Broadcasting Services in the Digital Age

Introduction

Convergence and technological changes pose particular challenges to traditional approaches to broadcasting regulation. Increased access to high speed affordable broadband will increasingly and fundamentally change the way audiences access audio- visual content. People will be able to watch and listen to a range of television- and radio-like content on a variety of platforms and devices – and be able to create and distribute their own content via the internet. As new technologies develop and become more pervasive, audiences will be able to watch broadcasting-like content distributed and developed by international and South African organisations and companies on their computers, mobile phones, tables and other connected devices. With the introduction of internet enabled televisions, set top boxes (STBs) and gaming devices, this content will also be able to be viewed on television screens. Traditional broadcasters will face increasing competition for content, audiences, advertising and revenue from other players (including internet companies and network operators).

These technological changes pose both opportunities and threats. On the one hand it will enrich diversity and allow South Africans to access news, information and entertainment programming from a range of different sources (local and international) and enable South Africans to tell their stories to an international audience. On the other hand, the need to ensure all audiences access to public interest content reflecting the cultural, social and linguistic diversity of the country could be threatened as traditional broadcasters will face increasing competition. The new framework must be flexible enough to anticipate the challenges and opportunities so that the overarching public objectives set for the sector can be realised. This section of the Green Paper identifies some of the key issues facing television and radio services given technological changes. It poses questions about what policy approaches would best ensure that the critical social, cultural and political objectives determined can be achieved.

Many other countries have adapted or are reviewing their broadcasting policy frameworks in light of convergence and digitisation. Australia, the UK, Canada, Singapore and the European Union are among these. While these countries have adopted different approaches, based on their own political, economic and social contexts and their particular public policy objectives, all have focused on how, in the changing environment, to continue to:

Ensure access to diverse content for all, including locally produced public interest programming, Promote diversity of ownership and control of content services and limit media concentration; Ensure fair competition between different content services; and Protect audiences from illegal content; ensure community standards are agreed on and met and that children are protected from harmful content.

Core questions focused on in these reviews include: What content services should be regulated? How should they be regulated? Where is there still a need for government/regulatory intervention to achieve clearly identified objectives?

1 Key Underlying Principles

As highlighted in Chapter 2, responses from stakeholders to the Framing Paper confirmed that the core principles and objectives that underpin the current broadcasting regulatory framework remain relevant. These include: Freedom of expression for all; Universal access to a range of services (including national and local public, commercial and community stations and channels); The right to create, disseminate and access a range of compelling content in the language/s of choice; The right to access a range of news, information, opinion and analysis to facilitate informed participation in society; and The need to protect children from harmful content and for broadcasters to abide by agreed upon content standards. (See section 2.1.2)

Key Policy and Regulatory Developments Since the White Paper was Launched

This section highlights key policy and regulatory developments since the adoption of the White Paper in 1998. It is not intended to be an exhaustive summary of developments but highlight key changes.

1998 – The Department of Communications launched its Community Radio Support Programme – providing support to the sector for, among other things, programming, infrastructure and subsidies for Sentech signal distribution costs. Between 2001 and 2013, the DoC allocated over R326,4m to this project. This excludes funding allocated to the National Electronic Media Institute of South Africa (Nemisa) for training of stations and in house training conducted by the Department. Government has made separate contributions to the sector since 2003 via the MDDA (see below). 1999 – The Broadcasting Act, no 4 of 1999 is promulgated – amending laws in line with the White Paper. The then IBA publishes a Code of Conduct for broadcasters setting out, among other things, a code to protect children, and providing audience advisories. It was revised in 2009 2000 – the Independent Broadcasting Authority was merged with the South African Telecommunications Regulatory Authority to form the Independent Communications Authority of South Africa 2002 – ICASA published new regulations on South African music and television content (amended in 2006). Overall South African television quotas increased to 55% for public and community television, 35% for commercial free-to-air channels and 10% for terrestrial pay-tv services. Satellite subscription services have to ensure that at least 10% of their channel acquisition budget is spent on channels with South African content that are compiled and uplinked from South Africa. A number of genre specific quotas were also reviewed for the different services. ICASA is currently reviewing the South African content regulations. 2003 – The Media Development and Diversity Agency is launched as a statutory body, funded as a public-private partnership, to provide financial and other support to community and small commercial media. ICASA issued regulations setting out which sporting events are regarded as sports of national interest and the terms under which these should be aired free-to-air. The Regulations on Sports Broadcasting Rights were replaced in 2010 by new regulations. The regulator published a policy position paper on regional television. In summary, the Paper stated that ICASA was of the view that the market could not at that time sustain commercial regional television services. However, the regulator outlined the requirements to be given to public regional television channels. In 2005, ICASA

2 granted licences for these two services (SABC 4 and 5), but stated that it would only issue these once funding was secured. No funding was ever secured for the two channels. 2004 – ICASA issued a Position Paper on the Review of Ownership and Control of Broadcasting Services. The regulator recommended a number of proposed changes to the legislative requirements regarding ownership and control limitations, including those on foreign ownership, ownership and control of services and cross-media control. 2005 – The Electronic Communications Act is passed. Among other things, the ECA provided for a registration rather than full licensing process for community broadcasters and introduced processes that the regulator must follow to ensure fair competition among broadcasters. SABC radio and television services are issued with licences under the Broadcasting Act. These are converted under the EC Act in 2010. ICASA issued a Position Paper on Subscription television. Among other things, the policy paper outlined the minimum licence conditions that would be set for pay-tv broadcasters, and stipulated that there would be no open-time on FTA broadcasters for subscription services (M-Net was at the time given open time on SABC services in terms of its licence though this provision was revoked in a licence renewal in line with the new policy). The policy also stated that ICASA would recommend to the Minister that provisions limiting cross media control of broadcasting not be extended to pay-tv services. 2008 – The Minister of Communications issues the Broadcasting Digital Migration Policy setting out key policies governing the migration from analogue to digital terrestrial television. The policy was amended in August 2011. ICASA issued revised regulations on DTT in December 2012. ICASA published ‘must carry’ regulations setting out the terms and conditions under which subscription services must carry SABC public broadcasting channels as required by the White Paper on Broadcasting. 2010 – The regulator published standard terms and conditions for individual and class broadcasting services under the ECA. ICASA published a Position Paper outlining its policy approach to video-on-demand (VOD) and Internet Protocol Television (IPTV). In this paper, the regulator stated that in its view IPTV fell under the definition of a broadcasting service in the ECA and thus would require a broadcasting licence, but VOD did not. It stated that it would approach the Minister with recommendations, including a regulatory framework for content services.

The Future

This section highlights key emerging issues to be considered in reviewing current broadcasting related policies and legislation. The issues identified are not exhaustive – and members of the public are encouraged to raise through submissions, other areas that in their opinion should be considered in the policy review process. The issues and questions identified are based on a number of considerations including the following:

The changing environment, given convergence and digitisation, and the impact this might have on approaches adopted to address the public interest objectives identified in Chapter 2 (the framing principles). Areas where existing policies may not have achieved the intended public interest outcomes so that problems experienced with the policies and/or their implementation are addressed.

3 They are further informed by submissions made by stakeholders on the Framing Paper. Many of these issues overlap, but it is important still to raise them separately to allow stakeholders to consider these from different perspectives.

The Changing Environment

Convergence and digitisation will inevitably change the way audiences access news, information, entertainment, cultural and educational programming. Currently, audiences primarily access programming from traditional regulated broadcasting services (satellite and terrestrial radio and television) or by buying or renting audio and audio-visual content. In the analogue environment, the number of television channels and radio stations that can be licensed is limited by spectrum availability. The existing policy and legislative framework is largely developed considering how to best meet public interest objectives given these limitations.

The imminent migration to digital terrestrial television will give audiences access to many more free-to-air and subscription television channels. Increased access across the country to affordable high-speed broadband linked to growth in the range, affordability and availability of internet-enabled devices (such as smart phones, tablets, smart TVs, internet enabled set top boxes and gaming devices) will, in addition, make it possible for South Africans to access a variety of international and South African audio-visual and audio content over the internet. People will be able to watch and listen to television- and radio-like programming on their television and radio sets and on mobile phones, tablets and computers. They will also be able to download and watch on their television sets content streamed by both South African and non-South African content providers – and be able to make and distribute their own content via the internet.

This will not only affect audiences – but will undoubtedly impact on the viability of traditional broadcasters and therefore affect their capacity to fulfil obligations placed on them to, for example, air a wide range of South African content in all languages and ensure access to services by people with disabilities (by sign-language, sub-titling and audio description for example). New content providers will also not be bound by current broadcasting codes and standards aimed at protecting audiences and children in particular, from harmful content. New services, not bound by regulations or licence conditions, will be competing with traditional broadcasters for audiences, content and revenue.

Defining “Broadcasting”

The ECA, in line with the White Paper, includes a technology neutral definition of broadcasting. According to the Act:

‘Broadcasting’ means any form of unidirectional electronic communications intended for the public or sections of the public “whether conveyed by means of radio frequency spectrum or any electronic communications network or any combination thereof”. The emphasis is therefore on the term unidirectional (ie linear) rather than the technology used to deliver the service.

