1. Contributing to South Africa’s Growth USAASA: Budget, Strategy Plan and Priorities for 2008/09 Presentation to the Portfolio Committee: Communications 18 March 2008 Parliament

2. Outline Introduction –The Board –Executive Management The Agency within the ICT Framework –Universal service and access evolution –ITU criteria on universal service and access –Legislative evolution Legacy Projects –Support to Legacy Projects: Rehabilitation to School Cyberlabs –Legacy Projects: Rehabilitation of Telecentres –Current Projects: Training, PUSANO Financial Review: USAF and USAASA Strategy Plan and Priorities for 2008/09: –Turnaround Strategy –Focus Areas –USAF Budget – MTEF 2008/11 –USAASA – MTEF 2008/11 Challenges and concluding remarks

3. USAASA Board

4. USAASA Executive Management Mr. James Theledi: Chief Executive Officer Dr. Sharon Horton Head: Corporate Affairs Mr. Winile Lamani Head: USAF Projects Mr. Keith Keys Chief Financial Officer Mr. Phineas Moleele Head: Legal & Regulatory Vacant Head: Research & Strategy Vacant Head: Human Resources

5. The Agency Within the ICT Framework James Theledi

6. Universal Service and Access Evolution 1907 Theodore Vail: AT&T President Theodore Vail: AT&T President “One System, One Policy, Universal Service” 1934 Communications Act 1934 (USA) Communications Act 1934 (USA) Preamble: “To make available to all the people of the United States, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.” USA establishes the Universal Service Administrative Company (USAC) to administer and manage the USF. USAC collects more than $7.5 Billion from Telecoms Operators Annually Other countries follow the example of USA and implement their own universal service strategies: Chile: Telecommunications Development Fund India: Universal Service Obligations Fund England: Universal Service Obligations

7. ITU Criteria on Universal Service & Access General principles Availability: National coverage of ICT services Accessibility: Users treated alike, non-discrimination i.t.o. price, service quality irrespective of locations, race etc. Affordability: Voice and data services should be priced so that most users can afford Criteria Definitions - Develop appropriate definitions of Universal Service and Access Information - Collect relevant information Targets - Establish targets preferably in licence conditions Affordability - Ensure affordability Funding mechanism - Establishment of Universal Service Fund Technology - Cheaper access technology Monitoring - Monitoring (and enforce) progress and targets

8. ICT market growth vs Universal Service & Access Government recognised the positive impact of improved ICT rollout on economic growth and well being of society Access gaps are left while market concentrates on high end customers Industry will not bring about higher levels of penetration of ICT services at affordable costs Market structure dominated by fixed line incumbent and cellular operators Costs to communicate remain high i.e. prepaid offerings USAASA exists to close the gaps the market has failed to address USAASA to utilise the USAF to facilitate the closure of access gaps USAASA is needed to do evaluation and monitoring of access gaps

9. Legislative Evolution in South Africa Future 1996 Telecoms Act (Act 103 of 1996) Telecoms Act (Act 103 of 1996) The Agency (USA) established under Chapter VII The Fund (USF) established under Chapter VIII Exclusivity period granted to Telkom 2001 Telecoms Amendment Act (Act 64 of 2001) Telecoms Amendment Act (Act 64 of 2001) Amendments of Sections 58, 61, 65, 66 and 67 Insertion of Section 67A Provision for USALs 2005 Electronic Communications Act (Act 36 of 2005) Electronic Communications Act (Act 36 of 2005) Renaming of the Agency (USAASA) and the Fund (USAF) Extended mandate

10. Variance between Rural and Metro ICT penetration Source: AMPS 2006 23% 2% 63% 13% 55% 69% 76% 81% 60% 18% 13% 6% 19% 12% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Less than 500/ Rural 500 - 39 999 40 000 - 249 999 250 000+Average Cellphone Land line PC Community size From BMI T

11. Communications penetration by Income Group Source: BMI T

12. Legacy Projects

13. Support to Legacy Projects ProvinceWCECKZNFSNCNWLPMPGPTotal Cyberlab2581339911565 Equipment PC’s, printer, copier, VSAT Rehabilitation Programme School Cyberlabs Challenges No mechanism for monitoring and evaluating real impact: usage of Cyberlabs by learners Lack of coordination with other parties providing similar facilities i.e. Department of Education, Khanya, Gauteng Online, CSI

14. Support to Legacy Projects ProvinceWCECKZNFSNCNWLPMPGPTotal Telecentres24444225330 Digital hubs11 Equipment10 PC,s and VSAT 10 PC,s & VSAT Rehabilitation Programme Community Access Centres; 30 Total of 30 Telecentres were rehabilitated Digital Hubs – 1 Cradock Digital Hub Challenges No mechanism of monitoring and evaluating real impact: usage of Access Centres by the community Lack of coordination with other parties providing similar facilities i.e. Operators, CSI

15. Current Projects Training Microsoft Training: –Assessors and Moderators (Unlimited Potential Curriculum Programme) – Telecentre Managers –Train the Trainer Programme: 30 Telecentre managers –Digital Literacy: Free Online Training Training Partnerships -INK Hub Training: (100 students trained on ICDL - Women and Youth in Business -60, Community radio personnel – 20 and Local civil society organisation – 20) -Fort Hare University: (15 Telecentre managers trained on basic computer skills) -DoE, DoC and Isett Seta FET Skills Training

16. Current Projects Group Photo: USALS – 21/02/2008

17. PUSANO Process -Ministerial Policy Directives on PUSANO –Working group between USAASA, DoC & ICASA to accelerate PUSANO process –ICASA process of licensing -Continuous meetings with USALs -Funding requests attended according to individual merits

