Speech by Dr. Siyabonga Cwele, Minister of Telecommunications and Postal Services on Budget Vote 32
24 May 2017, National Assembly, Cape Town
Honourable House Chairperson
Ministers and Deputy Ministers
Fellow South Africans
It is a great honour during this Centenary Year of Cde. O R Tambo to present Budget Vote 32 of the Department of Telecommunication and Postal Services, worth R1.6 billion. We salute this revolutionary who comes from the generation of leaders that rose above their oppressors, as illustrated by his 1989 message to the Soweto rally to welcome leaders;
“This is a joyful day for all of us. It is a day of celebration for all the people of our country. Those who have chosen to turn their backs on our festivity are a small minority who continue to cling to the anti-human concept and practices of racial arrogance, white minority domination and super-exploitation of the masses of our people. Yet they, are part of our heritage. They are part of that history and continuing reality of our country which has meant the imprisonment of the best representatives of our people for a quarter of a century and more, murder of thousands…. and millions who have suffered from the daily violence inherent in the apartheid system.”
Our key priorities for the year include measures to; expand ICT access through the broadband roll out, increase skills for internet utilisation, reduce the costs for data and devices, the corporatisation of the Postbank and the implementation of the National Integrated ICT White Paper to foster radical transformation in our sector.
We are pursuing these priorities on the backdrop of the Fourth Industrial Revolution, which is fundamentally changing the way we live, conduct business and the how we interact with government. It offers potential great benefits for those who participate in it but widens the divide to the excluded. The ANC government is embracing this revolution as a platform to propel us to be globally competitive. It calls upon us to prepare the current and future workforce through skilling and reskilling. Some of the skills you need to survive this revolution include;
• cognitive skill such as mathematical reasoning and visualisation,
• comprehension and ICT literacy,
• manual dexterity and precision,
• critical thinking and listening,
• emotional intelligence and service orientation,
• judgment and systems analysis,
• complex problem solving,
• resource and time management, and
• technical skills such as equipment maintenance, operation, and repairs
The key to these new skills is the learning of mathematics, science and coding for every school going child.
State of our broadband
Honourable House Chairperson,
In 2016, despite the tough economic environment, total investments towards ICT increased by 18.8% to R28 billion. However, the focus of the industry was on general network improvements as well as fibre deployment in major urban areas. This improved our World Economic Forum (WEF) Network Readiness Index from 75th to 65th position in 2016. This index measures the country’s propensity to exploit opportunities offered by ICTs and their impact on its competitiveness. The ITU Development Index also improved slightly but constrained by low usage and poor ICT skills.
The recent ICASA Report showed 3G coverage reaching 99% and the 4G rising to 75% of the population. However, not all those who are ‘covered’ have access to or are using the internet, as only 53,4% of South African households have access to the internet . The 10 districts with the least access to internet are; Alfred Nzo, Amatole, UKhahlamba, Sekhukhune, O.R. Tambo, UMzinyathi, Sisonke, Dr. Ruth Mompati, Chris Hani, Pixley ka Seme and Vhembe District Municipalities. The reasons for not having access to home or mobile internet includes:
• 38% lacks skills or confidence,
• 35% Lacks relevant content or the need for use, and
• 20.9% due to high costs.
However, in the metropolitan areas, the high costs of data and equipment are the main concern.
South African Internet for All Partnership Initiative
Fellow South Africans,
We need to connect 22 million people if we are meet our SA Connect and National Development Plan target of universal access to the internet by the end of 2020. The ANC Government maintains this enormous target because we know very well that the majority of the unconnected are those marginalised by the apartheid system, including women as well as people living in rural areas and underserviced municipalities. This task requires our collective effort. We are pleased that at recent WEF meeting in Durban, we adopted and announced Internet for All - South Africa Partnership initiative. We forged a partnership with WEF, business, civil society and donor agencies to advance priority areas. In June we will a national launch of Internet for All to enable more stakeholders to commit on their respective actions. The initiative will rest on four pillars;
• infrastructure expansion,
• ICT skills development,
• relevant content development including making internet content in our languages.
