Tag Archive | cwele

Broadband allocation could involve SABC

ICT White Paper to set up broadband allocation…

An Integrated ICT White Paper involving broadband allocation is in its final stages of preparation involvingSiyabonga Cweley consultation with various parties, said Telecommunications and Postal Services Minister, Siyabonga Cwele, during his Budget vote speech to Parliament.  This matter is a long outstanding issue in the industry and delays are imperiling broadband development.

What has concerned Opposition members during earlier parliamentary meetings on the subject was the remark by the Minister that “Some of the delay has been the delay to allow the Department of Communications to make a contribution to the decision regarding allocation across the spectrum and how this would be applied.”

This remark must be seen in the light of the fact that the two ministries and departments were split some five years ago and the conclusion is that Minister Faith Muthambi and the SABC under it’s new and controversial head of broadcasting, Hlaudi Motsoeneng, has been drawn into the equation.

Minister Cwele also said at the time that also added that his Ministry was working with Treasury to establish a “funding model” for the broadband “roll out”, estimated at R67bn.

Spectrum policy included

In his budget speech, Minister Cwele re-affirmed that the White Paper would be supported by a new Spectrum Policy Paper in order to provide for “open or public access networks and opening up the use of high demand broadband spectrum for use by all licensees while adequately compensating those who invest in infrastructure.   All South Africans must benefit from participation in the digital society, he said.                                  ‘

Until now, there have been a number of unfortunate reasons for the holdup in broadband which have been given by government in parliamentary meetings to date. With both DTPS and Minister Cwele present at the most recent parliamentary meeting before Parliament with ICASA as the regulatory body also  present, it became quite evident  that the two were at loggerheads on the manner and method of spectrum allocation.

Different signals

Minister Cwele, during the portfolio meeting, prioritised his department’s requirement as being the need to

transform the sector to ensure meaningful Black participation when allocation takes place. ICASA meanwhile placed far less emphasis on this, preferring an allocation on an “auction” basis style whereby bidders not only name their price but declared their additional contributions to Black upliftment and general social and community development programmes, knowing this would more likely attract outside investors.

Dr. Cwele admitted at the time that “broadband allocation is perhaps the biggest regulatory bottleneck in the South African deployment of wireless technologies at the moment.”

Minister says industry “monopolistic”

In his subsequent budget vote speech he notably remarked, “Radical supply side interventions will reduce barriers to investors by moving away  from monopolistic infrastructure allowing for competition in opening access tobroadband broadband networks”.

The Minister told MPs in his speech that the White Paper will provide for “a simplified, streamlined and nationally coordinated framework to accelerate the use of networks meaning, he said, a capability to “drastically reduce the costs to operators and, down the line, to consumers.”

This issue has been plaguing the South Africa consumer market for a number of years, he added, and it was widely accepted that with the growth of cell phone usage by all income groups, he said, the present pricing cannot continue at the expense of ordinary households.

Domestic WiFi roaming

Separately, private sector operators such as Cisco have said that any such move will present mobile operators intelecommunications South Africa with a tremendous opportunity to optimize capital and operational expenditures and improve user experience.

From discussion after the Minister had spoken, it emerged also from MPs that the more mobile data offloaded makes viable alternative to mobile broadband users in crowded locations such as shopping malls where spectrum availability for present mobile access to networks is limited.   In addition, it was noted that a bigger data offload will give operators the opportunity to reduce data costs, allowing them to accelerate adoption of competitive market share opportunities. The Minister made no comment on this and it was clear that the BEE component was a ministry priority.

Crosscutting in government

HlengiweMkhizeThe Deputy Minister of Telecommunications and Posts, Hlengiwe Mkhize, followed up the Minister in her address to the committee by focusing on “discussions taking place with the labour, public service and administration and higher education and training departments to boost ICT skills.”    She also mentioned that the White Paper would map out some of the internet connectivity plans for the rural economy to stimulate growth and opportunities.

In response to both Minister’s briefings, the following day in debate Opposition members said as far as the public service use of broadband was concerned in all aspects of communications, health and education, “it was time for the discussions to stop withe other departments and for the roll out to begin.”

 MPs noted the comment that out of 46 African countries surveyed, the cheapest mobile prepaid product in South Africa is still nearly 7.5 times more expensive than the African continent’s cheapest similar product.   The South African government is one of the smallest users of broadband facilities in the world, according to Cape Town based Research ICT Africa.