18. Financial Review

19. Financial Review: USAF Budget 2000/012001/022002/032003/042004/052005/062006/072007/08Total Opening balance32,89237,17958,81186,44988,32761,26722,51323,479 In year Allocation25,59522,48623,67924,74526,23029,40031,16432,722257,034 other income1,9662,9176,3056,9334,5833,2612,1224,15838,271 Total Available60,45362,58288,795118,127119,14093,92855,79960,359295,305 Expenditure23,2743,7712,34629,80057,87371,41532,32060,668295,614 Unspent funds37,17958,81186,44988,32761,26722,51323,479-309 Treasury is correct i.t.o. USAASA capacity to spend in the past - this demonstrates USAASA is spending guided by a strategy to work with partnerships to address the gaps

20. 2007/2008 USAF Expenditure Schools Connectivity and Rehabilitation:R30,607m Community Access Centres Connectivity and RehabilitationR13,339m USALS SubsidiesR11,624m TrainingR,868m ResearchR,563m Project Costs and Audit FeesR 1,116m

21. Financial Review: USAASA Budget 2000/012001/022002/032003/042004/052005/062006/072007/08Total Opening balance1,8063,2565,1522,8891,456-343-5711,203 In year Allocation9,64110,20510,71114,21115,88417,50020,10021,105119,357 other income2818941,19162913512302,218 Total Available11,47513,47915,95718,29117,96917,29219,65222,308123,381 Expenditure8,2198,32713,06816,83518,31217,86318,44921,703122,776 Unspent funds3,2565,1522,8891,456-343-5711,203605

22. Strategy Plan and Priorities for 2008/09

23. Turnaround Strategy Support the Government Business Unusual theme –Economic Cluster –ISAD Cluster Apex Project Strategic goals & objectives: –From implementer to facilitator, advisor and monitor –Elevate the role of the Agency and its impact Support processes of DoC and ICASA Cooperation through partnerships –MOU’s and Public Private Partnerships –Forum of contributors Manage the USAF –Collect contributions from operators –Define access and subsidy rules

24. Focus Areas Fund Manual –Standard Operating Procedures –Fund manual – 31 October 2008 –Competitive bidding process (reverse-auction) Project Sustainability Plan –Business plan –Skills development plan Subsidy Focus –Internet Connectivity to Community Access Centers Libraries, Telecentres, Digital Hubs, Kiosks –Infrastructure Training –Capacity building initiatives Research –Definitions on Universal Service and Universal Access –Universal Service Obligations –GIS Web Mapping

25. Funding – USAF & USAASA 2008-2011

26. USAF Planned Budget MTEF 2008/11 2007/2008 Projected2008/20092009/20102010/2011 USAF Projects 32,722,000 34,581,000 36,389,203 36,399,436

27. USAF Planned Budget MTEF 2008/11 ProjectOutcome2008/2009 2009/20102010/2011 Develop a Universal service & access strategy Fund policy, Fund manual, Identify ICT schemes, subsidy model and competitive bidding process completed 1,500,000 - - Subsidise FET colleges Subsidies paid to FET where SLAs have been signed 2,700,000 5,687,820 6,823,061 Connect Thusong Service centres ICT blue print for TSC's implemented, 5,000,000 5,485,938 5,296,810 15% Administration Costs 750,000 822,891 794,521 Rollout community access centres Digital hubs to be completed 4,000,000 - - New access centre infrastructure - 4,500,000 4,100,000 15% Administration Costs 600,000 675,000 615,000 Subsidise public schoolsMindset project (Pilot project) 1,000,100 3,511,351 3,254,685 New school cyberlab - 8,450,000 7,500,000 15% Administration Costs - 1,267,500 1,125,000 Subsidise connectivity to Community access centres Continue Internet payment 1,500,000 750,000 789,975 Subsidise broadcasting infrastructure Low power transmitters 1,000,000 1,053,300 15% Administration Costs 150,000 157,995 Sustainability plan Subsidies to entrepreneurs 10,800,000 - - 15% Administration Costs 1,620,000 - - ICT Kiosk 525,000 1,105,965 1,747,369 Training 1,785,900 1,881,088 1,981,350 ResearchWeb Portal 500,000 526,650 554,720 Public Consultation on Definitions 2,000,000 500,000 526,650 15% Administration Costs 300,000 75,000 78,998 34,581,000 36,389,203 36,399,436

28. USAASA Planned Budget MTEF 2008/11 2007/2008 Projected2008/20092009/20102010/2011 Fixed costs - Staff costs 12,542,836 16,128,647 16,935,079 17,849,573 - Operational lease 1,283,881 1,328,630 1,395,061 1,470,395 - Finance lease - 74,640 78,372 82,604 Variable costs 7,378,552 4,681,050 4,915,102 5,180,518 Capital expenditure 1,562,44790,000171,386180,641 22,767,716 22,302,966 23,495,000 24,763,730

29. Concluding Remarks

30. Challenges USAASA should be empowered to deliver on requirements placed on it by ECA –Engaging with DoC & Treasury on expanding resources USAASA and USAF Budget allocation –Ongoing engagement with DoC & Treasury to unlock existing funds Control of USAF - Collection & Account –Development of standard terms and procedures manual –Addressing method of collection with ICASA and contributors Contributions to USAF – Basis, manner & purpose of contributions –Addressing through public consultations and Fund Manual Monitoring and evaluation to measure impact and progress –Increasing research and monitoring capacity Fragmented approach to ICT infrastructure service provisioning –Encourage partnerships

31. Conclusion Turnaround strategy Provision of definitions on under serviced areas, needy persons Review of Universal Service Obligations Fund Manual Partnership and collaboration