Let me take this opportunity to thank Ms. Elsie Kanza from WEF and all the global and national partners who have joined us today and are seated at gallery.
The government will provide the secretariat for support and coordination; business provide project management and WEF supervise and guide for success.
The Internet for All global steering committee organisations have already committed to be core champions of this project. They include Telkom, MTN, Microsoft, Qualcomm, Intel Corporation, Boston Consulting Group, Digital Opportunity Trust, Cisco, DBSA, Neotel/ Liquid Telecom, African Development Bank, UK DFID and World Bank. In our preparatory meeting in Cape Town yesterday, more partners committed including Vodacom, Cell C, Google, Ericsson, Accenture, Altron, IDC, SOEs, ICT SMMEs, Research ICT Africa, Ndlovukazi online media and WEF Global Shapers. The meeting was also blessed with the presence of Inkosi Madikane II Diko of AmaBhaca ‘Tholelengwe!”
Some of the commitments to date include;
• training millions of South Africans on digital skills,
• Research assistance,
• Infrastructure deployment and funding, and
• Mobilisation of the participation of our youth
Phase 1 Broadband Project Implementation
Last year we committed to commence the implementation of the first phase of South Africa Connect in eight pilot districts after following the open tender process by State Information Technology Agency (SITA). Unfortunately, there was no successful bidder among those who participated, resulting in its cancellation in November 2016. We have since decided to utilise our state entities such as SITA, BBI and SENTECH in line with their mandates to implement this critical project. In the current financial year, R416 million has been set aside to connect 2700 sites.
In the last financial year, BROADBAND INFRACO (BBI) expanded its network to more than 14 900 km of fibre. It optimised 41 Points of Presence to enable third parties to access to its network. In this financial year, BBI will continue to aggregate state network services and lead in connecting sites in pilot districts. In advancing inclusive growth, BBI continues to connect Black-owned regional Internet Service Providers such as GALELA, UMZINYATHI and BRIGHTWAVE Technologies.
SENTECH is one of our best managed entity with unqualified audits. However, its going concern is currently being threatened by the broadcasters that are experiencing funding challenges and defaulting on paying for SENTECH services. We appeal to broadcasters to make efforts to resolve this debt. SENTECH received a budget of R193 million for DTT dual illumination until next year where we hope digital migration may be completed.
SITA provides the core private network of government. In addition, it has partnered with private sector and Western Cape government to roll out 1930 site in just two years. It is exploring a similar relationship with the Limpopo government. In this financial year, SITA will play a leading role in digitising and connecting sites in pilot districts.
SAPO and Postbank
The corporatisation and full licensing of the Postbank is on track as part of government effort to ensure financial inclusion in the underserved market. Some of the significant milestones towards compliance target by 03 July 2017 are;
• in July last year, SAPO obtained approval to establish a bank from the regulator
• In March 2017, the first Postbank Board was appointed after a rigorous fit and proper assessment.
• In April 2017, the South African Postbank SOC Ltd company was registered and incorporated with the Companies and Intellectual Property Commission (CIPC).
• Most of IT capabilities have already been implemented
• Key appointments in internal audit, regulatory and risk management positions have been made, and
• Now, our efforts are concentrated in resolving the structure of the Bank Controlling Company as well as the resolution of the legislative conflicts around the definition of a public company by aligning the Banks Act to the Companies Act.
It is important to note that despite the challenges in SAPO, the Postbank division is well cushioned, managed and profitable, with its capital adequacy requirements in excess by R1.4 billion in the last financial year.
In April 2016, SAPO was authorised to increase its long term borrowing to R3.7 billion in the domestic markets. This enabled SAPO to settle past debt, which was crippling its operations. The rest is being spent on revenue generation measures of the Strategic Turnaround Plan. SAPO is ready to assist SASSA to take over the payment of social grants as directed by the court.