A “broadcasting service” is required in terms of the Act to have a licence (either a class or individual broadcasting licence depending on the nature of the service). The definition of the term ‘broadcasting service’ excludes “a service which provides no more than data or text (including associated still images)” and “a service in which the provision of audio-visual or audio material is incidental to the provision of that service”. ICASA is also empowered to prescribe other services or class of services which will not be required to have a broadcast licence.

4 In a 2010 Position Paper on Internet Protocol Television (IPTV) and Video-On-Demand (VOD) ICASA considered the implications of these definitions of broadcasting and broadcasting services on its approach to regulating such “new” content services. In essence it stated that VOD services are not included in the definition of broadcasting services as they are bidirectional (users decide what content to access), while IPTV is a broadcasting service as it is primarily unidirectional. VOD services it stated would therefore require an electronic communications service licence but not a broadcasting service licence but IPTV providers would need a broadcasting licence to operate.

In its decision the Regulator noted that in the future, on demand services, including those available over the public internet, “may be a substitute for traditional television broadcasting” and therefore require some form of regulation but stated that this would require a legislative amendment to permit the regulation of content services (distinct from broadcasting services) under certain circumstances.

It noted that the Communications Act in the UK provides for regulation of both broadcasting and content services and stated that it would consider making submissions to the Minister that the ECA be amended to include a definition for content services.

In the UK, the Communications Act defines the different services essentially by the delivery platform used. The regulator in that country (the Office of Communications – Ofcom) has, in line with this, outlined specific obligations and requirements for the different licence categories. For example, television services using the DTT platform must have either Digital Television Programme Service or Digital Television Additional Service licences, while those that provide television programmes or electronic programme guides (EPGs) over other platforms (eg satellite, cable, the internet or mobile platforms) require Television Licensable Content Services licences (TLCS). The same distinction is made between radio services and Radio Licensable Content Services. Television content services include conventional programming (editorial, tele-shopping and self-promotion services available for reception by the public) and ancillary services (such as sub-titling or interactive programme enhancements). Such content services have to adhere to the Ofcom broadcasting code, ensure that at least 50% of the transmission hours are made up of European content and comply with regulatory requirements on promoting access to people with disabilities and rules limiting services from having exclusive rights to broadcasting live listed sporting events.

One of the issues that this policy review process has to consider is the approach to broadcasting-like services delivered over the internet. Television and radio-like programming will be increasingly available as stated via the internet on a range of devices (mobile phones, computers and tablets, for example) and internet-enabled television sets, STBs and gaming devices will allow such internet content to be delivered directly onto television screens.

This offers great opportunities – allowing South Africans access to a greater range of local and international content and therefore enriching diversity. It will also make it increasingly possible for South African stories to be show-cased to a global audience. It also introduces new challenges.

The migration to digital terrestrial television (DTT) will, on the one hand, give audiences access to a greater number of television and audio channels, while freeing up frequencies that will be used to increase high speed broadband access. Licensed multi-channel television broadcasters will therefore not only face increased competition for audiences, revenue and content from new services on DTT platforms, but also increasingly compete with internet based audio-visual content providers. While some of these new services might be South African based and focused, others will originate from other countries and be targeting a global rather than South African specific audience.

5 In terms of current legislation in South Africa, content services such as Video-On-Demand will not require a broadcasting licence or therefore be bound by the particular obligations for broadcasters.

Regulatory Parity

A number of submissions to the Framing Paper proposed that the principle of regulatory parity should inform a new approach to policies for broadcasting and audio and audio-visual content. Regulatory parity is based on principles of fair competition and technological neutrality and aims to ensure that like services are treated in a similar manner, regardless of how they are delivered (whether, for example, via satellite, transmitters, over the internet) or what device is used to access them (for example, a radio set, the internet, a mobile phone, a television, a computer).

While the principle of similar regulatory treatment for similar services might seem obvious, ensuring parity is not necessarily easy in practice. Traditional linear broadcasting, for example, has a range of requirements relating to prime-time (such as what types of public interest programming should be aired at times when audiences are most likely to be watching) and ICASA has set watershed periods for different broadcasters to protect children from unsuitable content. Such requirements, however, are not necessarily relevant to on-demand content providers and audiences can schedule their own prime time viewing with new technologies such as interactive television recording devices, for example personal video recorders (PVRs).

There are also a range of different approaches which could be adopted to achieve such parity. For example, while some might suggest deregulating those currently affected by laws (such as broadcasters), recognising that they face competition from similar unlicensed services (including content available over the internet), others might propose extending regulation to such currently unlicensed content.

Linked to this, is the need to consider whether or not the current approach of regulation by business model is still appropriate. The White Paper on Broadcasting and related legislation and regulation currently distinguishes, for example, between broadcasting services that are free-to-air and rely on advertising revenue and subscription broadcasters. Services have varying regulatory obligations based on their business model – with lighter touch regulation for subscription services. An issue for the review is whether or not such regulation by business model will in the new environment be in line with principles of fair competition and regulatory parity, noting that these services are increasingly competing with FTA broadcasters for advertising revenue (see Chapter 3).

When considering these issues and their implications on the policy framework, it is also important to recognise that audiences may have different expectations of different mediums. For example, audiences might still expect that certain types of content are restricted when delivered by traditional broadcasters, but be more accepting of such content when it is delivered in different environments and circumstances.

In submissions on the Framing Paper, several stakeholders also raised the issue of net neutrality as critical in the changing environment to ensuring regulatory parity and fair competition between different content providers. They argued that the new policy framework must ensure net neutrality so that all data available on the internet is treated equally by network providers. These stakeholders raised concerns that if the policy framework did not enforce net neutrality, broadband providers might use their last mile infrastructure to block internet applications, content (websites, services, protocols) and competitors by, for example, using deep packet inspection to discriminate between over the top broadcasting services or applications.

6 Arguments against net neutrality internationally, generally centre around the impact this will have on the availability of bandwidth given the amount of content that will be made available. Consideration of all these issues has to be guided by the overall objectives set for the policy framework and therefore be based on how best to ensure the identified public interest goals for the sector are met.

Regulatory Parity and Internet Content

An extension of the debate on regulatory parity and the decisions on what content is or not regulated, is the issue of cross-border audio-visual services. The internet has global reach. New technologies will therefore allow South Africans to access content from across the world and provide opportunities for South African stories to reach an international audience. International and local audio-visual and audio content delivered via the internet will increasingly compete with traditional South African channels and stations for audiences, advertising and subscription revenue.

While services hosted or originating in South Africa are currently generally regulated in some way (through ECS licences, for example, and/or by requirements set out in the Film and Publications Act and other related legislation), the global nature of the internet makes it impossible to set similar rules for services hosted or originating from outside South Africa. The nature of these off-shore services will also vary greatly. Some of the international hosted or originated services might, for example, specifically target South African audiences, while others might not. Some will generate revenue (subscription and advertising) from South African audiences, while others might not. They will include sites that mimic traditional broadcasting in many ways (for example internet based radio services or radio stations also streaming via the internet), provide services that might substitute traditional broadcasting (such as music streaming services or international VOD type services) and user generated content (such as YouTube).

Given the potential growing importance of internet-based services, this Green Paper process has to recognise such off-shore services in order to ensure a new policy framework is balanced. A key issue of the policy process will be how to reinforce South African broadcasting and other content services to ensure they can effectively compete with these international services.

Licensing and Spectrum

Current policies relating to broadcasting are largely met through licences (both individual and class). This allows specific requirements to be set for individual broadcasting services to promote, among other things, identified public interest objectives and diversity. The broadcaster is a South African registered legal entity which is held accountable for requirements set in licence conditions and relevant regulations.

In line with this, sections of the radio frequency spectrum are set aside for terrestrial broadcasting services. Broadcasting spectrum is planned to ensure audiences have access to a range of services at a national, regional/area-wide and community level. Licensing processes then consider, among other things, the target audience needs, what other services are available, how the aspirant licensee intends to meet key objectives (such as South African content and language mandates) and the requirements in legislation of diversity. Satellite services also require a broadcasting licence, although they do not utilise sections of the spectrum set aside for broadcasting services.

Broadcasting licences typically determine a licence area to ensure there is no interference with other services and promote diversity and fair competition.

7 With the migration to DTT, sections of the radio frequency spectrum currently allocated to broadcasting services will be freed for use by other sectors and therefore increase access to, for example, mobile broadband. New services using the spectrum previously allocated to broadcasting will undoubtedly provide content services to drive uptake and these could directly compete with licensed broadcasters. Spectrum currently allocated to electronic communications services and networks will also be used to distribute audio-visual and audio content. As noted previously, at the moment, many of these services will be competing with traditional broadcasters, but will not necessarily require a broadcasting licence or therefore have to meet public interest obligations linked to broadcasting (such as South African content and language related requirements). The notion of a “licence area” for particular services will also be irrelevant in these circumstances – therefore possibly limiting the availability of local news, information, language, music and content.

