Annual Report 1 April 2003 – 31 March 2004

8 November 2004

Outline of Presentation

• Strategic Objectives

• Telecommunications

• Broadcasting

• Engineering & Technology

• Legal, Communications, Consumer Protection and Council Support

• Office Finance and Business Support

Strategic Objectives

ICASA’s strategic objectives are informed by the policy directives aslaid out by government and the different statutes. These are: • Promoting affordable delivery of services and universal access

• Encouraging investment in the ICT environment within a stable and predictable regulatory regime

• Fostering the development of public, commercial and community broadcasting services that are responsive to the needs of the people

• Promoting the provision of a diverse range of sound and television broadcasting services on a national, regional and local basis

Strategic Objectives (2)

ICASA’s strategic objectives are informed by the policy directives aslaid out by government and the different statutes. These are:

• Encouraging the development of a competitive and effective ICT sector

• Promoting and facilitating convergence of telecommunications, broadcasting and information technology

• Bridging the Digital Divide

Organogram

COUNCIL

CEO

Telecommunications

BroadcastingLaw, Communications, Consumer Protection &

Council Support

Engineering & Technology

CFOFinance and Business

Support

Telecommunications Unit

Telecommunications

Telecommunications

Policy Analysis LENA

Policy & Research Competition EnforcementLicensing

Numbering Admin

Turnover R60 billion

Telecommunications (1)Some of the key issues that were considered in promoting thesector were:

• Finalisation of regulations i.r.o. COA/CAM for mobile operators – (this will ensure that ICASA receives information on the revenues and costs of service provision by operators in a user-friendly format)

• Regulations i.r.o. fixed line - to - fixed line interconnection. (this will facilitate interconnection agreements between Telkom and the SNO)

• Reviewed Carrier Pre-selection regulations (these regulations will enable consumers to choose an operator

of choice to carry their national long distance and international calls)

Telecommunications (2)Developed the following guidelines and regulations:

• Trial and Launch of New Services (operators will be able to follow the guidelines so that they can launch new services in a manner that is competitive and acceptable)

• Framework for the operation of wireless local area networks (WLANs) in “hotspots” without requiring a licence

• Number Portability (these will allow customers to retain their telephone numbers when they change operators)

• Contributions to the Universal Service Fund(these regulations remove the R20 mil cap to a percentage contribution of turnover by operators)

Telecommunications (3)

• Developed a comprehensive frame-work for the licensing and regulation of Value Added Network Services (such as Internet service providers) and Private Telecommunications Network Services (e.g. state owned enterprises, SITA etc.)

• Developed a Numbering Plan that will encourage competition within the sector

• Processed applications for Under-Serviced Area Licences and submitted a short-list of recommended applicants to the Minister

Telecommunications (4)

• Began development of a Short Code Strategy for SA

• Started work on the amendment of Telkom’s licence in preparation for competition

• Updating and finalising terms and conditions for the SNO

licence

• Developing a Central Numbering Database as required in terms of the Act

Telecommunications (5)

• Licence Amendment of the following licences:

– Sentech

– WBS (Pty) Ltd (Wireless Business Solution)

– Swiftnet

• Commenced process on the allocation of 1800MHz and 3G frequency spectrum bands by the Mobile Cellular Telecommunications Service licensees.

• Continuously in process of clamping down on illegal providers of telecommunication services.

Broadcasting Unit

Broadcasting

Broadcasting Division

Regulation of broadcasting

Policy Development & Research Dept.

Development of policy and regulations

Licensing, Monitoring & Complaints Dept.

Implementation of policy & regulations

Policy Development Unit

Policy research and the development of

discussion papers

Projects Unit

Co-ordination of public hearings, analysis of

submissions by the public and drafting of position papers & regulations

Licensing Unit

Processing licence applications, co-ordination

of licence application hearings, drafting

licences, issuing licences, licence fee collection,

licence renewals, licence amendments

Monitoring & Complaints Unit

Monitoring of licensees to ensure compliance with

licence conditions, regulations and

legislation. Receipt and processing of complaints

against broadcasters. Acting a registrar of

complaints for the the Broadcasting Monitoring

and Complaints Commission

R7 billion turnover

Broadcasting (2)

• The Position Paper and Regulations on Sports Broadcasting Rights published - 25 July 2003. (Regulating the broadcast of national sporting events on a non exclusive basis by subscription broadcasters)

• The Position Paper on the Review of Ownership and Control of Broadcasting Services and Existing Commercial Sound Broadcasting Licences published - 13 January 2004.

(Regulated consolidation of onwership and control to encourage foreign direct investment. Invitation to apply for commercial sound broadcasting licences in the secondary markets in Northern Cape, North West, Mpumalanga and Limpopo Provinces).

