US embassy cable - 05PRETORIA1441

UNCLAS SECTION 01 OF 02 PRETORIA 001441 
 
SIPDIS 
 
DEPT FOR AF/EPS/DKRZYWDA AND AF/S/TCRAIG AND KGAITHER 
COMMERCE FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND 
TREASURY FOR GCHRISTOPULOS, LSTURM, AND AJEWEL 
DEPT PASS USTR FOR PCOLEMAN, WJACKSON, AND CHAMILTON 
 
E.O. 12958: N/A 
TAGS: ECPS, ETRD, ECON, EINT, SF 
SUBJECT:  INDUSTRY AND REGULATOR RESERVATIONS ON RESURRECTED 
CONVERGENCE BILL 
 
REFTEL:   04 PRETORIA 927 
 
1.  (U) SUMMARY. For the second time in thirteen months, South 
Africa's Convergence Bill has been released for public comment. 
The Bill, originally released in February 2004, repeals the 
Independent Broadcasting Authority Act of 1993 and the 
Telecommunications Act of 1996 and grants increased powers to the 
regulator.  The Minister, however, retains control over the 
conditions and invitation to apply for key licenses.  At an April 
4 joint panel, officials from the Independent Communications 
Authority of South Africa (ICASA) and the telecommunications 
industry argued that the Bill suffers from the lack of a green 
paper/white paper policy process and falls short of creating 
legislative framework promoting convergence.  An unreleased ICASA 
Amendment Act will also increase the authority of the regulator 
in some areas.  END COMMENT. 
 
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THE BILL 
-------- 
 
2.  (U) The Convergence Bill is significant in that it 
consolidates existing legislation by completely repealing the 
Independent Broadcasting Authority Act of 1993 and the 
Telecommunications Act of 1996.  The Bill increases the authority 
of the Independent Communications Authority of South Africa 
(ICASA), although the Minister still controls the date and 
conditions of certain licenses.  The regulator will be allowed to 
issue regulations without requiring Ministerial approval and will 
have new powers to combat anti-competitive behavior.  The Bill 
proposes two types of licenses:  Individual and Class.  The 
Individual category includes licenses for communications network 
services, radio frequency spectrum, and broadcasting services. 
The Class category includes licenses for communications services 
and applications services.  There is general dissatisfaction both 
within the regulator and the industry with the Bill's definitions 
of these various types of licenses.  The Bill also allows ICASA 
to issue license exemptions for communications services.  The 
Bill calls for the regulator to issue a radio frequency plan 
within 12 months of the Bill coming into force and a numbering 
plan by the end of 2005.  In addition, the Bill calls for the 
regulator to manage interconnection, facilities leasing, license 
conversion, and consumer issues.  The chronically understaffed 
regulator is unlikely to have the capacity to carry out these 
mandates in a timely and effective manner.  Missing from this 
draft of the Bill is the funding formula that is to increase the 
financial independence of ICASA.  Officials at the regulator told 
Econoff that this language has been transferred to the unreleased 
ICASA Amendment Act, but could not say when that Bill would be 
made available to the public. 
 
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THE BACKGROUND 
-------------- 
 
3.  (U) In early 2003, Andile Ngcaba, then Director-General of 
the Department of Communications (DOC), announced his intention 
to create a policy and legislative framework to address the 
convergence of technologies in the broadcasting, 
telecommunications and information industries.  In July 2003, the 
DOC hosted a National Colloquium on Convergence Policy that 
brought together stakeholders from the public and private sectors 
to identify the issues that should be embodied in a convergence 
policy and subsequent legislation.  At the conclusion of the 
Colloquium, a committee was established to draft the Bill, which 
was completed in December 2003. In January 2004, Ngcaba announced 
his resignation to pursue a high-paying career in the private 
sector.  The Convergence Bill was released for public comment the 
following month and was widely criticized despite some 
improvements in regulatory independence.  Over the next twelve 
months, the DOC significantly rewrote the Bill before sending it 
to Parliament in mid-February 2005.  The Parliamentary Portfolio 
Committee on Communications released the revised version March 2 
for public comment through April 8. 
 
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INDUSTRY RESPONSE 
----------------- 
 
4.  (U) School and local holidays from March 18 - April 1 
diverted industry attention from the release of the Bill. 
However, the South African Institute of Electrical Engineers and 
the LINK Centre at the Graduate School of Public and Development 
Management of the University of the Witwatersrand convened a 
joint panel discussion April 4 to address the Convergence Bill. 
The event was well-attended by the academic, regulatory, and 
business sectors. 
 
5.  (U) Michael Markovitz, Advisor to the Chairperson of the 
Independent Communications Authority of South Africa (ICASA), 
said that the regulator supports the Bill's direction, but sees 
several areas of weakness.  On the positive side, he noted that 
the Convergence Bill consolidates existing legislation, but 
worries that ICASA's authority may be diluted if the powers 
granted to the regulator in the repealed legislation are not 
thoroughly transferred either to the Convergence Bill or to the 
unreleased ICASA Amendment Act.  Markovitz said greater 
clarification on the powers of the Minister and the regulator is 
required to prevent regulatory overlap.  He also expressed 
concern that the proposed 12-month transitional timeframe for the 
conversion of licenses was unrealistic and would divert 
regulatory attention from the business of opening new markets. 
Markovitz suggested that the ICASA Amendment Act, which is being 
drafted in parallel with the Convergence Bill, should be released 
simultaneously with the Convergence Bill because they both affect 
the regulator in significant ways. 
 
6.  (U) Carla Raffinetti, a telecommunications attorney, lamented 
the absence of a green paper/white paper process prior to the 
Bill.  She said the Bill seems to lack purpose throughout. 
Raffinetti said that the proposals for the licensing of 
infrastructure were heavily influenced by the Malaysian telecom 
model, which was based on a green paper/white paper process 
relevant to Malaysia's circumstances not South Africa's.  She 
also noted that while ICASA gains greater authority in the final 
approval of some licenses, the Minister still retains control 
over the entry date and the conditions of individual licenses, 
perpetuating the existing co-regulatory environment. 
 
7.  (U) Gerhard Petrick, a former ICASA Counselor now working as 
a consultant to the National Research Foundation, looked at how 
the Bill affects the broadcasting sector.  He criticized the 
Bill's separation of broadcasting and communications services, 
suggesting that technology is already quickly blurring the line 
between the two industries.  He noted that the Bill does not deal 
with digital broadcasting where convergence is already a reality. 
Petrick also said the Bill's handling of spectrum management is 
inadequate and requires greater attention. Finally, Petrick 
concurred with Markovitz that the transition timelines of the 
Bill were too ambitious. 
 
8.  (U) Dobek Pather, a telecommunications consultant with Africa 
Analysis, said that while the Bill lays the groundwork for 
convergence, the clear separation of licenses and the respective 
services that each can deliver minimizes the impact of the Bill. 
He also said that the Bill calls for a Numbering Plan to be 
completed in 2005, without anticipating that the Bill itself may 
not be finalized this year. 
 
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WHAT HAPPENS NOW? 
----------------- 
 
9.  (U) The Parliamentary Portfolio Committee on Communications 
denied industry requests to extend the period for public comment. 
The Committee will review comments submitted through April 8 and 
decide whether to refer the Bill back to the DOC for 
consideration.  DOC officials told Econoff, however, that there 
is ministerial pressure to finalize this Bill by mid-2005. 
 
FRAZER