Several stakeholders stated in submissions to the Framing Paper that, given this, a new policy must set out clear goals for the assignment of spectrum, and take into account issues such as:

The need to balance the social benefit that can be realised from spectrum with the monetary value of frequencies. Spectrum should therefore, they suggested, not just be sold off to the highest bidder (the digital dividend and spectrum that becomes available after analogue television switch-off); The need to balance social and monetary issues in determining spectrum fees – and the effect such fees could have on the ability of licensees to, for example, finance South African content and public service content; The right of the public to access diverse content services – and whether there is a need therefore to keep spectrum aside for future needs and growth in all three tiers of broadcasting; The importance of ensuring there is spectrum to facilitate linear and non-linear distribution of content and that broadcasters, not only electronic communications services, can offer complementary content services; and How spectrum allocation should accommodate future needs for things such as Hybrid Broadcast Broadband TV (HbbTV) and allow broadcasters access to spectrum to enable return paths to STBs and connected TVs (700-800 MHz spectrum).

The Three Tier System

A number of submissions on the Framing Paper raised the critical importance of strengthening the current three tier broadcasting system in the new policy framework. Several submissions also highlighted areas where current policy objectives for the different tiers have not necessarily been met and therefore suggested that the mechanisms in place in the White Paper, related to legislation and/or regulations be reviewed during this policy process. Both Government and Parliament have highlighted in particular the need to review the role of the public broadcaster, the governance of the SABC and funding for public broadcasting.

The three tier system (public, private and community broadcasting) is one of the key means in the current regulatory framework to facilitate freedom of expression and ensure objectives relating to, for example, diversity of ownership and content are met. The existing policy and regulatory frameworks recognise that each of these sectors complements the other and therefore that they collectively meet the diverse needs of audiences:

The public broadcaster has a specific mandate set out in a legislative Charter to fulfil key public goals such as universal access, providing a range of programming in all official South African languages and airing educational programming. Parliament, government and ICASA all have specific responsibilities in overseeing the fulfilment by the SABC of its charter

8 obligations. As the public broadcaster receives public funding (from both licence fees and government), it has greater public service obligations than privately owned and funded services.

Current policy recognises the positive role that can be played by the private commercial broadcasting sector (free to air and subscription) in fostering diversity of services, content, employment for producers, artists and broadcasters as well as increase diversity of ownership. The Regulator in licensing new services has to have due consideration for diversity, along with the demand and need for the proposed station or channel. Policy also stipulates that the regulator must set specific requirements in relation to public interest objectives such as the airing of South African content, broadcasting news and information programmes and commissioning of independent producers. More extensive conditions are placed on the free-to-air private commercial sector than the subscription sector.

The community broadcasting sector further extends diversity of ownership and content to the community level. The policy framework indicates that these services are non-profit and must involve the target community in the running of stations and channels as well as in the selection and provision of programming. Community broadcasters must provide a distinct broadcasting service dealing specifically with community issues that are not normally addressed by other broadcasting services available.

While each of these tiers is considered in more detail in relevant sections below, it is important to consider how a new policy framework can reinforce these sectors, and ensure that the right of access by all audiences’ access to a diverse range of services and content is realised. In this context it is important to consider how these services might be affected by convergence and/or digitisation.

It is also important to consider how these tiers are currently regulated. The licensing framework is the key mechanism for ensuring that each sector complements the other and that they collectively fulfil the overarching mandate set for the broadcasting sector. All sectors in terms of the White Paper and related legislation have to fulfil certain public service responsibilities and these are reflected in the conditions and regulations that apply to them.

Thus, the conditions for the SABC are based on, among other things, its Charter and mandate as defined in policy and legislation. Commercial broadcasters’ responsibilities are set out in minimum requirements determined by the regulator and in licence conditions which include promises of performance made by the broadcaster during a competitive licensing process. Community broadcasters though defined as class licensees and thus subject to a registration rather than licensing process, also have specific requirements set out in regulation and licence terms.

Public Broadcasting

The transformation of the SABC from a state broadcaster to a public broadcaster began in 1993 with the appointment of the first independent board of the Corporation. The Board appointed a new management and began the process of restructuring the organisation. The then Independent Broadcasting Authority (the IBA) took the process further through holding public hearings to discuss, among other things, the broadcaster’s mandate, structure and funding.

This culminated in the publication of the Triple Inquiry Report which was submitted by the IBA to Parliament. In line with recommendations of this IBA report, Parliament in 1996 agreed to privatise six of the SABC’s radio stations. These were “sold off” to private players through a licensing process. The IBA had further recommended that SABC 3 be privatised; however this proposal was rejected by Parliament.

9 The 1998 White Paper on Broadcasting took these transformation processes further. Among other things, it:

Introduced a legislated Charter for Public Broadcasting outlining the SABC’s mandate; Clarified the relationship between the public broadcaster and the Regulator and gave the Regulator specific oversight responsibilities in relation to ensuring compliance with licence conditions; Considered how the SABC mandate should be funded; and Separated the broadcaster into two divisions – public and public commercial. The division was intended to protect the public wing of the broadcaster by providing for cross-subsidisation of the public services by commercial channels and stations.

As noted in Chapter 3, the SABC currently includes:

Fifteen public radio stations, including eleven full-spectrum services broadcasting in each of the official languages; Three public commercial radio services; Two national public television channels (SABC 1 & 2) with mandates to, among other things, treat all official languages (including sign language) equitably, and include educational programming; and One national public commercial television service (SABC 3).

A further two regional SABC licences (SABC 4 & 5) were granted licences by ICASA in 2005 but the licences were never issued pending confirmation of sufficient funding for these services.

The migration from analogue to digital television will change the structure of the SABC and enable it to air many more television channels. With analogue, each spectrum channel or multiplex delivers a single analogue television channel. In the digital television environment, the multiplex can deliver up to eight channels. This will enable the public broadcaster to better meet its public mandate across its television services as, for example, it has been restricted by the number of channels in ensuring all languages are treated equitably. The time passed since the introduction of the White Paper together with the move to DTT however requires a review of this mandate. It is also crucial to review the funding model of the broadcaster and its governance structures as part of the ICT policy review process. The SABC has faced a range of governance and financial challenges since the introduction of the White Paper and the ICT review process must consider these when developing a new framework for the sector.

It is also important in such a review to consider how to ensure that public interest content is easily accessible by audiences given convergence. In many countries around the world it is recognised that public broadcasting services play a critical role in a democracy and in ensuring that society’s social and cultural needs and objectives are met.

The Role and Mandate of the South African Broadcasting Corporation The White Paper identified the need for the public broadcaster to play a fundamental and leading role in fulfilling public interest obligations set out for the sector as a whole. It stated that there was a clear need for “a strong and committed Public Broadcasting Service” which would “cater for the needs and aspirations of all sections of our society, particularly the underprivileged and historically disadvantaged”. The policy states that the SABC “should ensure universal availability and access and meet the education, information and entertainment needs of all of the people of South Africa. It should also meet the needs for children's programming and human resource development. Above all it should contribute to nation building”.

10 The White Paper identified the need to restructure the SABC in order for it to prioritise its public mandate while at the same time generating cash from its commercial activities. A Charter was developed and detailed in the Broadcasting Act, No 36 of 2005, to codify this mandate. As mentioned earlier, the SABC was further split into public and commercial divisions with the aim of protecting the public wing from being driven predominantly by commercial interests.

The White Paper and the Broadcasting Act required the SABC to apply for new licences from ICASA for each of its services so that it would be bound by conditions linked to its charter obligations. The initial licensing process was finalised in 2005. In line with the law and policies, SABC public services have to fulfil obligations outlined in the law, while public commercial stations and channels are required to meet the requirements set for the commercial sector by the Regulator.

Section 10 of the Broadcasting Act sets out specific objectives for the public broadcasting division of the SABC. It states: The public service provided by the Corporation must;

(a) make services available to South Africans in all the official languages; (b) reflect both the unity and diverse cultural and multilingual nature of South Africa and all of its cultures and regions to audiences; (c) strive to be of high quality in all of the languages served; (d) provide significant news and public affairs programming which meets the highest standards of journalism, as well as fair and unbiased coverage, impartiality, balance and independence from government, commercial and other interests; (e) include significant amounts of educational programming, both curriculum based and informal educative topics from a wide range of social, political and economic issues, including, but not limited to, human rights, health, early childhood development, agriculture, culture, justice and commerce and contributing to a shared South African consciousness and identity; (f) enrich the cultural heritage of South Africa by providing support for traditional and contemporary artistic expression; (g) strive to offer a broad range of services targeting, particularly, children, women, the youth and the disabled; (h) include programmes made by the Corporation as well as those commissioned from the independent production sector; and (i) include national sports programming as well as developmental and minority sports.

The Act further requires the SABC to develop a range of editorial policies taking its mandate into account through a public process. The policies are in terms of the Act lodged with ICASA. The SABC at the time of finalising this Green Paper was in the process of reviewing the current policies set in 2004.

