convergence biii [b9-2005]

1

CONVERGENCE BiII[B9-2005]

Presentation to the Parliamentary Portfolio

Committee on Communications

2

TeamNolo Letele : CEO, MultiChoice Africa

Glen Marques : CEO, M-Net

Clarissa Mack : Group Executive, MIH, Policy and Regulatory

Karen Willenberg : Director, M-Net Regulatory Affairs

Kwezi Mtengenya : GM MultiChoice Regulatory Affairs

Amanda Armstrong : Director, Werksmans

3

INTRODUCTION AND MACRO FRAMEWORK

4

INTRODUCTION

• Welcome release of Convergence Bill and potential opening up of the communications sector

• Excited about potential opportunities posed by convergence

• Potential only realised once broadcasters have digitalized networks– Welcome statement in Ministers budget speech regarding Digital Migration

Working Group– ICASA’s initial steps in respect to digital broadcasting

• Translation of convergence into law – Complex– Extremely difficult task– Challenge of S192 of the Constitution (different treatment of broadcasting

and telecommunications)• Resourcing and funding of ICASA will be critical

5

Macro framework

• Broadcasting perspective

• Guided by other jurisdictions– UK distinct chapter on broadcasting– EU separate regulation of transmission from content– Latter approach useful because of s192 of the Constitution

(Same treatment of traditional broadcasting and telecommunications services a challenge)

• Proposal: assess whether in general chapters appropriate to treat broadcasting services in the same way as other communication services

6

DEFINITIONS

7

Concerns about definitions

• Definitions critical to interpretation and implementation of Bill

• Important definitions too wide and unclear

• This makes it difficult to assess– which services/business activities require a licence– nature and extent of regulation of services/business

activities

• These difficulties will undermine compliance with and the efficiency of the Bill, and will result in litigation

8

Difficulties with sub-sets of definitions

• Bill creates sub-sets within key definitions– eg Bill defines a communications network service as a

communications service

• It’s also unclear whether broadcasting services are a sub-set of– or distinct from communications services– content services

• Confusion results

9

Licensing framework ought to be streamlined

• Services requiring a licence ought to be – communications network services– communications services– broadcasting services1

• Use of radio frequency spectrum also to be licensed

• Definitions ought to be amended in line with this approach

1 See s85(3)(e), (f) and (g) of the Bill

10

Concerns about content services

• Bill ought to make it clear that it does not require the licensing and regulation of content services

• This can be done by amending certain definitions2

2 Refer to paragraphs 18 - 19 of our Document 1

11

Key definitions

• For the broadcasting sector, the key definitions are

– communications network service– communications service– broadcasting– broadcasting service

12

Problems with current definition of communications network service

• This service should not be defined as a communications service

• Definition should not be restricted to licensees

• Reference to communications facilities too wide

• Paragraphs (a) to (c) ought to be simplified

13

Proposal re definition of communications network service

A “communications network service” is “a service whereby a person makes available a communications network, whether by sale, lease or otherwise

(a) for that person’s own use for the provision of a communications service or a broadcasting service; or(b) to another person for that other person’s use in the provision of a communications service or a broadcasting service; or(c) for resale to a communications service or a broadcasting service”

14

Problems with current definition of communications service

• Definition should not be restricted to any service provided in terms of the legislation


• Broadcasting services ought to fall outside of this definition

• There should be no reference to content services

15

Proposal re definition of communications service

A “communications service” is “a service provided for remuneration, to the public, sections of the public, or the subscribers to such service, which consists wholly or mainly of the conveyance of communications over communications networks, but excludes broadcasting services”

16

Problems with current definition of broadcasting

• This service should not be defined as a communications service


17

Proposal re definition of broadcasting

“Broadcasting” means “any form of unidirectional communications intended for the public, sections of the public, or subscribers to any broadcasting service, having appropriate receiving facilities, whether conveyed by means of radio frequency spectrum or any communications network or any combination thereof.”

18

Problems with current definition of broadcasting service

• Reference to television is not technologically neutral


• Paragraphs (i) and (ii) ought to be simplified

19

Proposal re definition of broadcasting service

A “broadcasting service” means “a service which consists of the broadcasting of visual and/or sound material to the public, sections of the public, or subscribers to such service, but does not include –

(a) a service which provides no more than data or text, whether with or without associated still images; or(b) a service or components of a service which makes programmes available on demand on a point-to-point basis, including a dial-up-service.”

20

Detailed comments and proposals on definitions

• We urge the Committee to refer to our detailed

– comments on the rest of the definitions3

– drafting proposals on definitions4



21

Powers of Minister / ICASA

POWERS OF MINISTER / ICASA

22

Powers of Minister / ICASA cont.

