PRESENTATION TO THE PARLIAMENTARY PORTOFOLIO COMMITTEE ON COMMUNICATIONS ON

PROTOCOL ON THE POLICY AND REGULATORY FRAMEWORK

FOR THE

NEPAD ICT BROADBAND INFRASTRUCTURE NETWORK FOR EASTERN AND SOUTHERN AFRICA

19 JUNE 2007

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TEAM DOC

Lyndall Shope-MafoleDG

Keith Shongwe DDG ICT International Affairs and Trade

Harry Mathabathe DDG Finance & ICT Enterprise Development

Harld Wesso DDG ICT Policy Development

Mashila Matlala Director Policy Development

Mameetse MphahleleChief Director DGO

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PURPOSE

TO INFORM THE COMMITTEE ON: developments regarding the NEPAD ICT Broadband

Infrastructure Network as part of the implementation of the NEPAD ICT programme

The public policy and developmental advantages of that network compared to others

Developments leading to, and post, the signing of the Protocol on the Policy and Regulatory Framework for the NEPAD ICT Broadband Infrastructure Network for Eastern and Southern Africa

TO RECOMMEND THAT THE COMMITTEE: considers recommending the ratification of the Protocol

to the National Assembly

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NEPAD ICT PROGRAMME

When NEPAD was established, ICTs were one of the five priority programmes

Provision was made for the establishment of Task Teams to accelerate implementation of the priority programmes

The NEPAD e-Africa Commission was endorsed by the Heads of State and Government Implementation Committee (HSGIC) as the NEPAD ICT Task Team in 2002

The Commission is responsible for overseeing the development and implementation of the NEPAD ICT programme

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THE NEPAD ICT PROGRAMME PRIORITISES AFFORDABLE

CONNECTIVITY AND EDUCATION

Accordingly the NEPAD e-Africa Commission identified the NEPAD broadband Network and the NEPAD e-schools as two of its top priority projects

In Abuja 2003 the HSGIC endorsed the NEPAD e-schools and the East-Coast African Sub-marine Cable Project as two of the six priority ICT projects

In Algiers 2004 the HSGIC adopted the NEPAD e-schools and the NEPAD Broadband Network for East and Southern Africa as NEPAD flagship projects

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THE NEPAD NETWORK

In developing the ICT programme, particularly the NEPAD Broadband Network, the NEPAD e-Africa Commission took particular attention to fulfil :

NEPAD objectives and comply with

NEPAD principles

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NEPAD OBJECTIVES

a) To eradicate poverty;

b) To place African countries, both individually and collectively, on a path of sustainable growth and development;

c) To halt the marginalisation of Africa in the globalisation process and enhance its full and beneficial integration into the global economy;

d) To accelerate the empowerment of women

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NEPAD PRINCIPLES

Good governance as a basic requirement for peace, security and sustainable political and socio-economic development.

African ownership and leadership, as well as broad and deep participation by all sectors of society.

Anchoring the development of Africa on its resources and resourcefulness of its people.

Partnership between and amongst African peoples. Acceleration of regional and continental integration. Building the competitiveness of African countries and

the continent. Forging a new international partnership that changes

the unequal relationship between Africa and the developed world.

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CHARACTERISTICS OF THE NEPAD ICT NETWORK Predominantly African owned and led The development of Special Purpose Vehicles (SPVs)

develop, own, and maintained the networks The principle of public private partnerships (PPP). Provides for collaboration between 23 countries in

Eastern and Southern Africa Connect African countries to each other and to the

rest of the world. The network will be made up of a terrestrial as well

as a submarine component thus contributing to the socio-economic development and cultural integration of the continent

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PRINCIPLES GOVERNING THE NEPAD NETWORK

Non discriminatory access – the cost of access is the same for owners and non owners irrespective of the size or wealth of the company

Open access - Any authorized licence holder can access the network

Separation of ownership from use – Only the SPV –which is owned by all, can sell capacity-eliminating profiteering

Regulated return on investment –investors are guaranteed a steady, stable but reasonable return on investment guaranteeing low communication costs

All companies invest the same irrespective of their wealth and size.

