a public operator.

Ms Singh explained that in terms of the definition provided in the legislation regarding the rights Sentech has to provide certain services, they were not allowed to provide their services to the public as an end user. Similarly, the OFTEL definition of a public operator would exclude Sentech as a public operator.

Mr N Kekana (Telkom) cautioned against a precedent that might be set here. He explained that the matter being discussed was before the Regulator and that interested parties should approach the Regulator so that the matter could be dealt with at that level. Secondly, he contended that matters related to interconnection and costing were very complex and as such, legislative intervention would be undesirable.

Mr Pongwana suggested that some of the arguments were not correct. In fact, Telkom's arguments bordered on being self-serving. He agreed with the manner in which ICASA was dealing with the matter and argued for legislative intervention because legislation would create an environment for recourse. He questioned whether OFTEL's definition of a public operator should be accepted as a universal definition of a public operator. However, "a person" in OFTEL's definition, in his opinion, could refer to an entity, company, individual, etc.

Ms A Van Wyk (NNP) asked why there should be legislative intervention if the Regulator could deal with the matter.

Mr A Magashule (ANC) was adamant that Sentech should be declared a public operator and asked why Telkom was arguing so strongly against this. He also responded to Ms Van Wyk's concern and explained that legislation would offer legal recourse to Sentech, should they be excluded and other operators be declared public operators.

A Telkom representative reiterated that the matter was very complex and not only of technical nature because it also had serious economic implications. He supported regulatory rather than legislative intervention.

Mr G Maruma (Sentech) aligned himself with the statements made by the Department and ICASA. ICASA had consulted extensively with the industry and in his understanding ICASA regarded Sentech as a public operator. He agreed with Mr Pongwana and found it difficult to understand the logic in the arguments put forward by Telkom and found their views to be myopic. He contended that any communications company, whether it transmits voice, videotext or data was actually in the business of communications. To have a restriction on one licence, the multimedia licence (in Sentech's case) to do voice, does not mean that you could not deliver services to the public. Sentech was saddled with three licences: a Common Carrier's status licence, an international licence where it actually carried voice and a multimedia licence where they were precluded from carrying voice. He saw absolutely no sense in developing three networks. Sentech should be declared a public operator to enable them to interconnect and lease facilities from Telkom at wholesale prices.

Mr Dube clarified the definition of "Carrier of Carriers" and disagreed with the impression Telkom had created that Sentech was not in compliance with their Multimedia licence.

Mr R Pieterse (ANC) suggested that the definition of a public operator be revised because it appeared to be problematic and asked if Telkom could indicate what the cost implications, if any, would be if Sentech were declared a public operator.

Mr Kekana indicated that there would be cost implications. He reminded them that current legislation did not contain the concept of major operator, yet ICASA was using the terminology. He concluded that the Bill did not provide for good law because of the vagueness and inadequacies, especially as it related to definitions in the legislation. He was concerned that a bad precedent would be set if this Bill were to be adopted.

Mr Pongwana hoped that a decision in favour of the Bill would not be construed as bad precedent but rather be seen as an attempt to create a better environment for decision-making for the Regulator through unambiguous legislation. He was trying to deal with the sense of urgency that had been there since July to resolve this matter. However, he believed that these debates would continue in the industry and that they would most likely return for further discussion.

The Chairperson said that Sentech was primarily bargaining for wholesale pricing that would advantage them to compete. The Committee would have to assess if this motive by Sentech was fair.

Mr Kekana reminded the meeting that Sentech has facilities and that they should be encouraged to improve existing ones and build more facilities. If Sentech wants wholesale pricing to apply, they must realise that it would be subject to negotiation and although they were not in the position to stop the lawmakers from legislating, Telkom would continue to put forward their position.

Mr Marumo interpreted Telkom's position as extremely arrogant. He did not appreciate Telkom's advice on how they should improve their facilities. That decision would remain a management decision. The issue for him was the fact that there was a regulatory and legislative regime that allowed for facilities leasing. Their argument was not necessarily to obtain facilities at cost price. Rather, they are negotiating for prices that will encourage competition to ensure a better deal for the end user.