• Balance struck in 1999 Broadcasting Act

• Representations in respect of separation of roles based on existing legislation

• Retain existing balance

23


• Concerns regarding powers of Minister in respect of:– Policy directions– Licensing of Broadcasting/Broadcasting Signal Distribution– Approval of all license conditions

• Policy Directions– Not per se a problem– However s13A(5) IBA Act Minister may not issue policy

directions - for the granting, amendment, suspension or revocation of

a licence, and ;- that interferes with independence of Authority

• Proposal: retain existing safeguards in s13A(5) of the IBA Act

24


• s5 – Minister to fix a date for applications for network service licences– Includes broadcasting signal distribution

• s9 – Minister approve licence conditions for all individual licences– Includes individual broadcasting licences

• S5 and s9 would fall foul of section 192 of the Constitution

25


• Our proposal– Retain existing separation

• If proceed with clauses in Bill – Constitutional amendment required prior to enactment of

Convergence Bill

26

LICENSING FRAMEWORK

27

Licensing framework

• Licensing framework concerns– Framework too rigid– Unintended consequences – Services where procedure to be simplified e.g community

radio caught up in complex licensing procedures/conditions

• Our proposal concentrates on broadcasting/broadcasting signal distribution services– Individual and class licenses to be granted in all categories

28

Licensing framework proposal

License Category Individual Class

Broadcasting service Public/commercial broadcasting licence

Community broadcasting licence

Signal Distribution Commercial signal distributor

Self provisioning by community or any other broadcaster

FrequencyFrequency used by individual licensee

Low power sound/event broadcasting frequency

29

Licensing Framework proposal cont.

• Individual licenses– Standard licence conditions for:

- category of service; and - individual licences

– Greater administrative obligations (application, renewal and amendment, procedures and reporting)

• Class Licences– Standard conditions for:

- category of service– Simplified application procedure and reporting and

monitoring– Automatically granted if comply with standard terms and

conditions

30

Licensing framework proposal cont.• Proposal – 2 alternatives

• Proposal 1 - demarcate class and individual licences in the legislation– Rigid approach in constantly changing sector– Problem because it constitutes closed list – Certain services may fall outside of the categories– Limiting

• Proposal 2 – Authority has discretion to decide which categories of services are individual or class licences– Future proof– More efficient– Allows more flexibility to deal with constantly changing sector

31

Licensing framework proposal cont.

• Proposal 2– Preferred option

• Statutory guidance on demarcating class vs individual licences– nature of service– technology used to provide service– nature of likely end users of service– likely number of end users of service– geographic reach of service

32

PROCESSES AND PROCEDURES

33

Processes and Procedures

• Primary concerns:• Reduction in public consultative processes• Inadequate procedural safeguards

• Bill proposes increase in power of Minister and ICASA BUT reduces checks and balances

• Critical issue to ensure proper exercise of expanded authority granted to ICASA and Minister

34

Inadequate Procedural Safeguards

• IBA Act required ICASA to consult the public before exercising its powers AND set out detailed procedures to be followed

• IBA Act repealed, but no equivalent provisions in the Bill

35

Ministerial Policies

• Since Bill requires that ICASA must consider Ministerial policies, we propose that before issuing policies5

- Minister must consult the Authority

- Allow the public an opportunity to comment

5 Refer to pg 17 of our Document 2

36

Regulations issued by Authority

• S4 of Bill– very thin on procedure – hearings optional

• Compare S78 of IBA Act – requires ICASA to conduct inquiry when proposing regulation

• Proposal6: include public consultative process

6 Refer to pgs 19-22 of our Document

37

Procedural Safeguards for Licensing

• Procedural and substantive safeguards important for certainty and transparency in licensing and related procedures

• Again, IBA Act contained detailed procedures for licence applications, amendment, renewal etc7

• Proposal: inclusion of substantive and/or procedural safeguards in key licensing procedures 8

7 See IBA Act: S28 (general inquiries), S31 (frequency licences), S41 – 42 (applications), S44 (renewals), S52 (amendment)

8 We have proposed the inclusion of key procedures which accord with those in the IBA Act. See Document 2 pp 24 – 26 (licensing), p 30 – 33 (licence application) pp 33 – 34 5(licence amendment), pp 35 – 37 (licence renewal) pp 37 – 38 (transfer of licence)

38

Processes and Procedures

• Absence of safeguards:• Militates against independent regulation of broadcasting• Infringement of right to just administrative action• No certainty – impact on investor confidence and stability

• One of the few issues where there is consensus between most parties

• Easy to implement – detailed proposals based on IBA Act

39

COMPETITION MATTERS

40

Issues over which ICASA ought to have jurisdiction

• Issues in the communications sector over which ICASA correctly has jurisdiction– interconnection– facilities leasing– number portability– carrier pre-selection