Broadcasting (3)• The Position Paper and Regulations on Regional Television

published on 26 November 2003. (Policy guidelines to inform the SABC applications for two public

regional television broadcasting services aimed at meeting the needs of marginalised languages in South Africa).

• The Position Paper and Regulations on Low Power Sound Broadcasting published on 24 October 2003.

(Policy and licensing framework for a class of licence called low power sound broadcasting, such as sports ground, drive-in movie theatres, retirement villages, community centres.

• In the period under review the Authority also published technical amendments to the South African Television Content Regulations of 2002 and conducted an economic feasibility study for subscription broadcasting in South Africa.

Broadcasting (4)• 18 public sound broadcasting services licences renewed

• 3 Public television broadcasting services

• 6 commercial radio services: YFM, Jacaranda FM, Kaya FM, P4 Cape Town and Classic FM

• Radio Oranje was granted an amendment to their application

• Approval of the Nail Transaction

• Awarding of 4 Year Community Broadcasting Licences in the 9 provinces

Broadcasting (5)Priorities for 2004/5

• Amending SABC Licences

• Issuing an invitation to apply for Community Sound Broadcasting licences in the Nodal Points

• Mnet Licence Amendment on Mnet open window

• Renewal of Orbicom Category two (2) Signal Distribution

• Issuing an invitation to apply for commercial sound broadcasting licences for Secondary Markets

Broadcasting (6)

Election 2004 was monitored to ensure that all political parties are equitably treated by broadcasters, in total 44 502 items were monitored and a data capture error ratio of 0,15 % achieved

Complaints – during the period under review 130 complaints were received, processed and referred to the relevant Authorities (Broadcasting Complaints Commission of South Africa (BCCSA) and the Advertising Standards Authority (ASA)

Broadcasting (7)BMCC - a statutory body that adjudicates complaints either in terms of complaints under the Code of Conduct for Broadcasters where the broadcasters are not members of the National Association of Broadcasters and therefore do fall within the ambit of the BCSA, or complaints in terms of violations of licence conditions

• in the year under review hearings were held in respect of the following broadcasters:

Lethabile Community Radio e-tv Radio Graaff-Reinet Imonti FM Mosupatsela FM

Outstanding Licence Fees

• M-Net has outstanding amount of R40 mil in licence fees – this is in dispute

• M-Net outstanding licence fees is as a result of the disputed basis used in calculation of the licence fees. ICASA has embarked on a process to audit the financial records and accounts of M-Net

• Midi TV was granted a reduction in it’s licence fee for the period 1999 – 2002

• Notwithstanding the reduction, Midi TV still owes the Authority R7 mil in outstanding licence fees

• Midi TV has made a commitment to settle the outstanding licence fees by March 2005

Engineering and Technology Unit

Engineering and Technology (1)The Engineering and Technology Division is divided into 2 units:

The responsibilities include:

• Support in the granting of frequency and station licences, certificates and authorisations

• The management and planning of access to the radio frequency spectrum

• The preparation of frequency band plans

• Investigation of radio communications interferences; and • The assessment, adoption and management of technical standards

relating to customer equipment and other devices

Frequency Spectrum Radio Monitoring and Regions

Frequency Spectrum (2)The Frequency Spectrum unit undertook the following projects during the period under review:

• South African Radio Frequency Band Re-planning Exercise

The new South African Table of Frequency Allocations (SATFA) (This new plan took into account the ITU, World Radio Communications (WRC) 2003 resolutions and recommendations

in order to introduce new services and entrants in the Telecommunications and Broadcasting sector)

• Review of Equipment Type Specifications

(All relevant standard telecommunications technical specifications

are assessed through the national Standards Technical Committee,

TC 80, which is governed by Standards South Africa (STANSA)formerly known as the South African Bureau of Standards.

Standard which is outstanding - VoIP

Frequency Spectrum (3)• Published Short Range Devices (SRDs) regulations (This regulation list and govern the frequency bands and equipment that do not require frequency spectrum licences)

• Published annual Terrestrial Broadcast Frequency Plan and ongoing development of Digital Broadcast Frequency Plan and migration strategy

• Issued ± 90 000 Radio communications Frequency Licenses (the cost of collecting frequency licence fees far outweighs the revenue yield. Regulatory imperative: to collect such fees.

