1. Impact of New Technologies October 2014 1

2. We are seeing the start of an OTT world  OTT - Delivery of video content over IP, typically on open networks, onto open devices 2

3. Impact of OTT  OTT changing the face of TV  IMS Research forecasts that 5.9 billion pay-OTT transactions (pay-per-view and subscription) will be initiated via fixed in-home devices in 2016, up from an estimated 563 million pay-OTT transactions in 2011 3

4. Existing Challenges  FTA broadcasters are currently facing range of competitive challenges:  Dominance of DStv  Audience drift from free-to-air channels to pay  Pressure on revenues  Struggling to get viable FTA multi-channel platform up and running  New competitors entering the TV market  Growing pressure on rights availability and cost  These challenges will be exacerbated as broadband penetration grows and TV viewers access more and more content on an on-demand basis 4

5. Importance of FTA  Why is it important that FTA TV exists?  National policy carves out a special role for FTA  FTA broadcasts free-of-charge to the consumer, thereby ensuring that both rich and poor have access to a diversity of news, views and information  FTA broadcasters must broadcast a range of public interest programming, much of which is not profitable and similar obligations are not imposed on pay TV broadcasters  FTA broadcasting is critical in a country with a developmental agenda that is highly dependent on access to information and bridging the digital divide  A vibrant and viable FTA television broadcasting sector is critical 5

6. 6 Explosion of OTT services

7. 7 Impact on TV

8. 8 Growing Impact on Linear TV

9. 9 Source: Ericsson Mobile Broadband – the Future?

10. Growth of mobile devices

11. Mobile broadband costs

12. Prioritising mobile delivery

13. 13 Relevance for developing markets

14. SA market developments  Broadband access steadily improving  On demand services increasingly being offered by existing broadcasters  Variety of new players (who do not hold broadcasting licences) announcing plans for VoD 14

15. Implications for broadcasting policy  For broadcasting policy:  On demand / OTT gives opportunity to improve competition in the broadcasting market  But policy makers need to ensure FTA broadcasters don’t enter this space on a weak footing  Weak FTA = weak public service delivery = greater digital divide 15

16. Priorities for broadcasting policy 1.Ensure fair competition now, in current broadcasting space (legislative amendments needed) 2.Ensure fair spectrum policy which takes into account terrestrial broadcasting needs and broadcaster access to new LTE networks 3.Ensure net neutrality and fair competition for network operators in their treatment of content service providers 16