The extent to which the SABC can fulfil all its mandate requirements on television has been limited due to the number of channels it operates. This will change with the migration to DTT and, for example, its ability to treat all official languages equally on television will be enhanced.

Regulatory and Licensing Framework of the SABC As highlighted above, the SABC is bound by both licence conditions and regulations set by ICASA. The White Paper and Broadcasting Act required the SABC to apply for new licences and indicates that the public services of the SABC must be primarily responsible for delivery on public interest goals set in policy. Public commercial services have to comply with the legal and regulatory standards set for privately owned commercial services while adhering to “the values of the public broadcasting service in the provision of programmes and service”. The licensing process was introduced to institute further accountability and oversight in relation to the mandate. ICASA’s content regulations

11 outline minimum requirements for public and commercial services for radio and television. With regards to South African music content, the regulations set the following minimum local music quotas to be broadcast on radio between 05h00 and 23h00:

Public radio stations must air at least 40 % South African music; and At least 25 % of the music broadcast on a commercial radio station must be South African.

The content regulations for television are more detailed and set minimum quotas for the different genres of programming, as well as overall percentages for content. The regulations also stipulate that independent producers must produce at least 40% of any broadcaster’s South African content. Details of content requirements are outlined in the table below.

Table 5: TV Content Quotas

Category Public Commercial

Overall quota 55% 35%

Drama 55% 20%

Children’s programming 55% 25%

Documentary 50% 30%

Knowledge Building 50% 30%

Current Affairs 80% 50%

Education 60% (not specified)

The SABC has stated in its annual reports that it has generally complied with and often exceeded these quotas. ICASA has not held any hearings into alleged non-compliance with these – though it should be highlighted that members of the public have raised questions about whether or not the regulator is effectively monitoring compliance.

Licence Conditions ICASA has set licence conditions for each radio station and television channel. These define, among other things, the reach of the different services, languages in which each station and channel must broadcast and the number of minutes of programming in the different genres to be aired both over the day and in prime time. They set out the universal service requirements for each of the channels and stations.

The 11 public radio stations which are dedicated to each of the different official languages have to provide full-spectrum programming (including drama, news and current affairs, information programming and educational programmes) and are required to target all audiences (children, youth, adults and the elderly).

Radio 2000 is licensed as a “utility service”, while stations such as Radio Lotus and X-K FM target particular communities (the Indian community and the Xu and Khwe communities, respectively). Tru-fm is licensed to target the youth in the Eastern Cape and broadcasts in both English and isiXhosa.

Two of the three public commercial stations cover all major cities and towns (Metro FM and 5FM) and are predominantly music focused English language stations. Radio Good Hope is a public commercial service covering the Cape Town metropolitan area. It broadcasts predominantly in English with some Afrikaans news and other programming.

12 Key programming related licence conditions for the three television channels are outlined in the table 6 below:

Table 6: Programming-related licence conditions for SABC channels

Category SABC 1 SABC 2 SABC 3

News 7 hours per week 7 hours per week 7 hours per week 3.5 hours in 3.5 hours in 3.5 hours in prime time prime time prime time Current Affairs 7 hours per week 7 hours per week 7 hours per week 2 hours in prime 2 hours in prime 1 hour in prime time time time Informal 16 hours per 18 hours per 12 hours per Knowledge week week week Building 2 hours in prime 2 hours in prime 2 hours in prime time time time Documentary 5 hours per week 5 hours per week 5 hours per week 2 hours in prime 2 hours in prime 2 hours in prime time time time Drama 24 hours per 24 hours per 24 hours per week week week 8 hours in prime 8 hours in prime 8 hours in prime time time time Children’s 20 hours per 15 hours per 12 hours per week week week Education 10 hours per 10 hours per - week week Language 39 hours per 41 hours per English week in Nguni week in languages languages other than English (Afrikaans, seSotho, seTswana, sePedi, Xi- Tsonga, Tshi- Venda)

Funding the Public Mandate The SABC in line with policy and regulation is funded by government, licence fees, advertising/sponsorship and other incidental income (sale of programmes, etc). As noted above, one of the reasons for the division of the SABC into public and public commercial divisions was to protect the public mandate by allowing for cross-subsidisation of the public wing by commercial services. The policy and legislative framework stipulates in line with this that:

Public funds (government allocations and licence fees) must only be allocated to public services.), and That the SABC should keep separate accounts for the two divisions.

13 The SABC, to date, has not published separate accounts for the divisions, and it is thus difficult to thoroughly review whether or not the division of the SABC has, as envisaged in the White Paper and Broadcasting Act, enabled the cross-subsidisation of the mandate by the commercial services.

The SABC continues to rely predominantly on commercial revenue (about 80% of its income is from advertising and sponsorship). Licence fees contribute about 18% and government funding about 2%. Allocations from government are approved through the Parliamentary process and have included annual funding as well as funds for specific projects (such as elections and the migration to DTT).

In its application for a Government Guarantee in 2009, the SABC highlighted the need for any policy review process to review the funding mechanisms in place for the public broadcaster. It specifically highlighted challenges in relation to the licence fee system. The 2009 Guarantee application noted that:

Licence fees do not increase annually with inflation (there have been three licence fee increases since 1998). Collection costs however increase with inflation. About a third of potential licence fees are not collected at all (bad debt – either because people could not afford to pay or chose not to pay).

It stated that the impact of both the bad debt and the collection costs resulted in net collections of only about 50% of potential revenue – raising questions about the efficacy and sustainability of the licence fee model.

The SABC noted in this application that the Triple Inquiry Report by the IBA had proposed that a number of alternative options to the licence fee be reviewed by Government (such as collection through SARS and a levy on the purchase of certain goods such as car radios). The Government Guarantee stressed the critical importance of such a review. It noted that concerns from stakeholders that the current licence fee system amounts to aggressive taxation should also be addressed.

Structure of the SABC As noted, the SABC is divided into two divisions – public and public commercial. The primary reason for this was to protect the public mandate as far as possible from commercial influence. SABC public commercial services have fewer obligations than those imposed on the public stations and channels.

The section on funding has highlighted the need to review this structure along with a review of the entire funding model for public broadcasting. The introduction of DTT and the increased number of television channels also requires the policy to consider whether or not these will be divided along public and public commercial lines as previously and if so, how such a division will be effected.

As noted previously, it is difficult to assess the effectiveness of the division on the funding model of the SABC as the broadcaster has not produced audited separate accounts for the two wings as required by law. It is thus not possible to, for example, assess the extent to which the three commercial radio services, have cross-subsidised public interest content provided across the public radio stations.

The SABC is governed by a Board including both non-executive and executive members. It is established as a company and in terms of the law and its memorandum and articles of association; the Minister of Communications is the sole shareholder of the Corporation. As a company, the SABC is bound both by the Companies Act No 71 of 2008 and by the Public Finance Management Act No 1 of 1999.

14 Governance of the Public Broadcaster Major issues regarding governance at the SABC have been raised recently. These have led to resignations by directors, two boards being disbanded since 2009, and the appointment of two six months interim boards by Parliament over the same period.

One of the core issues raised in Parliamentary and other forums relating to this have been about poor governance. Battles within the Board and between the Board and management have been fought at times publicly. Parliament has raised concerns about the lack of accountability of the SABC, and has considered evidence in audit and other reports of poor financial and other management controls. These issues have collectively diminished the standing of the SABC.

A key underlying issue raised by government, parliament and members of the public has been an apparent failure to effectively hold the SABC to account. Parliament has raised the need to clarify accountability mechanisms in the law to make it clear, for example, the lines of accountability between the SABC and the Minister as shareholder on behalf of government, ICASA and Parliament. The Broadcasting Act together with the Public Finance Management Act, No 1 of 2000, sets out the following reporting lines in relation to the SABC:

Table 7: SABC Reporting Lines

Reporting structure Issues to report Parliament Parliament decides on the Charter of the Corporation through legislative processes, approves of the Corporation’s operational plans and budgets - taking in to account its mandate - and audited financial statements and annual reports to measure performance. In practice, reporting by the SABC is against the performance indicators identified in the approved operational plan rather than against objectives set in law.

Government The SABC has to provide quarterly reports to government on issues such as its expenditure programmes, budgetary outlays and financial performance. In 2009 the Corporation was given a government guarantee to cover its debts. The Guarantee specified that a management team including Treasury, the Ministry of Communications and representatives from the SABC must provide further financial oversight of the broadcaster. Independent The SABC is issued licence conditions by ICASA and has to adhere Communications to regulatory requirements such as South African content rules. It Authority of South has to report on compliance in relation to these on a quarterly or Africa annual basis. ICASA in terms of the law has to monitor and enforce compliance with conditions for all licensees. The Authority publishes annual compliance reports for all broadcasters on its website. The Broadcasting Act also states that the regulator must monitor and enforce compliance by the SABC with its Charter (Section 6). ICASA has not to date issued a specific report on compliance by the SABC with its Charter.

