1. PUBLIC HEARINGS ON THE BROADBAND INFRACO BILL, 2007
Portfolio Committee on
Public Enterprises,
Cape Town
29 August 2007

2. Public Comments
The Infraco Bill was published for public comments and had the following sections:
Section 1 – Definitions
Section2 – Objects of the Act
Section 3 – Establishment of Infraco
Section 4 – Objects and Powers of Infraco
Section 5 – Borrowing powers
Section 6 – Servitudes
Section 7 – Expropriation of land
Section 8- Conversion of Infraco into a public company
Section 9 – Effect of Conversion
Section 10- Regulations
Section 11- Short Title and Commencement

3. PUBLIC COMMENTS
The Bill was certified and introduced in the National Assembly .
The Bill has the following sections:
Section 1 – Definitions
Section2 – Objects of the Act
Section 3 – Transfer of Infraco shares and Infraco interests
Section 4 – Objects and Powers of Infraco
Section 5 – Borrowing powers
Section 6 – Infraco Licence
Section 7 – Servitudes
Section 8- Expropriation of land
Section 9 -Conversion of Infraco into a public company
Section 10 – Effect of Conversion
Section 11- Regulations
Section 12- Amendments of Laws
Section 13-Short Title and Commencement

4. Public Comments Comments were received from: City of Cape Town;
Major Operators (Vodacom, Cell C, MTN, Telkom, Sentech and Neotel);
Public Entities (Universal Service and Access Agency of South Africa (“USAASA”), Eskom Holdings);
Value Added Network Services Providers (Internet Solutions, iburst); and
Regulatory Agencies (ICASA and Competition Commission).
The comments largely express support for the concept of Infraco

5. Public Comments Section 2 – Objects of the Act No comments received
Section 1 – Definitions
Comments were received from Cell C and Telkom to include definition of electronic communication services
We have included the definitions of electronic communication services
Section 2 – Objects of the Act
No comments received

6. Public Comments
Section 3- Transfer of Infraco shares and Infraco interests
No comments received
Section 4-Main object and powers of Infraco
City of Cape Town - to amend the main object of Infraco as to provide optic fibre infrastructure capable of supporting
Eskom- to amend the main object to specify “to provide affordable broadband telecommunication services”
Section 4 is amended as follows:
“The main object of Infraco is to provide bulk broadband connectivity services by means of its long –distance facilities at the lower than commercial costs at a utility rate of return and on a non-discriminatory basis in terms of the provisions of the Electronic Communications Act.”

7. Public Comments Section 5- Borrowing Powers of Infraco
No comments received
Section 6- Infraco License
Neotel - Infraco should have a deemed licence granted in the Infraco Bill
Cell C -Infraco can’t be a deemed licensee.
Telkom Media and Telkom (Pty) Ltd - Infraco will need a licence in terms of the EC Act
The proposal is to remove the deeming provisions in the Infraco Bill (i.e. section 6) and amend the EC Act as follows:
“6 (a) The Minister may from time to time after cabinet approval, issue a policy directive to initiate and facilitate interventions by Government that will ensure strategic ICT infrastructure investment.
The policy directive will also provide for a framework to give effect to the licensing of such a public entity by ICASA.
New Definition in the ECA “public entity” means a national or provincial public entity:
[Definition of “public entity” substituted by section 1 (h) of the PFMA)”
The proposal will be deliberated after Cabinet approval.

8. Public Comments
USSASA - Infraco should have deemed authority to operate and be granted a licence by Icasa in the conversion process
Vodacom - Licensing should comply with EC Act
Neotel -Infraco should have a deemed licence granted in the Infraco Bill

9. Public Comments Section 7 – Servitudes
Telkom SA and Telkom Media - Transfer of Eskom servitudes and Transnet’s registration of servitudes in favour of Infraco go too far as it accords to Infraco more extensive rights than previously enjoyed Eskom and Transnet
Section 8 - Expropriation
If Infraco is licensed, the ECA, read together with the Expropriation Act and the Constitution adequately provide for expropriation rights for Infraco;
It is necessary to extend Eskom’s servitudes and transfer them along with the FSN to Infraco since, the primarily for power distribution. Should Infraco wish to extend its network at affordable and reasonable costs.
Section 22 of ECA applies only to land reserved for public purposes. The ECA does not define public purposes. The ECA does not define public purposes.

10. Public Comments
USSASA - Infraco’s rights to servitudes from Transnet and Eskom as well as the expropriation rights from Transnet and Eskom as well as the expropriation rights provided for in the Bill should comply with Chapter 4 of the ECA”.
The purposes and thus results in an uncertainty, which may hamper Infraco’s ability to fulfil its strategic mandate to lower communication costs and contribute to economic growth in South Africa. It is also important to note that Infraco will not compete with other licensees as a commercial expropriation powers can be exercised only while Infraco is a state owned enterprise

11. Public Comments Section 9 – Conversion of Infraco into public company
No comments

12. Public Comments Section 10 – Effect of Conversion No Comments received
Section Regulations
No comments received

13. Section 12 – Amendments of Laws
No comments
Others:
Neotel- Neotel should get an exclusivity in respect of the use of Infraco’s infrastructure
Infraco will provide access to its network in accordance with the EC Act and Icasa regulations, to Neotel and every other player
The relationship with Neotel is one of agency – Neotel will act as Infraco’s agent in providing access

14. Public Comments Neotel Competition law Infraco should be exempt from
competition law – the merger
provisions
The DPE is of the view that it is not appropriate to exempt Infraco from competition law requirements
MTN-
Policy - Infraco may not have a positive impact on policy of managed liberalization, or increase competition, so policy should be debated in a green paper/white paper process first
Policy
The DPE disagrees that a green paper/white paper process is necessary

15. Public Comments MTN Neotel relationship
It is not clear to whom Infraco will provide its infrastructure
Infraco will provide access to its network in accordance with the EC Act and Icasa regulations, just as every other ECNS licensee must do
The relationship with Neotel is one of agency – Neotel will act as Infraco’s agent in providing access
Telkom Media
Infraco should provide open access and not exclusivity to Neotel

16. Public Comments
SITA
Sita requests a provision that indicates specifically that it may use the Infraco infrastructure to deliver government services
Such a provision is not necessary as access is governed by the EC Act IS
Equal access
Infraco Bill should address issues: access, pricing, contractual arrangements, anticompetitive behavior
All of these issues are more appropriate dealt with in the EC Act, which Infraco will be subject to

17. Public Comments Neotel Rights of way -The provisions of theInfraco
Bill should not be seen to negate the
rights granted all ECNS licensees
under the EC Act
Infraco will benefit from the general provisions regarding rights of way in the EC Act and the specific provisions in the Infraco Bill which are deemed necessary