 Previous articles on category subject  

Broadband allocation on its way – ParlyReportSA

Govt and Nersa differ on broadband – ParlyReportSA

Overhaul of broadband policy underway – ParlyReportSA

Parliament gets final dates for digital TV – ParlyReportSA

Posted in Communications, Facebook and Twitter, LinkedIn, Public utilities, Security,police,defence, Special Recent Posts, Trade & Industry0 Comments

Parliament to open Aug 16

Parliament .. in a galaxy far, far away

 

……editorial….There’s nothing  more like an election to disrupt Parliament and the business of running a country thanparliament 6 an election.    Probably, and to a lesser extent, the same is going on in the USA but nevertheless few politicians in SA at present seem to have their eye on the ball when it comes to important decisions on matters of state.     Parliament is, of course, in recess.

A good many of the Cabinet seem to be on a different planet. Some appear to be focusing on putting out political fires in the lead up to what is, after all, only a local election. A disproportionate amount of time seems to be spent in a parallel world of infighting, all of it totally unrelated to business and industry. Our Cabinet seem more concerned with issues such as the SABC, for example.

Short on crew

Indeed, one could be forgiven for thinking that the only people at their desks at the moment are Mark Barnes at the Post Office, Minister Lynne Brown with her fight to reform public utilities and control Eskom’s statements; members of the Competition Commission; and Minister of Finance Gordhan Pravin and his Treasury crew.

On communications matters outstanding, Minister Faith Muthambi seems to have left the planet altogether.  Minister Cwele is fighting with his own colleagues on broadband allocation,putting the brakes on a desperately late decision. tina-joematt

Minister Joemat-Pettersson seems lost as to whether to go ahead with nuclear or not; now having to decide it seems whether to have more independent power providers or not and possibly reverse her promises to the private sector; trying fruitlessly to buy Chevron with SFF money and whether or not to renew the contracts of highly experienced personnel at NERSA. This Minister seems badly off radar.

Hands off

Eskom’s unexpected statement that the private sector REIPPP clean energy programme “makes no economic sense” must have wounded DTI’s investment programme and Minister of Trade and Industry, Rob Davies, also seems missing from the control deck in the light of  Zimbabwe trade inconsistencies. Again, living in another world far, far away, not having a plan “B”.

Meanwhile, the Presidency has a whole in-tray of unresolved legislative issues to make decisions upon and, sadly,Rob-Davies decision-making appears not to be the President’s forté.     Parliament re-opens for business on 16 August and it won’t be a moment too soon.

From now until the Christmas recess, matters before Parliament will vitally affect business and industry. It would seem doubly important therefore to get this election over and hope for some coherent policy statements from Cabinet.
Previous articles on category subject
Parliament and the investment climate – ParlyReportSA
Parliament closes on sour note – ParlyReportSA
Parliament, ConCourt and Business – ParlyReportSA

Posted in Cabinet,Presidential, earlier editorials, Finance, economic, LinkedIn0 Comments

SAPO – one big bungle at taxpayer’s cost

Total management failure…..

The horror story of the uncontrolled mess in the South African Post Office (SAPO) and how this state entity,
without forSAPOmal management control to speak of and facing imminent danger of structural collapse, was reported upon in Parliament recently

The route to near bankruptcy was recounted to the Standing Committee on Public Accounts (SCOPA) by current SAPO board chairperson, Mr Simo Lushaba, who had been summoned to explain the crisis at SAPO, accompanied by the new CEO of the Post Office, recently appointed Mark Barnes.  Comments were added by Minister of Posts and Telecommunications, Siyabonga Cwele.

Previously Mark Barnes had tried to respond to the call by SCOPA to report but the meeting had to be abandoned, incurring the ire of the Committee, since it is the chairman of the board of the state entity in question, in this case Simo Lushaba, who can only respond to a SCOPA call as the nominated person in terms of parliamentary procedure was unavailable.

Rulings are clear on this, as is the Public Finance Management Act (PMFA) in the case of SOEs.

Poor management

Immediately, it became evident in the meeting that whilst the worst period of poor management in SAPO had occurred in the last two years culminating in four strikes in 2015, although not necessarily connected issues, the common factor was a collapsing management hierarchy over a number of years beforehand.

Senior officials, it appears, throughout the organisation were totally out of touch with employees and no overarchingSimo Lushaba managerial directives were passed according to any form of plan. The disastrous current situation was a culmination of “systemic mismanagement over a long period of time”, said Lushaba.

The SAPO board chairperson said SAPO did not have the cash available to continue with legal disciplinary proceedings against the former CEO and CFO, both persons having received a total of R5.7m in salaries whilst suspended for a year, during which it was alleged that they were responsible for the chaos when in control of SAPO.

The SAPO board had decided to cut its losses and halt the legal proceedings with regard to the legal case. “It was not an ideal outcome but unfortunately it was just taking too long, plus we did not have the money to follow the case through”, said Lushaba.

Ship with no rudder

When asked for sum up comments by MPs of the SCOPA committee towards the end of the meeting, new CEO Barnes said that SAPO, as an entity, was currently suffering a loss of about R125m a month. He told sapo queuesparliamentarians that twenty-five post offices had been closed down, some of them because of rent arrears.