Monitoring And Regions (1)Regional Operations

• Enforce compliance with the Telecommunications and Broadcasting Acts in terms of spectrum usage and clamps down on illegal operations

• The regional offices clamped down on the following illegal operations: – GSM signal jammers Illegal cordless telephones– Illegal Broadcasting transmitters– Unlicensed provision of IP networks– Spurious Transmission– Equipment used in excess of licence (Audits)

Monitoring and Regions (2)• Installations of Direction Finding Monitoring Units to improve

the effectiveness of spectrum monitoring and location of unlicensed sources

• Memorandum of understanding between ICASA and Lesotho Telecommunications Authority (LTA) to manage Radio Frequency Spillover

• Labeling campaign: Various retail outlets were visited to ensure that equipment had been certified by ICASA.This campaign also drove public awareness on buying certified and approved equipment.

Monitoring and Regions (3)

Square Kilometre Array (SKA) project.• Together with the Dept. of Science and Technology ICASA is

involved in the planning of terrestrial radio frequency site surveys

• This is a project aimed to develop the largest-to-date radio-astronomy telescope estimated at U$ 1 Billion

• South Africa is a strong contender with several sites identified in the Northern Cape as Southern Hemisphere sites are preferred

• South Africa is competing with Australia

Law, Communications, Consumer Protection and Council Support

Law, Communications, Consumer Protection and Council Support

Legal Department:

• Management of litigation – 11 litigation matters were before court, of which five were finalized

• Provision of opinions on legislation, regulations and processes

• Assistance in adjudicatory matters before Council

• Managed 3 section 100 complaints in terms of the Telecommunications Act, conducted adjudicatory processes and hearings

Law, Communications, Consumer Protection and Council Support (2)

• 197 complaints were received and attended, of which 150 were resolved in the year under review

• Several complaints on coverage were received and as a result of negotiations with operators, many rural areas now enjoy coverage

• Community fora in three Provinces, namely Kwazulu- Natal, Eastern Cape, and Western Cape have been established to facilitate research that will inform policy.

• Active participation in TRASA, ITU, RIARC (chaired), ATU, SABA and IIC

• Successfully managed and profiled ICASA as a brand

Office Finance and Business Support

Office Finance and Business Support (1)

• Improved the management reporting systems to allow for accurate, comprehensive and regular financial reporting

• Improved the efficiency of payment procedures

• A number of policies and procedures were reviewed and updated

• The telecommunications and broadcasting licence collection functions were integrated into Finance unit to improve efficiency in revenue collection

Licensing Revenue Trends

495

643

772

904973

0

200

400

600

800

1000

R millions

1999/2000* 2000/2001 2001/2002 2002/2003 2003/2004

Improvement of 197% over 5 years

* IBA and SATRA combined

Office Finance and Business Support (2)

• 70% of staff are from the previously disadvantaged groups

• High staff turnover as a result of “poaching” by the industry (remuneration packages)

• The organisation restructuring as a result of the merger of IBA and SATRA was concluded, and 80% of staff confirmed into various positions

• A performance management system has been developed and is being implemented

56.00%

7.00%9.00%

28.00%

African Asian Coloured White

Race Group

Per

cen

tag

e

COMPARISON OF ICASA RACE STATISTICS TO SA POPULATION

Per

cen

tag

e

COMPARISON OF STAFF COMPLEMENT MARCH 2004 VS MARCH 2003

56% 58%

7% 6%9% 9%

28% 26%

African Asian Coloured White

20042003

Race Group

STAFF COMPLIMENT AS AT 31 MARCH 2004BY GENDER

45%55%

FEMALE MALE

STAFF COMPLIMENT BY RANK 31 MARCH 2004

54%

15%

13%

11%7%

Administration Engineering/Technical

Professional Middle Management

Senior Management

Emphasis of Matter• Amounts owing to the National Revenue Fund were not paid within 30

days of receipt as required by Section 15(3) of the ICASA Act, 2000.

An existing backlog of payments has now been eliminated, however operationally the 30 day period is a difficult target to meet. A proposal will be made to amend the ICASA Act to extend the period to 60 days.

• The Authority had granted broadcasting licences but not collected licence fees.

Legal measures have been taken to collect the outstanding licence fees and repayment plans have been agreed to by the relevant licensees.

• Frequency spectrum fees of R5,9 million was written off as bad debt and a further R10 million was provided for as doubtful debt.

This was as part of an intensive clean-up exercise, which forms part of an

overall project to improve debt collection of these licence fees.

Audit Issue

• Staff Debt more than doubled from R201.1 thousand at 31 March 2003 to R422.9 thousand at 31 March 2004.

– Most of this debt relates to travel advances that have not yet been reconciled. The processing of these reconciliations was streamlined and tough measures were put in place to ensure reconciliations were submitted by staff on time.

– Total outstanding debt has since decreased by 15% to R357.8 thousand. A similar further decrease is anticipated for the remainder of the financial year.

Q & A