• However, remaining competition-related provisions of Bill problematic

41

Government policy on competition matters

• Government recognizes there is a shift away from prospective sector-specific regulation to generally applicable competition law

• Government sees the following benefits– consistency with which competition principles applied across

different sectors– flexibility, which is required in a dynamic market such as the

communications market– ability to adapt to continuously changing products and

geographical markets9

9 Policy Framework, Ministry of Public Enterprises, August 2000, pg 57

42

Government policy on competition matters

• We support this government policy, and the representations made by the competition authorities

• In an industry in transition, competition authorities should play the leading role and enjoy final decision-making powers10

10 Policy Framework, Ministry of Public Enterprises, August 2000, pgs 61-62

43

Competition authorities appropriate bodies to deal with competition matters

• Competition Act– applies to all economic activity– deals with prohibited practices and merger control– deals with competition concepts in detail

• Competition Act creates appropriate infrastructure for dealing with competition matters– Competition Commission is the investigative body– Competition Tribunal is the adjudicative body– Competition Appeal Court deals with appeals and reviews

44

Competition authorities are appropriate bodies to deal with competition matters

• Competition authorities have the resources, expertise and experience for dealing with competition matters

• In prior statements, ICASA has accepted a jurisdictional divide“As a sector-specific regulator the [Authority] has primary expertise when it comes to licensing, legal, technology, policy and public interest matters that directly affect the … industry …However, the Competition Commission may be more expert in dealing with issues relating to essential facilities, mergers, exclusionary acts, market power and restrictive practices”.11

11 “Competition and ownership in the media and broadcasting sector”, paper delivered by Mandla Lange, Chairperson of the IBA, at a conference in April 2000

45

Advantages to avoiding concurrent jurisdiction

• Avoiding concurrent jurisdiction avoids

– forum shopping– wasteful duplication of resources– lengthy and expensive litigation– double jeopardy– uncertainty within the sector– compliance difficulties

46

Concerns about s8(3) to (7), s61 and s63

• These sections create concurrent jurisdiction over general competition matters

• This is contrary to government policy

• This will have all the adverse consequences outlined above

47

Further concerns with these sections

• These sections use concepts which do not accord with the provisions of the Competition Act

• These sections empower ICASA to act unilaterally – there are no procedural safeguards, and in particular, prospective or actual licensees are given no opportunity to be heard

• ICASA lacks the appropriate infrastructure to deal with these matters (ie there are no separate investigative and adjudicative bodies and court of appeal)

48

Proposals on competition matters

• s8(3) to (7), s61 and s65 ought to be deleted

• A provision ought to be inserted in the Bill requiring the competition authorities to consult ICASA in competition matters concerning the communications sector

49

Limitations on Ownership and ControlLIMITATIONS ON OWNERSHIP AND CONTROL

50

Current Statutory Limitations on Ownership and Control

• IBA Act - S48 to 50 limitations on foreign, horizontal and cross-media

control

• Broadcasting Act, s31 provides: - Limitations do not apply to a broadcasting service carrying

more than one channel unless the Authority has recommended the application of these sections to those services and those recommendations have been adopted by the National Assembly.

51

Proposals arising from the Bill

• Bill Proposes- repeal of the entire IBA Act

• - repeal of s31 Broadcasting Act - these limitations therefore fall away

• Multichoice and M-Net welcome this development but have some serious concerns about certain provisions of the Bill particularly s13

52

Concern that Limitations are introduced by way of regulations

• s13 is headed ‘Transfer of individual licence or change of ownership’

• Sub sections 3 and 4 proceed to deal with possibility of limitations on ownership and control being introduced by way of regulations.

53

Authority to set Limitations on Ownership and Control

• Sub section 13 (3) provides that :-

- The Authority may by regulation set a limitation or restrict the ownership or control of a licence or communications service in order to:

- (a) promote diversity of views - (b) promote ownership and control of

communications services by historically disadvantaged groups - (c) promote competition in the communications sector

54

Major concerns with these proposals

• Limitations on ownership and control on licences should not be imposed by way of regulation

- imposition of limitations is a major issue which impacts on the country’s economic policies

- critical issues in relation to the attraction of local and international investment - Impact on large investments

• Any limitations ought to be determined in primary legislation by Parliament.

55

Major concerns with these proposals cont.

• s13(3) suggests that the Authority may make one or more regulations in relation to a specific licence or a communication service.

• We are concerned and opposed to this approach.

• If the limitations on ownership and control are to be imposed, these must be imposed by way of law of general application.

56


• Regulations could be made and take effect without adequate notice being given.

