1. The Convergence Bill Submissions by the SABC
Parliamentary Portfolio Committee on Communications
10 June 2005

2. Members of the Panel Solly Mokoetle Acting GCEO
Justine White Attorney, Mukwevho Mkhabela Adekeye Inc
Ihron Rensburg CE: Strategic Corporate Services
Sharoda Rapeti MD: Technology
Lara Kantor GM: Policy and Regulatory Affairs

3. Contents Key Issues Definitions and Market Structure
Role of Minister and ICASA
Legislative Provisions on Broadcasting
Licensing
Ownership
Subscription Broadcasting
Contributions to the Universal Service Fund
Conclusion

4. Key Issues

5. Key Issues
Convergence is the coming together of the broadcasting, signal distribution, telecommunications and computing/ IT sectors
Convergence requires the harmonisation of regulation of different sectors:
Infrastructure
Services
Content
The Convergence Bill, which seeks to harmonise the regulatory approach to these sectors, is therefore a much welcomed development
The SABC congratulates the Minister and the Department of Communications for drafting and tabling the Convergence Bill

6. Key Issues
SABC is also thankful to the portfolio committee for the opportunity to address it on the Convergence Bill
The SABC believes the Bill goes a long way to creating a solid legislative and regulatory framework, within which convergence can take place
We also welcome the work which has been done in eliminating duplication in different pieces of legislation, e.g. between the IBA Act and the Broadcasting Act
We are supportive of the further amendment of the Broadcasting Act so that this becomes in effect an “SABC Act”
We believe there is the need for further review of the Broadcasting Act and we will be proposing necessary amendments in due course

7. Key Issues
The SABC has made detailed written comments which we have supplemented with additional written comments, submitted today
In today’s presentation we will not revisit all the concerns dealt with in our written submissions but will focus only on a few key areas
Initially though, it is important to consider how a converged environment may impact on the public broadcaster

8. Key Issues
The SABC is building a unique model of PBS in order to meet the national challenges of promoting nation building and diversity, building democracy and restoring human dignity
This emerging model sees the traditional PBS ethos being rooted in a distinctly South African and African character
This model requires that a South African PBS play both transformational and developmental roles, build social cohesion and seek to promote dialogue and discussion among South Africans

9. Key Issues
This model requires the public broadcaster to ensure large audience share, on both traditional and new platforms, so that it can achieve national goals and build social value
In this context, convergence undoubtedly offers the potential for enhanced mandate delivery with the potential for additional services carrying PBS content to audiences
However, this delivery would be undermined if convergence legislation created a situation where public interest delivery was restricted only to the SABC

10. Key Issues
Currently, in line with national policy, all broadcasters including the commercial sector, must make public interest contributions such as local content delivery, news, regional diversity etc
However Chapter 9 of the Convergence Bill gives no indication to ICASA as to the social goals of the commercial and community broadcasting sectors and how these are to be regulated
The Convergence Bill also links the setting of licence conditions for all operators to “significant market power”. This concept may be appropriate in the telecomms environment, but it would undermine the broadcasting sector

11. Key Issues
It would mean that ICASA could not set licence conditions requiring language delivery, regional diversity etc on the many dozens of community and commercial broadcasters who do not have “significant market power” and who currently make such contributions
The setting of licence conditions is a critical mechanism of ensuring that social goals are met across the broadcasting sector
SABC believes the Convergence Bill should be amended to ensure that all tiers of broadcasters, including commercial and subscription broadcasters, make a contribution to social goals, in line with national policy
We will later address these issues in more detail

12. Key Issues
A second area where there is the potential to undermine the public broadcaster’s position in a converged environment is through a restriction on its revenue
In this regard, the SABC was very concerned to note that the Convergence Bill proposes the repeal of section 27 of the Broadcasting Act
Section 27 of the Broadcasting Act is the section which states that people in possession of TV sets must have TV licences

13. Key Issues
The repeal of this section would undermine the SABC’s financial viability, as it would mean the SABC would be unable to raise TV licence revenues
In this way the Convergence Bill would be restricting the SABC’s access to public revenue, in the face of calls for increased public funding of the SABC. This is anomalous
Currently, television licence fees contribute approximately R500m to the SABC’s annual revenue. This revenue is utilised entirely for public broadcasting in areas such as local drama, news, children’s programming and education

14. Key Issues
Clearly the SABC’s viability and ability to deliver on public mandate programming would be placed in jeopardy if s27 of the Broadcasting Act were to be repealed
The SABC asks that this section be retained, in line with national policy which states that “funding sources for the public broadcaster will consist of licence fees, grants, advertising and sponsorships” (White Paper on Broadcasting Policy)
We will now turn to our detailed comments on the Bill

15. Definitions and Market Structure

16. Definitions and Market Structure
In order to allow for convergence to take place it is important that there is clarity and consistency in the definitions and market structure laid out in the Convergence Bill
SABC concerned that some definitions in the Convergence Bill are too broad, e.g:
subscription broadcasting service would fall within the definition of:
Application service – class licence
Broadcasting service – individual licence
Communications service – class licence
Content service – no licence required
SABC believes the definitions need to be reviewed to eliminate duplication and confusion

