ICT transformation 'weak'

The ANC admits that transformation of the ICT sector remains weak, with black economic empowerment (BEE) policy implemented to a very limited extent.

The discussion document on communications being debated at the 53rd ANC National Policy Conference this week says the limited implementation is due to a lack of adequate funding, procurement practices not promoting black businesses, and absence of a focus on enterprise development.

“Black companies continue to be left behind in the consistent growth of the ICT market. Whereas the ICT sector was the first sector to undertake steps to transform, much still needs to be done and more new innovative interventions are needed to speed up the pace of transformation in all elements of the value chain in the ICT sector.”

It adds that as part of the proposed National ICT Policy vision, it should target completing the ICT sector transformation process by 2030.

“At the end of this period, ownership and control of the sector should reflect national demographics, including the increased role and participation of black people, women and persons with disabilities in the sector.”

The ruling party also said several interventions need to be prioritised. This includes reviewing the empowerment targets in all the ICT subsectors and elements of the ICT value chain by 2014.

The review will consider the regulatory and institutional structures overseeing the realisation of empowerment targets. To this end, the regulatory capacity will be strengthened to ensure that the Independent Communications Authority of SA (ICASA) is capable to set and enforce empowerment obligations on the industry.

The second intervention is ensuring that the empowerment rules apply equally to all entities, irrespective of size.

As the third intervention, the ruling party must see that the review of the broadcasting policy by 2014 should be underpinned also by the policy desire to reduce barriers to entry, especially in the pay-TV market.

“It is ANC policy to support the convergence of technologies and services. However, the regulation of the ICT sector in the converged environment should not lead to the creation of consolidated vertical and horizontal monopolies, or to abuse of dominance by the existing operators. Competition rules and regulations dealing with opening the market to competition will be prioritised,” says the document.

It adds that the fifth intervention entails the Universal Service and Access Agency (USAASA) being reviewed after over 10 years of existence in order to redefine its focus towards increasing the uptake and usage of ICTs.

Also, USAASA should merge with the Media Development and Diversity Agency by 2014 to create a new state entity that will provide funding to small, medium and micro enterprises, broad-based black economic empowerment (BBBEE), co-operatives and other not-for-profit initiatives in the electronic communications, broadcasting and postal sector.

“The ANC should ensure that strong preference is given to new companies to access scarce radio frequency resources going forward.”

The document explains that licensing and use of the high-demand spectrum, which is a public asset, is another central pillar towards the creation of an industry that is responsive to the needs of all the people.

In order to facilitate the diffusion of ICTs across society, licensing of the scarce radio frequency resources should be underpinned by several factors, according to the president.

These are alignment of the spectrum allocation with the prevailing social and economic development context; equitable allocation of the frequency spectrum to new licensees to reduce entry barriers; requirements and obligations to achieve universal coverage; and promoting BBBEE at the minimum of 30% to 50% direct ownership, and control of ICT and broadcasting. The ANC says this must be achieved by 2020.

Minister of trade and industry Rob Davies this month gazetted the ICT sector code in terms of the BBBEE Act. This charter has been nine years in the making.

The gazette means that the ICT sector code is legally binding on entities in the ICT sector from the date of gazette to the 31 April 2026, with the midterm five-year review on 31 April 2017.

The ICT sector has set a black ownership target of 30% to be achieved by entities in the sector instead of the 25% of the generic codes. The main feature of the charter is a set target of 5% net profit after tax to be spent on enterprise development initiatives that are aimed at growing and developing black-owned ICT enterprises.

“Another key highlight is the spend of 1.5% of net profit after tax on socio-economic development initiatives to improve the lives of communities through programmes such as ICTs in education, and health. The ultimate goal is to bridge the digital divide in the country. The generic codes require companies to spend 1% of their net profit after tax,” says the Department of Trade and Industry.