Ms Smuts remarked that there was no issue as to whether the legislation was desirable because it would be in the interest of the consumer. She also encouraged ICASA and the Department to investigate the uncertainty of definitions.

Mr Pongwana commented that the Regulator has a definition and that they would most likely retain that definition.

Mr Dube reiterated the anomaly that existed i.e. that Sentech was billed retail rates for facilities leasing but that they were expected to provide services at wholesale rates.

Mr M Nchabeleng (Sentech) accused Telkom of using economic concerns of overseas investors and definitions to protect their monopoly. He expressed his passion for the delivery of quality services to the people in an environment of fair competition.

Mr M Ncetez (ICASA) said that they desired to resolve the matter through legislation because the regulations have definitions for both a public operator and major operator. The definitions contained in the regulations are helpful because if change was needed it could be done within a regulatory and legislative environment. The current definition of a public operator in the regulations excluded Sentech but the adoption of the Amendment Bill would bring them on board as a public operator.

Mr S Madyibi (MTN) contended that ICASA was correct and also showed support for the Bill but agreed with the point made by Telkom that the industry needed a definition that was all encompassing and not formulated along category licences.

Mr Pongwana agreed with Mr Madyibi and indicated that new legislation related to telecommunications was avoiding technologically-inclined definitions. The reason it was being avoided was due to the nature and pace of technological change that would necessitate ongoing amendments to legislation. Hence the important domain of the Regulator where changes could be effected.

Mr Nceteza suggested that convergence would solve this problem but it would require a lot of work since it entailed the revisit of all the regulations based on technology and the like.

Mr Kekana assured the meeting that they wanted to be as constructive as possible because they did not want to create any uncertainty in the industry. However, they would continue to encourage fundamental change in policy that would effect a healthy and flexible regulatory and legislative environment.

The Chairperson brought the discussion to an end and thanked everybody for their contribution.

Appendix 2:
MEMORANDUM ON THE OBJECTS OF THE TELECOMMUNICATIONS AMENDMENT BILL, 2003
The object of the Telecommunications Amendment Bill, 2003 is to provide for the
following amendments to the Telecommunications Act, 1996 (Act No. 103 of 1996):
1. The Bill seeks to amend section 43 of the Telecommunications Act by the addition
of a new subsection (3A) in order to give the powers and assign the duties of a public
operator to certain categories of operator for the purposes of guidelines prescribed in
terms of section 43(3);
2. the Bill also seeks to amend section 44 of the Telecommunications Act by the
addition of a new subsection (5A) in order to give the powers and assign the duties of a
public operator to certain categories of operator for the purposes of guidelines
prescribed in terms of section 44(5) of the Act.

INSTITUTIONS CONSULTED
0 ICASA
0 SENTECH

FINANCIAL IMPLICATIONS FOR STATE
None.

PARLIAMENTARY PROCEDURE
The Department of Communications and the State Law Advisers are of the opinion
that the Bill must be dealt with in accordance with the procedure established by section
75 of the Constitution since it contains no provision to which the procedure set out in
section 74 or 76 of the Constitution applies.


Appendix 1

Opinion 1
MEMORANDUM

Adv F S Jenkins I Dr E Palmer
Parliamentary Legal Advisers

Opinion 2
MEMORANDUM1. We refer to your verbal request 'or advice, following our memorandum dated 30
September 2003 on the legal ramifications should the Portfolio Committee on
Communications (the Committee) reconsider the candidature of Mr A Maralack
to serve on the SABC Board.

1. We refer to your request for advice on the way forward for the Portfolio Committee on Communications concerning the candidature of Mr A Maralack to serve on the SABC Board of Directors.

2. According to the information provided to us, Mr Maralack was nominated and shortlisted to be interviewed but terminated this process with his withdrawal as a candidate in a letter dated 15 September 2003. We are of the view that Mr Maralack cannot unilaterally rejoin the process by withdrawing his earlier letter after the Committee took cognisance of the withdrawal.

3. In our view the Committee can continue finalising the selection process and report to the House without having to consider Mr Maralack's candidature in light of his changed circumstances We strongly doubt that Mr Maralack could successfully institute legal proceedings against Parliament if his candidature is not re-instated.