15 Appointment and Constitution of the Board It is also important in considering how to address any weaknesses relating to governance of the SABC to look at the role of the Board and management of the Corporation in relation to the mandate, and appointment procedures in place.

The Board of the SABC is made up of 12 non-executive members and three executive members (the Group Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer).

The Broadcasting Act states that the Board controls the affairs of the Corporation and that the executive committee (made up of the three executive directors and no more than 11 members) administers the affairs of the Board. The executive committee is directed by the Board. The Board is the accounting authority in terms of the PFMA and as such bears overall responsibility for ensuring sound financial management.

Nine members of the Board – including the chairperson or deputy chairperson - make up the quorum according to the legislation. The appointment of executive members of the Board is outlined in the memorandum and articles of association. The appointment process of non-executive members of the Board is managed by Parliament. It entails:

A call for public nominations to fill vacancies on the Board Nomination by individuals or organisations of potential members in response to the call from Parliament. Short listing by the Parliamentary Portfolio Committee on Communications made of representatives of all political parties in Parliament Public interviews by the Portfolio Committee of short-listed candidates Recommendations by the Portfolio Committee to Parliament for adoption Appointment by the President on the advice of Parliament. The President selects the Chairperson and Deputy Chairperson from among those appointed. Board members must be suitably qualified, committed to fairness, freedom of expression the right of the public to be informed and openness and accountability as well as to the objects outlined in the Charter of the Corporation.

The Act also sets out the processes to be followed to remove non-executive members of the Board or dissolve the entire governing body. It says that Parliament can recommend the removal of a member for failing to attend three consecutive meetings without the permission of the Board, failure to declare a conflict of interest or misconduct. Parliament can also recommend the dissolution of the Board for, among other things, failing to discharge its fiduciary duties or failing to adhere to the Charter. In the event of the dissolution of the Board, the Act states that Parliament can recommend the appointment an Interim Board made up of five non-executive members for a term of no more than six months.

This appointment process was in many ways developed as a result of the experiences of the past. Political, civil society and labour movements who had fought for the transformation of the then state broadcaster to a public broadcaster emphasised the need to develop public processes to appoint the board in the future. The Parliamentary appointment process was designed to demonstrate to South Africans a break with the past in which government kept tight control over the broadcaster and processes of appointment were secret, as were the affairs of the SABC.

Given the recent history of challenges at a Board level, it is important to discuss and review whether or not this process does ensure that the best candidates are appointed. Such a review of the appointment process is not about casting aspersions on the structures involved but a genuine attempt to analyse if the system can meet the desired

16 outcomes. It must also be highlighted that given the role of political parties in the appointment process via Parliament, the process does not ensure that it is free from party-political influences. In reviewing the appointment processes, the role and functions of the Board must also be looked at to ensure that this process best assists in fulfilling these – and to consider how those appointed are held to account.

There are many ways to ensure public participation and/or openness in appointment of boards. These include:

The Portfolio Committee of Parliament could appoint a panel of experts who undertake a systematic analysis of the leadership needs of the Corporation, draw up the criteria for appointment, advertise, interview and recommend to Parliament. Parliament would then consider the report and advise the President accordingly. Government could appoint a panel of experts to undertake the tasks identified above. Names could be submitted to Parliament for confirmation.

Commercial Broadcasting

The licensing framework for different services is aimed at promoting fair competition while ensuring diversity of ownership and content. As highlighted, though it is privately owned and funded, the policy and legislative framework emphasise that commercial radio and television services also have to meet defined public interest objectives, such as airing South African music and television content.

The framework currently provides for increased public content requirements for commercial free-to-air services and lighter touch regulatory approaches for subscription services. For example, free-to-air radio and television services all have requirements relating to provision of news and information programming, whereas subscription services are not obligated to provide these. South African content requirements also vary depending on whether a service is free-to-air or subscription (Note that South African content in general is considered in more detail below).

It is important in a policy review process to examine each of the commercial broadcasting sectors separately, as well as consider how they impact on each other. The possible impact of convergence and digitisation in future must also be considered.

Commercial Television There is one privately owned national terrestrial free-to-air television broadcaster licensed currently (e.tv). E.tv (like SABC) will have the capacity to air more channels with the migration to DTT. ICASA has also indicated that it will be considering when to licence new terrestrial FTA private players after the digital migration process has commenced. Two new satellite FTA services were launched in 2013 (OpenView and FreeVision).

E.tv was licensed through a competitive licensing bid – and therefore is bound by promises of performance made during its application which are often more stringent than minimum requirements set for commercial FTA television services. It thus, for example, has to air a minimum of 45% South African content rather than the minimum regulatory requirement of 35%. The channel first broke even in 2004 – five years after its launch. It is now the third largest service in terms of audience (with a viewership of close to 69% of adult South Africans).

As noted previously, the introduction of DTT will increase the potential number of channels on air operated by both either existing and/or new licensees - and therefore potentially the capacity to meet key public interest programming objectives. At the same time though, the increase in the number of channels will result in an increase in

17 competition for audiences, advertising revenues, sponsorships and programming. This competition, in the absence of the corresponding growth in advertising revenues, will limit investments in South African content production by free-to-air broadcasters. At the same time these broadcasters will be facing increased competition from content services that are currently not regulated as broadcasters.

Television Services

Subscription television services have shown extremely strong growth in audiences in recent years. This has been driven by an increase in subscribers to DSTV rather than increased competition in the sector. There were three subscription television services on air by October 2013 – satellite subscription services, DSTV, and terrestrial pay TV operator M-Net – both part of Nasionale Pers’ MultiChoice – and new player TopTV/StarSat. As noted in other sections, TopTV/StarSat is the only one of five additional subscription services licensed by ICASA in 2009 to go on air. It has faced challenges – and was placed under business rescue in 2012. An application by the Chinese-owned Star Times to buy shares in the broadcaster was still under consideration by ICASA at the time of finalising this report. ICASA has recently invited applications for new subscription services and was considering these applications at the time of finalising this Green Paper.

The growth of DSTV (in terms of number of subscribers and therefore both subscription revenue and its share of adspend) is linked to its strategy to increase penetration by offering a range of different and cheaper bouquets targeting different sections of the population. DSTV’s viewership has increased from 2% of the adult population in 1998 (420 000) to 28% in 2012 (9,9 million viewers). DSTV has also in recent years increased the number of South African channels it airs (including with the introduction of a range of Mzansi channels) – thus contributing towards the public interest objective of ensuring that South African audiences have access to South African content across all platforms. This increase has been driven by commercial imperatives rather than regulatory requirements. The four FTA channels (SABC 1, 2, 3 and e.tv) which are simulcast by DSTV however are among the most popular services on the platform.

Subscriptions to M-Net have however declined over the period from 16% of the adult population in 1998 (4,1 million viewers) to under 10% in 2012 (2,41 million). The pay-tv service has stated that this is in part due to delays in the launch of DTT as it stopped marketing the sale of analogue set top boxes pending the launch. M- Net is one of the key channel providers to DSTV. It will be able to offer an increased number of channels to subscribers with the migration to digital transmission.

Given the dramatic changes in the pay-TV market since the development of the White Paper, it may be necessary to review many of the policy and legislative provisions that currently apply to these services. In the 2013 Parliamentary hearings on amendments to existing laws, for example, other licensees suggested that subscription services access to advertising should be further limited as they claimed this threatened the viability of the FTA services. Parliament indicated that such issues should rather be discussed through a holistic review of broadcasting related policies. The existing White Paper recognises that commercial free-to-air broadcasters rely almost entirely on advertising and sponsorship revenue to meet key public interest objectives. It therefore stipulated that subscription services should rely primarily on subscription fees and that free-to-air services must have access to “revenues that are sufficient to allow them to meet their public service obligations”. Given the number of subscribers to DSTV and M-Net at the time, it was believed that this would sufficiently limit such services access to advertising.

18 The situation has however changed and the overall subscription revenue now exceeds that of overall television advertising revenue.

It has also been suggested by some stakeholders that, if subscription broadcasters compete directly with FTA services for advertising revenue, the light touch regulatory approach to such services should be reviewed. Subscription broadcasters have however argued that the real threat to fair competition in the broadcasting sector is from internet and other unlicensed content providers (including international providers). It should also be noted that subscription broadcasters in many jurisdictions are considered as a separate market from FTA television in terms of competition provisions – as they are seen as complementary rather than substitutions for services which generally bear greater responsibilities in meeting identified public interest objectives.

Commercial Radio Commercial radio broadcasters do not face the same immediate challenges in relation to digitisation as television services – though there are an increasing number of South African internet radio stations and international and local music streaming providers.

As commercial radio broadcasters are licensed to cover different licence areas, and/or to provide different formats and services, the current licensing framework is aimed at ensuring that services do not directly compete with each other. These measures are further aimed at promoting diversity of services and content available to audiences.

