CONVERGENCE BiII [B9-2005]

1. CONVERGENCE BiII[B9-2005] Presentation to the Parliamentary Portfolio Committee on Communications

2. Team Nolo 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 • 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 • Paragraphs (a) to (c) ought to be simplified • 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 • Paragraphs (a) to (c) ought to be simplified

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 (a) to (c) ought to be simplified • 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 • Refer to paragraphs 12 - 24 of our Document 1 • Refer to paragraphs 1 - 93 of our Document 2

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. Powers of Minister / ICASA cont. • 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. Powers of Minister / ICASA cont. • 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. Powers of Minister / ICASA cont. • 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

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 procedures8 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 Control LIMITATIONS 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.