Sharp revenue decline for Regulator

The Office of the Regulator made $1.5 million tala less in 2010 financial when compared to what the office made in 2009 a parliamentary committee has reported.

In its report on the Annual Reports for the Office of the Regulator for the financial years ending 2009 and 2010 the Education, Science, Communication and Information Technology (E.S.C.I.T) Committee attributed this decline in the revenue the Office Received.

Lenatai Victor Faafoi Tamapua serves as this Committee’s Chairman.

“According to financial reports of the Office of the Regulator, it has been identified that the amount of income received by the Office in 2010 which amounted to $2,599,197 tala was less compared to the financial year of 2009 at a total of $4,117,199 tala,” the report reads.

“Such a difference was due to a decrease in revenue received from the government, telecom license fees and radio license fees.

“However, revenue received from other license fees increased, which is took almost 1.56 per cent of the Office’s total income.

“In terms of expenditure, a slight decrease in the amount of expenses which amounted to $3,566,464 tala for the financial year 2010 compared to $3,641,776 tala for the financial year 2009.

In its report on the Annual Reports for the Office of the Regulator for the financial years ending 2009 and 2010 the Education, Science, Communication and Information Technology (E.S.C.I.T) Committee attributed this decline in the revenue the Office Received.

Lenatai Victor Faafoi Tamapua serves as this Committee’s Chairman.

“According to financial reports of the Office of the Regulator, it has been identified that the amount of income received by the Office in 2010 which amounted to $2,599,197 tala was less compared to the financial year of 2009 at a total of $4,117,199 tala,” the report reads.

“Such a difference was due to a decrease in revenue received from the government, telecom license fees and radio license fees.

“However, revenue received from other license fees increased, which is took almost 1.56 per cent of the Office’s total income.

“In terms of expenditure, a slight decrease in the amount of expenses which amounted to $3,566,464 tala for the financial year 2010 compared to $3,641,776 tala for the financial year 2009.

“Committee recognises an increase of expenditure in allowances, doubtful debts, operating expenses, personnel expenses, grants to Ministry of Finance expenses and other expenses. “However, money spent on rent and consultancy fees decreased in 2010 compared to the previous year.

In an overlook view of the Committee on the Office’s financial report for the two years examined, it is reported that the Office over spent and gained a loss in 2010- its expenses exceeded the total income the Office received for 2010.

“Management confirms that the Office has not yet received other revenue forecasted to come from telecom fees, license fees and other fees,” the Committee reports.

“It also confirmed that they are trying to reduce costs and expenses to ensure that there is enough income to support and maintain its telecommunication services.”

In addition to Lenatai, the Committee consists of Ifopo Matia Filisi as Deputy Chairperson, Tusa Misi Tupuola, Levaopolo Talatonu, Tofa Aveau Nikotemo Palamo, Tuileutu AlavaaVoi and Afioga Tufuga Gafoaleata Faitua.

The report is published verbatim below:

1. RECOMMENDATION: The Education, Science, Communication & Information Technology Committee recommends that the Assembly takes note of its Report.

2. PREAMBLE: The Education, Science, Communication & Information Technology Committee is constituted pursuant to Standing Orders 172.

3. STANDING ORDER 172: It shall be the duty of the Committee: (a) To consider any bill, petition or other matter referred by the Assembly or pursuant to these Standing Orders; and such Estimates or review of ministerial performance as maybe referred by the Finance & Expenditure Committee; (b) To examine the policy, administration and expenditure of the ministries and associated government organizations related to Education, Sports, Youth & Culture, Science, Communications and Information Technology.

4. PAPER CONSIDERED: (Tabled 3/1 0/201 1) (Referred 4/10/2011) P.P.2013/2014 Nu. 24, Annual Report of the Office of the Regulator for financial year ended 30 June 2009. P.P.2013/2014 Nu. 25, Annual Report of the Office of the Regulator for financial year ended 30 June 2010.