There are though a number of other questions which need to be considered in this policy review process. The current White Paper envisaged commercial radio services being licensed across the country. While there are now services available outside of the urban areas of Johannesburg/Pretoria, Cape Town and Durban (including in Mpumalanga, Polokwane and North West, for example), and new licence applications being considered in the Eastern Cape, the viability of these stations in these secondary towns needs to be carefully evaluated. More critically, while ICASA has twice issued invitations to apply for a commercial radio service in the Northern Cape, no entities have submitted any proposals. Private commercial radio stations are all licensed to cover relatively limited areas (towns or regions) and, apart from SABC public commercial services, there are no national private radio stations. This is in part limited by spectrum availability.

The White Paper on Broadcasting also emphasised the need for commercial radio licensing processes to prioritise services in languages other than English and Afrikaans. Commercial radio stations are however still broadcasting predominantly in English (with some also including Afrikaans and others, such as Igagasi, in KwaZulu-Natal also broadcasting in isiZulu).

Community Broadcasting

As highlighted in Chapter 3, the community broadcasting sector has grown since the adoption of the 1998 White Paper. The number of community radio licences on air has almost tripled and community television is now a small but vibrant sector. The sector though still faces many similar challenges experienced prior to the adoption of the policy framework – including, for example, issues relating to sustainability and viability. These inevitably affect the sectors capacity to meet envisaged public interest objectives.

The current White Paper outlines the vision for the community broadcasting sector as a whole and states that it “must provide a distinct broadcasting service dealing specifically with community issues which are not normally dealt with by other broadcasting services covering the area in question. It will focus on the provision of programmes that highlight

19 grass-root community issues, including developmental issues, health care, basic information and general education, environmental affairs, local interest matters and the reflection of local culture”. It is a non-profit sector in terms of law, and stations and channels have to involve their targeted communities in the governance and operations of services.

Early challenges faced by the sector as a whole, and community radio in particular, of slow and cumbersome licensing processes have been addressed by the introduction of the EC Act. Community broadcasters are under this Act classified as class licensees – and thus subject to a far simpler registration process than the previous licensing process. While addressing some of the initial problems faced however, this has also introduced new challenges. The sections of the EC Act dealing with class licensing, althought ensures quick turnaround times for decisions on registration (60 days), however may limit the ability of the regulator to scrutinise applications to ensure they meet all the envisaged objectives and requirements for the sector. ICASA, for example, is not specifically empowered in terms of the Act to refuse an application if it has, for example, not met requirements relating to community participation set out in Section 50 of the EC Act. The Act further does not empower the Authority to suspend, revoke or refuse to renew a class licence – even if the licensee has for example repeatedly violated legislative, regulatory or licensing requirements.

Community Radio The history of community radio in South Africa is perhaps best characterised as one of resilience. Many media analysts were sceptical that stations would survive when the first licences were granted in 1994 – suggesting that too many licences were being granted. However, despite numerous setbacks (including delays in licensing and funding and capacity challenges), the sector has come a long way since several stations first went on air illegally in 1993 to pressurise the then apartheid government to open up the airwaves. As of April 2013, there were according to ICASA 207 licensed community radio stations and as highlighted in other sections, total listenership for the sector has grown from about 16% of adults in 2005 to 25% (a quarter of all adults) in June 2013 (AMPS).

One of the major challenges identified by government in the White Paper, was a then unequal development of community radio – and the paper emphasises the need for the regulator and Department of Communications to develop a planned roll out strategy to ensure that communities in need are specifically targeted. The policy further recognises the need for government to provide financial and other support to facilitate the realisation of this vision. It emphasises the need for government to act as a “catalyst” to assist the sector to fulfil its mission and ensure access by all South Africans (not only those in advantaged areas) to community broadcasting services. In line with this, the Department of Communications initiated a community radio support programme in 1999 – providing financial and other support to stations for programming, signal distribution and infrastructure. Government in 2002 took its commitment to supporting community media further – establishing as a public private partnership the Media Development and Diversity Agency (MDDA).

Much has changed in this regard since the publication of the White Paper more than 12 years ago – seeming evidence of the success of both the Department of Communications programmes, the MDDA support to the sector and the policy’s focus on disadvantaged areas. Whereas at the time of finalising the paper, most stations on air were either community of interest stations (for example religious or boere Afrikaner) or based in urban areas and many broadcast in English, the number of stations broadcasting in disadvantaged and rural communities has grown along with the listenership levels.

20 Community Television There are now six community television services on air centred around the major cities of South Africa. These services broadcast local news, religious programming, community and international content. All of the community television services are also transmitted to a national audience via the DSTV platform. DTT policies and regulations have set aside capacity for community television channels (on Multiplex 1). The funding mix of the community stations includes advertising, donations and sponsorships.

Technically, the community broadcasting services are not in competition with the other sectors of the television market as they are aimed at addressing very specific local needs. Their availability on the satellite platform though implies national coverage and they are consequently in competition and are affected by developments in the subscription and free-to-air markets.

The greatest challenge facing the development of community television is funding. Funding constraints operate at two levels. It limits the number of communities that can launch their own services to those with access to donors or other resources, and is an ongoing challenge for those that are licensed. Television by its very nature is resource dependent. The cost to distribute channels in the digital terrestrial environment will also play a fundamental role in the future developments as the distribution costs together with programme costs consume most of the operational budgets.

Fair Competition

Promotion of fair competition is a critical to ensuring the viability of the broadcasting system as a whole, including the commercial broadcasting sector. Several stakeholders in their submissions to the Framing Paper highlighted a need to review current provisions and mechanisms aimed at reinforcing fair competition to both address challenges that may have been faced in meeting the objectives and to ensure that current provisions are updated in line with new challenges given the new converged multi-channel environment.

In terms of the current policy framework, ICASA and the competition authorities have complementary roles to play in ensuring fair competition in the electronic communications and broadcasting sectors. The EC Act further clarified the regulator’s role in relation to this and set out the processes that should be followed by ICASA in dealing with competition related matters it is responsible for. The regulator has held one specifically broadcasting linked competition inquiry in terms of the Act – an inquiry into broadcasting transmission.

In other countries, general competition rules are increasingly used in relation to broadcasting/audio visual services in light of convergence and digitisation. This is in part due to a recognition that broadcasting content can (or will in the future) be carried over telecommunications and other unregulated networks and thus that competition in content distribution is not only between services licensed by a sector specific regulator. It is recognised that there may be media related anti-competitive practices that escape traditional sector specific regulation which are better dealt with therefore by competition law.

In Europe specifically, the European Union has developed rules on state aid to ensure that public funds for public organisations (including public broadcasters and national broadcasting transmission companies) do not interfere with the principle of fair competition. The rules essentially stipulate that all public content providers must have clear and specific public remits and that state aid must not exceed the net costs of this public service mission. A number of other issues relating to fair competition in the television sector are also important to consider in a policy review process.

21 The issue of access to premium content is one such issue that has been considered in a number of countries. Access to premium content such as sports or movies is crucial to the success of platforms such as free-to-air, subscription and mobile television. Competition issues may occur when buyers acquire exclusive rights to such premium content that effectively lock out competition. Given convergence, there is also the potential for rights bundling across platforms (one operator bundles rights across subscription television or internet protocol television—IPTV—or mobile). Ultimately, this may deprive audiences of choice and quality. The way rights are bundled and the period of such exclusivity are often ways that these issues are addressed by regulatory authorities (both sector specific ones and/or competition bodies.

At the same time however it must be recognised that the sale of distribution rights on an exclusive basis can result in higher prices for rights holders, which in turn can support industry development in sport and content development generally.

Other countries have also considered a range of other interventions in order to promote fair competition in the broadcasting television sector. These include measures to make it easier and more affordable for consumers to switch between services, such as interoperability of equipment. Other issues considered include bottlenecks/gateways that negatively impact on providers’ access to audiences (including conditional access systems, the Applications Programme Interface, audience management systems and Electronic Programme Guides).

South African Music and Audio-Visual Content

The 1998 White Paper on Broadcasting recognises that “broadcasting plays an integral role in developing and reflecting a South African identity, its character and cultural diversity within the framework of national unity”. It focuses on television content across a broad range of genres and formats and on promotion of South African music on radio.

The White Paper states that South African content regulation and policy must serve both the following cultural and economic objectives:

A “deliberate policy” must ensure that South African broadcasters reflect in their programming distinctly South African experiences and artistic expressions; and Policies must further facilitate the growth of South African cultural industries and employment opportunities for cultural producers and creative artists. The White Paper outlines the following key interventions to achieve these objectives: Radio Television broadcasters must provide a mix of their own productions and of programs produced by independent South African producers. South African music will be prioritised in the South African broadcasting system. Local independent production industries must have sufficient resources to be able to provide content competitive with the international products available.

ICASA has in line with this developed regulations setting out minimum requirements for each sector (public, community and FTA and subscription commercial broadcasters). It has indicated that it is currently reviewing requirements. Radio and television stations must commit sufficient resources to schedule appropriate amounts of local content at times when citizens can see or hear them. They must not only meet local content obligations but also make all efforts to ensure that South African content is of a quality that will draw listeners and viewers.

Television

Minimum requirements for television services set by ICASA are summarised in the table below.