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NEPAD ICT Broadband Infrastructure Network for Eastern and Southern Africa.

Submarine cable system

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THE PROTOCOL

Given that the NEPAD Heads of State and Government Implementation Committee (HSGIC) identified the NEPAD ICT Broadband Infrastructure Network as a NEPAD flagship project in March 2003.

The Ministers of the region tasked the senior government officials, regulators and policy makers of the region to develop a Protocol under the auspices of the African Union which shall provide a Policy and Regulatory Framework, by which the network will be governed.

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BACKGROUND CONTEXT TO THE PROTOCOL

The Protocol was developed against the background of several previous treaties establishing the Common Market for Eastern and Southern Africa

(COMESA), the East African Community (EAC), the Inter-Governmental Authority for Development

(IGAD), Southern African Development Community (SADC)

All of which enjoin their Members States to work towards harmonization of policies in the ICT sector and in particular to work towards improving connectivity amongst their members and the world

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THE IMPORTANCE OF THE PROTOCOL

Provides a common framework across the region for cross border high-quality, high-speed and reliable electronic communications, and at an affordable price to the end-user

Contributes to the development and promotion of the economic, social and cultural integration of the African continent

African ownership of the Protocol promotes security over the network with minimal non-African interference.

Is a private public partnership between the Governments of the region and the private African telecommunication companies

Believed to be the first of its kind in the world

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SIGNING OF THE PROTOCOL

On the 29th of August 2006 under the Chairmanship of H.E President Paul Kagame of Rwanda, seven countries signed the NEPAD Network Protocol in Kigali – the Kigali Protocol.

The Kigali decisions included Signing of Protocol extended to the 30th of November 2006

(during which an additional five countries signed). Countries to ratify the Protocol by June 2007 Harmonization of National policies to the Protocol by

March 2008 Operational date to be late 2008-early 2009

To date 12 countries have signed and these are South Africa, Lesotho, Madagascar, Malawi, Mauritius, Rwanda, Tanzania, Uganda Botswana, the DRC and Zimbabwe and Zambia.

Countries that have not signed can accede once 51% of the signatory countries have Ratified, and the Protocol is enforce.

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THE PROTOCOL LAYOUT

1. Definitions2. Objectives of the Protocol and General Undertaking 3. Establishment, Objectives, Ownership and Governance of the

Operating Entities/Entities:4. Rights and Obligations and Operating Principles of the Operating

Entity/Entities: 5. Policy, Regulatory and Licensing Principles6. Financial and Tariffs Principles for the Operating Entity/Entities: 7. Access to Undersea and Terrestrial Fibre Optic Cable Systems8. Dispute Settlement 9. The Inter-Governmental Assembly and the Implementing Agency10. Miscellaneous Provisions:

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Chapter 2 – Objectives of the Protocol

To promote and facilitate the provision of ICT broadband infrastructure to support high-quality, high-speed and reliable electronic communications in Eastern and Southern Africa and with the rest of the world at Affordable Price for End Users based on Open Access Principles;

To secure the rollout of broadband open access infrastructure in the Region with the involvement of the private sector.

To facilitate the incorporation and / or utilisation of existing national and / or regional networks, subject to agreement by the IGA and participating Governments where applicable, practicable and / or feasible, into the NEPAD ICT Broadband Infrastructure Network.

To address legal, policy and regulatory obstacles in relation to the provision of cross-border infrastructure and services in the Region and beyond by encouraging the harmonisation of ICT policies and regulatory frameworks in the Region.

To ensure that the infrastructure constructed pursuant to this Protocol is designed to contribute to the development and promotion of the economic, social and cultural integration of the African Continent as envisaged in the African Union Constitutive Act.