• Regulations may often and fairly easily be amended by the Authority.

• Provisions imposing limitations on ownership and control could therefore be changed on short notice and frequently.

57


• Little certainty and security as regards current and future investments

• In most jurisdictions, limitations on ownership and control are set out in primary legislation

• Bill substitutes decision-making powers of Parliament for that of the Authority

• Proposed that if any limitations are imposed, these should remain in primary legislation

58

CONTRIBUTIONS TO UNIVERSAL SERVICE FUND

59

Contributions to Universal Service Fund

• S81 proposes that all licences are to contribute to the fund.

• Regulation of telecommunications designed to achieve particular objectives

• Regulation of broadcasting designed to address particular but different set of objectives

60

Contributions to Universal Service Fund

• Usually telecommunications services are required to contribute to a Universal Service Fund

• Money is then used to fund:- provision of telecommunication services to needy communities- construction or extension of telecommunications networks to

under serviced areas.- institutions as regards procurement of telecommunications

services and access to networks.

61

Broadcasting Services

• Usually required to contribute and provide:– development and the broadcasting of local content– devote part of its budget to production of varied mixture of

programming

- News and Current Affairs- SA Drama- Children’s Programming

• Substantial financial contribution to Media Development and Diversity Agency (MDDA)

62

Broadcasting Services cont.

• Are already making a range of contributions designed to achieve the objectives of broadcasting policies

• Could not have been the intention of the drafters of the Bill to subject broadcasting services to “double taxation”

63

Proposal

• Amend s81 to make it clear that this section does not apply to broadcasting services and broadcast signal distribution services.12

• Extensive support for this proposal from broadcasters, signal distribution operators and Icasa

12 Refer to pg 61 of our Document 2

64

TRANSITIONAL ARRANGEMENTS

65

Objectives of transitional arrangements

• Objectives ought to be as follows

- persons within the communications sector who are lawfully providing a service when the Convergence Act commences, must be properly protected

- transition ought to be as orderly as possible- all transitional issues which may arise must be provided for

in Bill

66

Protection of persons lawfully providing a service

• We have proposed a new section to ensure that

- existing licensees and- persons who lawfully provided certain services prior to the

commencement of the Convergence Act are adequately protected13

13 Refer to pgs 64 to 65 of our Document 2

67

Our proposed transition process

• Within six months of commencement of Convergence Act, ICASA must publish regulations setting out

- licence categories - which of these categories are to be granted an individual

licence and which a class licence- standard terms and conditions for each category of licence- manner in which application for conversion is to be made

and- which services do not require a licence

68

Transition process

• Existing licensees will then have four months to submit their applications for conversion

• ICASA has two months to gazette details of who has applied for what services and schedule for public hearings

• For existing licences which are to be converted to individual licences, ICASA must prepare draft new individual licences, and must give notice that these draft new licences are open for inspection

69

Transitional process

• There will be an opportunity to make written representations on these licences

• There will be hearings concerning these licences

• In relation to existing licences which are to be converted into class licences we propose a far simpler process14

14 Refer to pgs 62 to 69 of our Document 2

70

Rights, duties and obligations

• In converting an existing licence, ICASA- may not remove any material rights- may confer greater rights- may not impose duties and obligations which are materially

more onerous

• A new licence may not confer an exclusionary right15

15 Refer to our proposed s86 on pgs 69 to 70 of our Document 2

71

Additional comments on transitional arrangements

• We propose that

- s5(10) and s72 be deleted- s84, s85 and s87 be replaced with the proposed sections we

have put forward16

• We propose amendments to s87 dealing with existing regulations17

16 Refer to pgs 64 - 70 of our Document 2

17 Refer to pgs 70 - 71 of our Document 2

72

Transitional provisions for Bill inadequate

• Transitional Chapter fails to deal with numerous issues which require attention

• This may result in significant uncertainty, and create instability and discourage investment in communication sector

73

Important transitional issues omitted from Bill

• Existing station licences and permits

• Any existing agreements eg interconnection or facilities leasing

• Existing approvals granted for telecommunications equipment

• Technical standards

74

Important transitional issues omitted from Bill

• Frequency plan made in terms of s31 of IBA Act in relation to the broadcasting services frequency bands, and made ito s29 of the Telecommunications Act in relation to rest of spectrum

• Pending inquiries ito s28 of IBA Act and s27 of Telecommunications Act

• Pending applications

75

CONCLUDING REMARKS

76

Concluding remarks

• Would like to thank the Committee for the opportunity to make oral submission

• We trust that our contribution will assist the Committee in its deliberations

• We will make our team available to assist the Committee throughout this legislative process

• Wish you well in your deliberations

77

THANK YOU

convergence biii [b9-2005]

Documents