5. WITNESSES: The Committee also sought assistance of the following Officials during the course of its consideration:- Office of the Regulator (OOTR) Donnie De Freitas - Regulator Unutoa Auelua Fonoti - Manager, Technical Services Faalelei Sua - Manager, Coporate Services

6. FINDINGS: The Education, Science, Communication and Information Technology Committee examined Annual Reports from the two financial years (2009 & 2010) that ended 30 June.

Committee recognises the Regulator’s efforts to ensure that all areas that need assistance are aided for so that the services it provides continues to develop especially in telecommunication as provided under the Telecommunication Act 2005. Within the two years examined Committee recognises the various difficulties and challenges the Office has encountered because of the nature of the work in telecommunications around the globe. Despite this, the Office has been so efficient in setting out its work to ensure that the work produced is up to par and effective enough to accommodate interconnection within the country. In the financial year that ended 30 June 2009, the Office underwent human resource shuffling, capacity development and training, to ensure that the right person is given the most fitting position within the Office. Not only this, other events were also executed such as: - The appointment of the new Regulator in February 2009; -

The appeals to the Telecommunications Tribunal in May 2009; - The extensive and intensive training of the staff of the Office of the Regulator; - Regulator scheduling spectrum monitoring in Upolu and Savaii; - Conduct of a cost modelling exercise to determine cost of termination or Interconnection services; - Initiating work on policies for Universal Access and a National Emergency Telecommunication Plan; - Formalizing arrangement for the independence of the Regulator; -

Improving its collection revenues from licensed operators. Management has also stated that Interconnection is a major regulatory issue and needs to be resolved.

The regulatory issues on interconnection this year includes: - Appeal of the Orders 2008/03 and 2009/01 by SamoaTel; -

Tribunal ruling to review the rates; and - Reconsideration of the rates by the Regulator In the financial year that ended 30 June 2010, Committee recognised the Regulator’s continual challenge that is partially slowing down the Regulator’s efforts for development is its efforts to improve interconnection services in the country. One of its main goals and priorities is to develop the capacity of its human resource within the 4 divisions that make the Office of the Regulator. This includes: (i) Corporate Services; (ii) Legal Framework; (iii)Spectrum and Technical Division; (iv) Regulatory and Consumer

Affairs. The selection of Managers for most of the divisions in the Office is one of many efforts in solidifying its development as it prepares to become independent. Management also confirmed that these Managers and some representatives of the Office were able to study overseas, a training program coordinated by the Telecommunications Training Institute and the project by the World Bank to develop human capacity and knowledge concerning telecommunications.

Committee recognises that the Regulatory Office encounters many legal challenges this year which includes: - Digicel lodged an application for judicial review with the Supreme Court of Samoa. Digicel argued that the Tribunal’s decision was unreasonable and unlawful; - Digicel appeals against Regulator’s reconsideration of interconnection charges; - Clarification of the legal framework for telecommunication companies; - Cooperation with Telecommunication companies so that workload will be made easier; - Underwent consultations concerning the distributing of licenses to those new established telecommunication companies Because of the various legal challenges the Office of the Regulator has encountered these years; it resulted to efforts in reviewing the Telecommunications Act 2005. Advice and changes to the Principal Act was discussed with and handed over to the Attorney General’s Office for amendment. Such changes reflected what the Regulator’s believe would be fitting for today. The spectrum monitoring is one development that must be managed well because of the increase in demand to use such a system by the television and radio companies, satellite earth station, satellite, emergency telecommunication, forecast, and communication on land, sea and other areas of communication. Management has confirmed that the Spectrum and Technical Division will be making policies and guidelines on the use of spectrum monitoring in the country. This is to ensure that these systems are used in a lawful and proper manner as well as a fair usage of new technology by all companies operating within Samoa. Not only this but to ensure the efficient use of the spectrum monitoring as well as to have effective outcomes from such use so as to circumvent radio frequency interference. Committee recognises the efficient maintenance and usage of spectrum technology for communication that was aided to the Regulator’s Office for Emergency purposes. The successful establishment of a National Emergency Telecommunication was done in a cooperative effort between the Office of the Regulator and other Ministries and organizations who will be guided by these set principles. The Regulator’s Office was also able to finalize the first part of its Universal Access Policy which was discussed and put together by Private Corporation, governmental organizations, Telecommunication companies, Organisations and Committees of villages. The Office of the Regulator was able to undertake research and record telephone numbers that are used in the country which is one of its statutory responsibilities. The Office will assist by setting polices and guidelines as to how phone numbers are used in Samoa.