Despite a further allocation of R650m in terms of the last Budget allocation, “this came nowhere near to eliminating the mountain of debt which amounted to more than R800m by March 2016”, he said.

With a balance sheet such as this, he said, “a government guarantee was no longer sufficient to persuade banks to lend SAPO money, despite Treasury agreeing to extend on its repayment loan date.” An immediate cash injection was the only route, he said, and that was on its way as agreed to by the Minister of Finance and Treasury. “This means that SAPO can pay its some of its creditors within the next few days”, he said.

Compromising with creditors

“The very existence of SAPO under threat on a daily basis is evident as creditors understandably want simple proof of future income which is extraordinary for a state entity”, Barnes said.

“Every month the delay in paying creditors has made it increasingly difficult to continue operations and negotiate commercial contracts on favourable terms since there is a total lack of trust on the part of suppliers.”

CEO Barnes said there was now a plan in place to turn around the organisation, with an estimated loss of R1.5bnsapo3 expected for the current year, adding to the R1.2bn loss for R2014/5. By the end of 2017/8 there could be a small gain reflected on the balance sheets. But the plan still hangs in the balance awaiting decisions from banks, he said at the time.

He also said he was “disturbed by the fact the banking sector did not automatically accept government guarantees”. This fact was slowing the downturn around and the plan was losing momentum. He suggested that the state should take another view on their relationships with the banks and enormous sums of cash they receive from the state to pay public servants.

SAPO was already three months behind in its strategy to achieve future successful financial outcomes whilst the banks made up their minds and Treasury despatched the cash on a painfully slow basis, he noted.

Oligarchy over

He stated that never again should SAPO ever be “a one man one show business.” It could indeed be rescued, he said, and made profitable in the next three years but no sooner and it could become a valuable asset in five years.”

This could be achieved by doing vigorous work to identify every source of loss, he said. The memory of the postal strike was also very evident with all speakers, still not resolved in entirety.

Mark Barnes“The Public Finance Management Act is the challenge”, CEO Barnes noted. “The competitors of SAPO make decisions in three to six minutes whilst SAPO made decisions in three to six months.” It was clear he included Treasury in this remark.

He stressed that PostBank was unaffected by SAPO’s trading deficit since it was an entirely separate enterprise holding some R7.3bn in cash in the form of savings. In this area lay the future, CEO Barnes said, adding that SAPO had to turn from a postal operation to a faster and cheaper package/courier service for the citizens of South Africa.

Minister weighs in

Minister Cwele added to this comment when he noted that reckless trading decisions had been made when globally mail volumes were going down. There were far too many post offices in unprofitable areas paying enormous rentals to developers all resulting from the days when it was “the hype to have a post office in every major shopping centre.” This was bad management and bad thinking at the time, the Minister said.

cweleHe pointed out that Parliament had passed the Post Bank Act and the PostBank could eventually work as a limited savings banker and bank operator in post offices, especially in unreachable areas where the private sector did not wish to venture, if not in small towns as well.

The Minister said that at some stage strategic decisions needed to be taken on such issues and also such matters as government officials being paid through PostBank. The Minister echoed the view that post offices should become competitive, low cost, courier service providers as well as handling smaller volumes of mail now being experienced and be run individually on a profit basis.

Where the money is

A recent survey had been conducted of post offices running at a loss and those most profitable, the Minister said. The most profitable were in the old Transkei area in the Eastern Cape and the one post office running at the biggest loss was the Sandton Post Office, he concluded.

Chairman Lushaba explained that the service called PostBank was a division of the post office. There was a risk osapo7f talking of the organization as a whole. For example, the disaster recovery IT programme of PostBank had worked well but the IT problems of post offices itself were still causing high risk. For example, he said, the entire post office backup system was on its own system and there was no separate system to switch to. He wondered how such elementary mistakes had been made.

Bad record

During the debate on a litany of irresponsible financial decisions, absent financial systems and even the lack of a working asset register, it emerged after a full day of reporting and cross questioning by MPs that a call had to besapo5 made for upgrading of IT and general management skills, Treasury officials present took a dim view on the future unless this was done, they said.   The question of basic training was also seen as an impediment as was the lack of broadband facilities to improve the IT position.

SCOPA demanded, as a committee, that the previous CFO and CEO be brought to book since, besides matters involving the rejection of the auditor general to undertake an audit; the inability to produce a balance sheet and ignorance of the Public Finance Management Act in all matters of procurement, criminal charges should be investigated as a matter of course and with speed.

Previous articles on category subject

Lack of skills hampering broadband rollout – ParlyReportSA

The big SA cabinet crunch – ParlyReportSA

Broadband allocation on its way – ParlyReportSA

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