In September 2016, the ANC Government approved the National Integrated ICT Policy White Paper to drive the NDP objectives of creating an inclusive information society and knowledge economy. Since then, we have been engaging the ICT industry stakeholders on how best to implement the policy. There is general agreement with the thrust of the policy and the need to implement it without delay. Most of the discussions focused on how best we implement Wireless Open Access Network (WOAN) and the allocation of and the return of the high demand Spectrum. I am pleased to announce that after the last consultation meeting on 19 May 2017 we agreed on the following approach;
• There may be no urgency to return the current high demand spectrum from licensees until the end of current licence period to ensure investment certainty
• In return, the licensees committed to buy at least 30% of the existing capacity of WOAN to ensure its viability
• Given the current levels of investment on the 4G network, the Minister committed to conduct an urgent high level study to determine if WOAN will utilise all high demand spectrum for 4G network. If there will be remaining spectrum, it will be licenced to operators with rural coverage obligations. In such case the licensees further committed to buy at least 50% of WOAN capacity.
It is important to realise that without WOAN, the new entrants particularly black entrepreneurs and SMMEs will find it impossible to enter this industry. In the next few months we intend to finalise the Implementation Plan.
Fellow South Africans,
Our work is made easy and enhanced by our councils and forums we have created. The Deputy Minister will expand on these as well as E-Skills Institute, National Cybersecurity Hub and Universal Service and Access Agency of South Africa (USAASA).
We agree with the call from South Africans that “DATA PRICES MUST FALL.” According to 2017 StatSA Report , the ICTs contributes 3.0% to the GDP and constituted 4.6% of household expenditure.
In 2016, I issued a policy directive to ICASA to prioritise the commencement and conclusion of an inquiry and the prescription of regulations to ensure effective competition in broadband markets. We are still awaiting concrete interventions from ICASA. The response from the regulator suggests they will finalise this work in the next 2-3 years. The speed of intervention is critical in a rapidly evolving sector such as ICT. The ICASA’s State of ICT Report seem to suggest lack of competition, particularly by dominant players. The report indicates that data traffic increased by 55%, data revenue increased from R30 to R38 billion, the employment decreased by 4000, yet prices remain sticky at same level.
In our view, this may need the attention of the Competition Commission. We appeal to operators start competition in services to ensure the cost data and call fall to affordable levels or below 2% of average household income.
Our international work is advancing our national development goals in the International Telecommunication Union, Universal Postal Union, United Nations, African Union and the Internet Governance Forum.
Earlier this month, South Africa joined the Smart Africa Alliance. This is an initiative that aims to transform Africa into a single digital market, through harmonising policy, legal, regulatory and investment codes in the continent, generating more demand and establishing more favourable market conditions. Ultimately the intension is to enhance African economy, attract large scale investment, build new industries and create jobs. It supports digital government through IoT such as smart cities, agriculture, water, sanitation energy etc. South Africa will champion the skills development programme and localisation, to stimulate demand of locally produced electronics for the African market.
With our modest budget and through strategic partnerships, we are on track to meet our ambitious target of ensuring that all South Africans have access to and are utilising internet for their development. We are taking bold and practical steps to move towards inclusive growth in the ICT sector and prepare our nation to reap the benefits of the Fourth Industrial Revolution, while minimising digital divide and unemployment.
Let me thank our ICT industry for continuing to invest in the South African economy. I am indebted to all those who are optimistic about our country, and are partnering with us in to connect 22 million South Africans in the next two and a half years.
I am grateful to all the workers that make our sector tick. I thank the boards of our State-Owned Companies and their managers for always striving to meet their developmental mandates.
I thank our new Director General, Mr. Robert Nkuna and Team DTPS for improving the performance and governance.
I thank the Chairpersons of Parliamentary Committees and members of the committees for keeping us on our toes to improve delivery.
I thank my family and friends for their unflinching support.
Lastly, allow me to thank our President, Deputy President, Cabinet colleagues and the African National Congress for their guidance in ensuring we take our country forward for the benefit of all our people.
I thank you all.