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Chapter 3 - Establishment, Objectives, Ownership and Governance of the Operating Entities/Entities

ESTABLISHEMENT OF OPERATING ENTITY/IES: This chapter stipulates the structure of Special Purpose Vehicles (SPVs) (also referred to as operating entity/entities) that will construct, maintain, own and operate the Network. There will be three types of SPV

Pure SPV (terrestrial) Hybrid SPV with African-led SPVs and direct investors

(submarine) GOVERNANCE: Each SPVs shall have a shareholders agreement

which shall include: The formation of the SPV boards, the directors of which shall be

from the private African telcos shareholders, with the Governments of the region, represented by the Inter Governmental Assembly (IGA) occupying one seat on the boards.

The establishment of a “golden share” which be held in trust by the IGA, and which share shall be exercised in the event that there is a deviation from the principles of NEPAD.

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Chapter 4 - Rights and Obligations and Operating Principles of the Operating Entity/Entities

Highlighting manner in which Operating Entity/Entities will operate in line with Protocol

Countries are committed to giving the entity/entities, within their territories, certain specific rights and obligations.

Adhere to principles of open access, transparency and non-discrimination

This chapter entitles the SPVs to lease non telecommunications infrastructure or capacity it might need for its operations, as well as entitles it to lease out its infrastructure to authorised service providers in the signatory countries territory.

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Chapter 5 - Policy, Regulatory and Licensing Principles

Countries are required to amend existing policy and regulatory frameworks and or promulgate new policy and regulatory frameworks to ensure that they are harmonised and aligned to the network in terms of the Protocol.

Alignment of existing national licensing framework and/ or introduce new licensing frameworks to ensure open access principle

Align and where necessary introduce new legislation to allow for the licensing of the SPVS, and thus ensure that the SPV is licensed and/or authorised to operate in respective countries territories.

Provides for license fee conditions Initial 15-year term administration fee-based Exemption from turn-over related licensing fees

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Chapter 6 - Financial and Tariffs Principles for the Operating Entity/Entities

This chapter determines charges for wholesale bandwidth and in so doing stipulates that charges will be based on capacity and be independent of distance. In other words, on the network, the charge for a call to Egypt will be similar to that to Mozambique on the network.

It binds countries to open access principles related tariffs and charges of services.

The chapter proposes the Capital structure of Equity, Debt and/or Quasi-Equity. The Quasi equity facility will allow for the ware-housing of shares for companies that will not be in a position to buy their shares upfront, but may wish to do so at a later stage.

The chapter also calls for there to be no transit charges for regional cross boarder traffic by SPV

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Chapter 7 - Access to Undersea and Terrestrial Fibre Optic Cable Systems

Countries with landing points for existing or planned cables shall licence the SPV(s) to ensure them access to such cables

In cases where the landing points are not part of the network, coastal countries shall endeavour to ensure that the charges on the SPV(s) are affordable, fair and transparent.

Where a country is a signatory, they are obliged to conform to the principles of the Protocol whether they or a telcom company from their country is a shareholder in the SPV(s) or not.

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Chapter 8 - Dispute Settlement

The proposed approach is to encourage amicable dispute resolution, if in 30 days resolution is not reached, resort has to be made to arbitration in accordance with the rules of the African Union

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Chapter 9 - The Inter-Governmental Assembly and the Implementing Agency

The Inter Governmental Assembly (IGA) is made up of senior officials of participating governments of the region.

The IGA shall appoint 1 representative to the SPV board/s, who holds a golden share used to ensure that the objectives and principles of NEPAD are adhered to and to protect the interests of the governments

the NEPAD e-Africa Commission shall be: The secretariat of the IGA and the implementing agency of the Protocol

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Chapter 10 - Miscellaneous Provisions

This chapter deals with general issues such as the status of annexes, amendments to the protocol, signature, ratification and accession and the entry into force.