6.2 COMMITTEE VISIT: The Education, Science & Information Technology Committee was able to visit the Office of the Regulators new headquarters at Mulinuu and observe the operation of their day to day work. Committee compares the Office performance to date to the time when the Office was initially established and confirmed a substantial improvement of its work. Committee applauds the Office’s new headquarters and hopes that having a new infrastructure can further facilitate the proper execution of their work. Committee recognises the Office’s plans to further improve its telecommunication services in the country. The Office also has an effective way of keeping the machines (such as spectrum monitoring) well maintained. However, as technology continues to advance, there is a need for continual update on the technology they already have so as to ensure effective monitoring of interconnection services.

6.3 STATEMENT OF ACCOUNT: According to financial reports of the Office of the Regulator, it has been identified that the amount of income received by the Office in 2010 which amounted to SAT2,599,197 was less compared to the financial year of 2009 at a total of SAT 4,117,199. Such a difference was due to a decrease in revenue received from the government, telecom license fees and radio license fees. However, revenue received from other license fees increased, which is took almost 1.56% (percent) of the Office’s total income. In terms of expenditure, a slight decrease in the amount of expenses which amounted to SAT3,566,464 for the financial year 2010 compared to SAT3,641,776 for the financial year 2009. Committee recognises an increase of expenditure in allowances, doubtful debts, operating expenses, personnel expenses, grants to Ministry of Finance expenses and other expenses. However, money spent on rent and consultancy fees decreased in 2010 compared to the previous year. In an overlook view of the Committee on the Office’s financial report for the two years examined, it is reported that the Office over spent and gained a loss in 2010-its expenses exceeded the total income the Office received for 2010.

Management confirms that the Office has not yet received other revenue forecasted to come from telecom fees, license fees and other fees.

It also confirmed that they are trying to reduce costs and expenses to ensure that there is enough income to support and maintain its telecommunication services.

7. ACKNOWLEDEGMENT: The Committee acknowledges the hard work performed by the Management and the Office of the Regulator as well as the achievement of its goals for the years examined. It acknowledges the Office’s forwardlooking and diligence in seeking ways to improve its services. Committee would expressly thank those from the Office of the Regulator’s Management team in assisting the Committee in writing this report.

8. RECOMMENDATION: After consideration of the reports given, the Education, Science, Communication & Information Technology Committee recommends the following to the government: 1. Development and maintenance of the current technology that monitors the use of Spectrum monitors and telecommunication within the country should be prioritised.

Not only should there be an efficient way of looking after those machines, the constant update of technological development should also be taken into account; 2. The Office to review and reconsider legislation regarding payments of Telecommunication License fees to be able to deter the problem of having outstanding payments of fees for the services it provides; 3. The Committee advices the Office of the Regulator to diligently seek relevant ways to improve telecommunication services those that are rarely used and those that are often used such as television, radio and satellite earth station.

8. RESOLUTION: At the conclusion of its consideration, the Committee resolved to recommend that the Assembly approves the P.P.2012/2014, No. 24. Annual Report of the Regulator for Financial Year ended 30 June 2009, & P.P.20l2/2014, No. 25. Annual Report of the Regulator for the Financial Year ended 2010.

LENATAI Victor Faafoi Tamapua CHAIRPERSON