22

Table 8: Minimun Requirements for Television Services

Public Community Commercial Terrestrial Satellite FTA TV Subscription subscription Minimum weekly 55% 55% 35% 10% 10% of average measured channel over a year acquisition budget must be spent on channels with South African content Drama 55% Not specified 20% 2% of the SA - content must be drama Children’s 55% Not specified 25% - - programming Documentary 50% Not specified 30% - - Informal 50% Not specified 30% - - knowledge building Current affairs 80% Not specified 50% - - Education 60% - - - -

At least 40% of the South African content must be commissioned from independent producers. ICASA has stated that broadcasters generally comply with the provisions – though it should be noted that some stakeholders have raised questions about whether or not its monitoring of broadcasters is effective at ensuring compliance. It is evident however that audience demand for South African drama and other content has resulted in broadcasters focusing on these genres in order to attract viewers and/or subscribers. This has resulted in services such as DSTV recently increasing the number of local channels available – exceeding the requirement set for them.

The requirements for terrestrial television were developed mostly for analogue services and the approach will need to be reviewed given the multi-channel environment.

A range of other government initiatives have also focused on promoting the film and television production industries. The Department of Trade and Industry, for example, has for example developed a range of incentives to support production and the National Film and Video Foundation (NFVF) has been established under the Department of Arts and Culture to promote and support the local industry.

According to research published by both DTI and the NFVF, the film and television production industries have contributed to economic growth in the country. The Department of Trade and Industry (DTI) in its latest Industrial Policy Action Plan (IPAP) 2013-2016 strategic plan states that the film industry contributed R8bn to the economy between 2008 and 2012. This is a total and includes international movies made in South Africa and local productions. It states that the television industry in particular has performed strongly since 2008/2009 – growing by 13,4% from R20,326bn to R23,051bn.

A 2013 study by the NFVF states that the film and television industries together have created over 25 000 full-time equivalent jobs and contributed over R650 million to the fiscus. It should be noted though that the independent production industry was particularly hard hit

23 by the 2009 SABC financial crisis and a number of tv focused companies closed down as a result of this as they were predominantly reliant on the public broadcaster.

Radio

In terms of radio, the regulations state that public and community radio stations must air at least 40% South African music and commercial radio stations at least 25%. As noted in other sections, many commercial broadcasters actual licence conditions exceed these minimum requirements as they are bound to promises of performance made during a competitive licence bid.

A 2011 report from the Copyright Review Commission appointed by the Minister of Trade and industry made a number of recommendations on issues relating to the music industry, including suggestions on the regulatory framework for radio broadcasters. Among other things the Commission recommended that:

Definitions for South African music in the EC Act be amended to ensure that a song must have been composed or written by a South African citizen to qualify as local content. An exception should be included for classical music allowing it to qualify if performed by South African musicians and recorded in the country.

The regulatory quotas for music content be increased: To 80% for public and community radio From 25% to 50% for commercial radio stations over a five year period – with a 5% increase introduced every year. Music quotas should be extended to television services as well. While considering the effectiveness of existing provisions, it is also crucial to look at how a policy framework can ensure continued and enhanced availability of South African content in a multi-channel and convergent environment.

Diversity of Content

One of the cornerstones of South Africa’s broadcasting related policies is diversity of content; different types of content in different languages, from different sources, at a national, provincial and local level. The policy framework emphasises and encourages this through, amongst other things, the three tier system, South African content and music requirements and the emphasis on news and information programming. Diversity of ownership, content offering and service are critical considerations in decisions on licensing.

The ECA states that broadcasting services collectively should “promote the provision and development of a diverse range of sound and television broadcasting services” to meet the needs of all audiences.

Digitisation and convergence create more opportunities to further the principle of diversity – audiences will be able to access a wide range of content, across different platforms and channels packaged by South African and international traditional broadcasters as well as audio-visual and audio material generated by users and other content providers. Audiences will have increased opportunities to choose when, how, where and what content they view and listen to. The audio-visual industry will at the same time be able to explore new services and innovative ways to reach audiences. New technologies also are increasingly reshaping the relationship between audiences and content providers – enabling suppliers to get to know their audiences better and match content more closely to their needs. A much more engaged and intense relationship with audiences is possible.

24 Experiences in other countries have, however, shown that this abundance of content distributed over a range of platforms can threaten, for example, the development and distribution of unique programming and the cultural and linguistic diversity of content. Threats to the viability of South African broadcasters and audio and audio-visual content producers can result, for example, in an emphasis on “tried and tested” entertainment formats that appeal to a mass audience, rather than promote innovation and creativity and an emphasis on local issues. The proliferation of 24 hour news services around the world, for example, has it been charged with increased homogeneity rather than diversity – with different news providers focusing on the same stories and using the same images and audio clips, rather than actually increasing the range of sources and perspectives available to audiences.

Content providers (both traditional broadcasters and others) may also feel increased pressure to appeal to broader audiences and therefore not focus on reflecting and celebrating local cultural diversity and covering issues of local importance in local dialects and languages. Alternative voices moreover might be drowned out by big global companies. There are a number of ways that a policy framework can address these issues. These include:

The promotion of media literacy to equip all audiences with the skills to navigate this range of platforms; The development of mechanisms to support and encourage innovation and investment in the production and distribution of quality, original and culturally diverse content in all languages; Introduction of steps to ensure wide and easy access to original content for all audiences across all platforms; Introducing requirements and incentives to ensure that content providers, including broadcasters, cover local and regional news from across South Africa and have the resources to produce their own news and information programming.

Promoting Access to Public Interest Content in a Converged Environment

The importance of ensuring easy access across all platforms and devices to public interest content becomes increasingly important in a converged environment. This will be a key means to ensure that South African audiences continue to be able to access content that is relevant to them and meets the key cultural, social, linguistic and economic needs identified in the policy objectives.

Policies that focus on these issues are aimed at ensuring prominence of public interest content across all platforms. They include, for example, obligations requiring subscription broadcasters to carry public broadcasting content services, rules on positioning of public interest broadcasters on any electronic programme guides (EPGs) and rules to ensure that key sporting events are aired free to air.

What are called “must carry” rules requiring, for example, subscription broadcasters to re- transmit public broadcasting services, are prevalent in a number of countries and are aimed at ensuring that audiences have easy access to public interest content. They are intended to ensure that audiences do not have to switch platforms to access such content. Rules have also been set in some countries to ensure that public broadcasting or free-to-air channels are featured prominently on any electronic programming guides (sometimes referred to as” must-be-found” requirements) – and are thus easy for audiences to find.

The EC Act states that ICASA must develop regulations to ensure that subscription broadcasters must carry “subject to commercially negotiable terms, the television programmes provided by a public broadcast service licensee”. The regulator finalised must carry rules for the analogue environment in 2008. There is a need to reflect on whether or

25 not the legislative requirements on must carry have had the intended effects in South Africa and have achieved the underlying objectives for these requirements. In developing a new policy framework, it is also important to consider whether or not such provisions will remain relevant in a new converged environment.

The 1998 White Paper and related legislation have also put in place mechanisms to ensure that national sporting events are aired free to air and not only over subscription services. The policy framework highlights that a list of national sporting events should be developed in consultation with the Minister of Sport and the law states that pay-tv broadcasters may not acquire exclusive rights that stop the free-to-air broadcasting of such national events. ICASA has developed regulations to implement these provisions.

In some countries such stipulations also extend to other types of programming – for example to major cultural events in Australia. Laws and policies need to balance the need to ensure key events are aired free to air, while recognising that rights to, for example, certain sporting events, are critical to the viability of the subscription broadcasting model.

Content Standards and Protection of Children

There is currently a co-regulatory approach to the development and enforcement of South African broadcasting content standards. The EC Act requires ICASA to develop a Code of Conduct for broadcasters through a public process and stipulates that all broadcast licensees must adhere to this unless they are “a member of a body which has proved to the satisfaction of the Authority that its members subscribe and adhere to a code of conduct enforced by that body”. Such a self-regulatory code and the mechanisms to enforce compliance to it have to be approved by ICASA in terms of the law. Section 55 stipulates that advertising falls under the Code determined by the Advertising Standards Authority of South Africa.

Complaints regarding alleged breaches about the ICASA Code are adjudicated by its Complaints and Compliance Committee (CCC) – which also is responsible for deciding on complaints about breaches of licence conditions. Broadcasters have established their own self-regulatory body in line with the above provisions of the Act and the Broadcasting Complaints Commission of South Africa (BCCSA) was recognised by the then IBA in 1995.

The Codes developed by both ICASA and the BCCSA are very similar. Both focus on protection of children and providing viewers and listeners with sufficient information about programme content to make decisions about what to watch or listen to through advisories (information prior to and during a programme alerting audiences to either age restrictions on television content, or if content may be offensive to some). They also both set a watershed period (from 9pm to 5am for FTA broadcasters and 8pm to 5am for pay operators) during which ‘adult’ programming can be aired. Such programmes (including violence and sexually explicit material) cannot be aired outside of the watershed when children are most likely to form part of the audience.