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DEVELOPMENTS SINCE THE SIGNING OF THE PROTOCOL (THE MEETING OF THE 1ST IGA)

The IGA has met on two occasions: In the 1st IGA meeting held in Tshwane in December 2006: Engineer George Mlilo, the Permanent Secretary of

Zimbabwe was elected as the Chairperson until July Brig Tembo, Permanent Secretary of Zambia is 1st Deputy

Chairperson, and Chair from July Uganda is 2nd Deputy chair (they serve 6 months in a

capacity). Governments were requested to submit the names of their

companies that wish to participate in the SPVs

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BETWEEN THE FIRST AND THE SECOND IGA MEETINGS…

A group of African telecommunications companies, signed a Construction and Maintanance Agreement (C&MA) for the East African Submarine system (EASSy).

The EASSy cable is not compliant with the Protocol

Telkom SA also signed this C&MA MTN signed as MTN Uganda and VSNL signed as

VSNL international.

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DEVELOPMENTS SINCE THE SIGNING OF THE PROTOCOL (THE MEETING OF THE 2ND IGA)In the second IGA meeting in Zimbabwe in March 2007. The IGA discussed the issue of the signing the EASSy

Construction and Maintenance Agreement (C&MA), the equivalent of a shareholders agreement.

The governments of the IGA stated that the companies in their countries signed the EASSy C&MA because Telkom South Africa has signed.

The IGA requested “South Africa would take up the issue with Telkom SA and its other companies that had signed, resulting in these companies reversing their actions”

The IGA further agreed that shares will warehoused to provide for countries that accede to the Protocol late will be allowed to forward a maximum of three companies per country to participate on the SPVs at market price

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MEETING WITH SOUTH AFRICAN COMPANIES THAT ARE SIGNATORIES TO THE EASSY In pursuance of the IGA decision the Director General of

the Department of Communications met with the Chief Executive Officers of Telkom, Vodacom and MTN regarding their signing of the EASSy C&MA and its implications.

Although the South African telecommunications companies indicated that this would be difficult to do on their own without the other EASSy companies, they indicated their willingness to work within the Protocol.

The companies indicated their interest to participate in the NEPAD ICT broadband infrastructure project.

Some of the companies indicated that they would still like to continue with EASSy, but to do so within government policy.

The Director-General in addition met with Neotel who informed her that their parent company VSNL has signed the C&MA.

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IN CONCLUSION

THE PROTOCOL takes into account that there is an uneven balance of forces in international connectivity which is not favourable to Africa, accordingly it; prioritises the NEPAD network, which: ensures collective responsibility for the development of

Africa in the context of NEPAD ensures that the bulk of money generated by African

traffic remains in, and contributes to, the development of the continent

This is important given that international connectivity accounts for a substantial portion of the cost to communicate

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RECOMMENDATION

CONSIDERING; The developments regarding the NEPAD ICT

Broadband Infrastructure Network as part of the implementation of the NEPAD ICT programme

The public policy and developmental advantages of that network compared to others

The Developments leading to the Protocol on the policy and regulatory framework for the NEPAD ICT Broadband Infrastructure Network for Eastern and Southern Africa

Progress since the signing of the Protocol The proposed way forward

RECOMMEND That the Committee considers recommending the

ratification of the Protocol to the National Assembly

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THANK YOU

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ANNEX: MINISTERIAL DECISIONS

June 2006 Decisions The Republic of Rwanda should be the domicilium of

the submarine (EASSy) Special Purpose Vehicle. The inclusion of Mauritius. A Policy and Regulatory Framework, which is

embedded in a Protocol to be signed by countries. The Protocol should be signed, under the auspices of the African Union.

The structure of the SPVs of the Terrestrial and Submarine components of the network.

The Fast Tracking the implementation of the regional network.

August 2006 SADC Decision Support for the project

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ANNEX: MINISTERIAL DECISIONS

August 2006 Decisions Protocol signing extended to 30 November

2006 thereafter interested states to accede once ratified by 51%

Protocol to be ratified by 30 June 2007 by all signatory countries through national processes

Alignment of all national ICT policies and regulations to the Protocol by 30 March 2008