ICASA has furthermore recognised that new technologies allow for new ways to protect children from unsuitable or harmful content. Parents can, for example, set up family filters on STBs to restrict access to certain channels. At the same time, though, such technologies such as PVR will result in the watershed becoming less and less effective.

Content delivered over other platforms is currently regulated via a range of different bodies in line with the Film and Publications Act. The table below highlights some of these:

26 Table 9: Content Regulating Bodies

Institution Media/content Legal basis Regulatory Sanctions regulated approach Film and Film/cinema, Statutory Prior Set out in law Publications publications not institution classification Board regulated by Press established under and labelling Ombudsman, the Film and of films, games, videos, Publications Act videos, video-on-demand, games, and internet, mobile certain content etc publications Advertising Advertising and Self-regulatory but No pre- Order withdrawal of Standards sponsorship content officially classification. advert or promotion Authority of across all mediums recognised in the Advertisers, either permanently or South Africa Electronic marketers, until changes made. Communications broadcasters Results in significant Act. All etc have to loss of money due to broadcasting comply with costs of advertising. licensees have to Code of adhere to Conduct requirements on advertising in terms of the law. Internet Content Self-regulatory but Code of Range of sanctions Service accessed/available officially conduct to provided for including Providers through Internet recognised as an protect reprimands, fines, Association Service Providers Industry children and orders to take down Recognised Body ensure fair content, and expulsion by the Minister of business from ISPA. Expulsion Communications practice results in the service in terms of the Processes in provider being held Electronic place to directly liable for Communications ensure illegal content accessed via and Transactions content is its services in terms of Act taken down the Electronic (take down Communications and notices) Transactions Act Wireless Providers that Self-regulatory Code of Range of sanctions, Application distribute and/or Conduct including warnings, Service develop applications developed to reprimands, fines and Providers and content for protect suspension/expulsion Association mobile industry children, and from organisation, force ensure fair the immediate “take terms of down” of certain access. content/applications. Works closely with mobile industry and media organisations to implement its rulings.

Convergence raises a number of new issues in relation to ensuring audience expectations regarding classification of audio-visual content and protection of children.

These include:

The need to consider how to create awareness of Codes and how to protect children using technologies available; and

27 Challenges in ensuring that such content delivered over the internet meets audience expectations and constitutional standards, given, for example, that it might be uplinked by international content providers not subject to South African codes. In this regard, it is important to note that audience expectations of content delivered over different mediums might be different but that technological changes will make it possible for, for example, internet content to be viewed on television screens via internet enabled devices.

Given the volume of content that will be available over different platforms and channels, many countries around the world are considering ways to strengthen self-regulatory and co- regulatory arrangements. There is also an increased focus on media literacy to equip audiences and parents with information on tools available to protect, in particular, children from accessing harmful content. The focus of such interventions is primarily on:

Making it easier for the public to make informed choices about what they and their families watch, listen to and access; Developing common approaches to classification and labelling to ensure greater public awareness of the systems in place; Sharing resources and developing more effective education and awareness programmes; and Streamlining the process of lodging complaints making it easier for members of the public to complain about inappropriate or harmful content across the different mediums and platforms.

Inconsistent treatment of content can be confusing for those accessing the services and for those that provide services. It can also raise competition and parity issues, where, for example, some content providers are forced to fund the costs associated with regulation while competitors might not have similar costs.

Signal Distribution

The 1998 White Paper sets out specific objectives for broadcasting signal distribution. These include:

The need to ensure access to signal distribution services and facilities including access by content providers to distribution facilities, and by viewers to content; Signal distribution must be flexible and a scheme for tariff regulation should be developed; Signal distribution systems should be open and interoperable; and The need to strategically position the signal distribution sector for the multimedia future.

It states that, in light of this, Sentech should be licensed as a common carrier. The EC Act in line with this stipulates that any ECNS licensee providing broadcasting signal distribution or multi-channel distribution services must, among other things:

Give priority to carrying South African broadcasting channels; Provide universal access for all South Africans to broadcasting services; Be open and interoperable; and That a common carrier must provide transmission to broadcasting licensees at their request on an “equitable, reasonable, non-preferential and non-discriminatory basis” and must in determining its tariffs take into account, among other things, the different categories of broadcasting service licences.

28 While there are specific requirements in legislation for broadcasting transmission services, broadcasting signal distributors are also governed by electronic communications facilities provisions set out in sections 43-47 of the EC Act. These sections state that ECNS licensees must, on request lease facilities to other licensees “unless such request is unreasonable”. Leasing agreements must be “non-discriminatory ….and not be of a lower technical standard and quality than the technical standard and quality provided by such (ECNS) licensee to itself or to an affiliate”.

ICASA initiated a competition inquiry into the broadcasting signal distribution market in 2010 and has stated that it will be further looking in to tariff regulation of Sentech. Broadcasting services are allowed to self-provide signal distribution on obtaining an ECNS licence. Many community radio stations have opted to self-provide their signals on this basis.

Intellectual Property

The broadcasting sector is a major developer of content and South African intellectual property (IP) rights and law applies. Content generation is set to expand in the future with the migration to digital and with increased data storage and distribution across the Internet. In fact, content and intellectual property related to that content is and will be a continued source of income generation in the future. The sector needs to encourage this development and grow and support content generation and the expansion of this industry. However, the challenges related to enforcement of intellectual property (IP) rights and copyright will increase, especially as property pirating and infringement becomes more sophisticated globally.

Control of IP should however not restrict access to and sharing of content and as such policies should balance the need for content creators to realise the value of their work while not unfairly limiting access to content.

There is further a need to consider whether or not the framework in place for rights clearance is sufficiently simple to ensure audiences have easy access to broadcasters’ online services or distribution of content on different platforms. Increasing the amount of content easily available legally undoubtedly assists in combating piracy.

While legislation relating to IP falls under the Department of Trade & Industry (DTI), the issue of copyright in relation to the broadcasting sector is important to any overarching policy framework. Other related issues include the need to, protect subscription broadcasters from piracy of signals.

Universal Access

Universal access is dealt with comprehensively in other chapters of this Green Paper (chapter 9) and this section will not repeat issues that are dealt with there. There is however a need to recognise the specific needs relating to access to diverse content and the different approaches that have guided broadcasting policies dealing with this.

The SABC is the only broadcaster specifically charged with the responsibility of ensuring universal reach and has to “make its services available throughout the Republic” and provide services in all official languages. It is required therefore to make sure its public television channels are required in their licences to “cover the Republic”. As a national television broadcaster, e.tv’s licence also includes provisions on reach (requiring it to ensure its signal is received by at least 77% of the population). Community broadcasters by their very nature are limited to coverage of a specific community in order to ensure they meet the specific

29 needs of that community, and commercial radio stations are generally city-wide or regional so that audiences can have access to a range of content (including music).

Universal access in broadcasting policies thus refers to the availability of services to all citizens (reach) but also extends this notion to including access to a range of information and other programming in a diverse range of languages.

The transmission network for broadcasting services has in recent years continued to expand into areas previously uncovered by signals. The SABC and Sentech, for example, have over the past few years extended the reach of television services by increasing the transmitter network and the network now covers over 90% of the population in 2012 compared to 60% in 1998. The figures are however inevitably always shifting as people move and migrate affecting the population reach of services. Sentech has stated that that in 2013, 14,7% of the population does not have access to analogue television signals. With the migration to DTT, policies have emphasised again the need to ensure universal access to digital terrestrial television. The policy has set targets for this, and has provided for complementary satellite transmission of broadcasting services to ensure that remote communities are also covered. Policies have put in place measures to ensure that all TV households will have the means to acquire set top boxes (such as subsidy schemes)to enable them to access DTT services.

In relation to radio, frequency limitations have inhibited all public radio services from broadcasting across the country. SABC’s licence conditions therefore focus on reaching people who speak the principle language of each radio station. Again there has been significant progress though migration of people has also affected this. SAFM (English), Radio Sonder Grense (Afrikaans) and Radio 2000 have the largest footprints with other language stations generally covering several provinces rather than having national coverage. According to Sentech, 12,3% of the population still do not have access to radio services. It becomes increasingly expensive to expand the reach given that those still not covered generally live in sparsely populated areas.

All SABC radio stations do stream over the internet, but limited access to broadband has not resulted in meaningful extension of these services to all parts of the country. The launch of DTT will assist in overcoming spectrum limitations as all public radio stations will be aired over the multiplex and thus will be available in the home though not, for example, on car radios or other mobile radio sets.

The new policy needs to consider ways to address the challenges that have been faced in the past, while also recognising the need to ensure a new digital divide does not develop. It needs to also look at how to promote affordable universal access to devices, networks and platforms.

Conclusion

This chapter focuses essentially on asking questions on how the policy framework can ensure audiences can reap the full benefits of convergence and have ongoing access to public interest content. The focus is on how best a policy framework can ensure that in a multi-channel, multi-platform environment can ensure that the key policy objectives are met. The list of issues identified above is not necessarily exhaustive. Stakeholders are encouraged to identify other issues that the policy framework should address.

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