17. Definitions and Market Structure
The SABC further suggests that the definition of application service be deleted with consequent amendments throughout the Convergence Bill
SABC therefore proposes that Chapter 3 should make provision for 4 categories of services, as follows:
Content: unlicensed
Broadcasting services: individual licence
Communication network services: individual licence
Communications services: class licence

18. Role of Minister and ICASA

19. Role of Minister and ICASA
The SABC believes that the Convergence Bill must achieve two important objectives
Government playing key and guiding role in policy development
Constitutionally appropriate role and position of ICASA
The SABC is aware that a number of stakeholders have raised concerns regarding potential constitutional problems with the Convergence Bill
The SABC believes these exist in only a few limited areas and may be easily rectified, with minor drafting adjustments. These areas are:
Licensing
Radio frequency spectrum
The SABC’s drafting suggestions are as set out on p3 and 4 of its additional submissions

20. Role of Minister and ICASA
Section 5(4) of the Bill:
Except in so far as the communications network services licences are to be used for the distribution of broadcasting signals, [T]the Authority may only accept and consider applications for communications network services as from a date to be fixed by the Minister by notice in the Gazette.
Section 5(5) of the Bill:
Subject to subsection (4), [T]the Minister may determine the date when and the geographical area within which communications network services licences may be granted.
Section 9(2)(e) of the Bill:
submit to the Minister the proposed licence conditions in order to obtain the Minister's views and comments thereon [for approval].

21. Role of Minister and ICASA
Section 34(7) of the Bill:
After the hearing, if any, and after due consideration of any written representations received in response to the notice mentioned in subsection (5) or tendered at the hearing, the Authority must forward the radio frequency plan to the Minister and the Minister must [for approval and implementation of]:
approve the plan if it complies with the Republic's International Telecommunications Union's obligations; and
implement any migration plan identified therein.
Section 34(14)(a) of the Bill:
The Minister may allocate appropriate portions of the radio frequency spectrum for the exclusive use of the security services where this is necessary to safeguard national security.

22. Legislative Provisions on Broadcasting

23. Legislative Provisions on Broadcasting
As stated previously, the SABC believes the Broadcasting Act should become an SABC Act so that the general broadcasting sector is regulated through the Convergence Bill only
This means that the Convergence Bill must contain all relevant broadcasting stipulations
In our additional submissions we have focused on at least 45 broadcasting legislative provisions which have not been carried through to the Convergence Bill (p 4 – 11, SABC additional submissions)
We ask that the drafters take care to ensure that these important provisions are incorporated in the Convergence Bill

24. Licensing

25. Licensing Licence Conditions
The SABC’s concerns in the area of licensing are related largely to the fact that the Convergence Bill appears to circumscribe ICASA’s powers to set licence conditions for broadcasters who do not have significant market power:
s8(3): The SABC believes ICASA must have general authority to impose terms and conditions on all broadcasters and not just on broadcasters with significant market power
s8(6)(j) The SABC believes ICASA should be able to impose local content conditions on all broadcasters not just those with significant market power – if this is not amended it will undermine local content delivery

26. Licensing Licence Conditions (cont.)
Currently the Convergence Bill provides that ICASA may impose conditions on broadcasters only on local content and then only if they have significant market power. This ignores other important social goals such as regional / BEE ownership, training and language requirements etc, which should be captured in licence conditions
s9(7) ought to allow ICASA to:
impose licence conditions beyond specific undertakings made by an applicant
impose licence conditions to meet social objectives of the Convergence Bill and for the broadcasting sector generally

27. Licensing Licence Conditions (cont.)
In terms of the current wording of s10, licensees would have an effective veto re: amendments to their licences
SABC suggests s10 which says licences must be amended “in consultation with the licensee” must be changed to “after consultation”
Section 10(a) should be amended to read: “to make conditions of the individual licence consistent with conditions being imposed generally in respect of all individual licences granted in the same category or for the purposes of ensuring fair competition between licensees”
s10 must also make provision for a public notice and comment procedure re: amendments to licences
s11(6) ought to be deleted to allow ICASA to impose licence conditions upon renewal in order to meet social goals of the sector

28. Licensing Licence terms
The SABC believes the proposed 25-year licence term for all individual licensees is too long
ICASA requires the ability to renew licences within reasonable time-frames to ensure social goals are met
SABC’s suggestions:
Individual licences:
Communications network services: 25 years
Public broadcasting services: 15 years
Commercial broadcasting services: 10 years
Community broadcasting services: 8 years
Frequency Spectrum licences: variable: depending on the service being provided
Communications service class licences: years depending on the type of class licence

29. Licensing Licences granted in terms of IBA Act and Broadcasting Act
s72: The SABC believes this should be deleted because:
it suggests that licensed broadcasters or broadcast signal distributors may not broadcast until the conversion of their licences is complete
unfair relative to telecoms licensees

30. Licensing Licence conversions
Incorrect categorisation in licence conversions:
Multi-channel signal distribution is a facilities-based infrastructure service and ought to be in same category as other signal distributors ie it is not a communications service – s85(3)(e)(ii) but a communication network service s85(3)(f).
Multi-media services are a type of broadcasting service as broadcasting forms a key aspect thereof
ICASA power to refuse class licences
s18: ICASA ought to have power to refuse a class licence in the public interest generally and not only on procedural grounds

31. Ownership

32. Ownership
The SABC welcomes the greater regulation-making flexibility for ICASA on ownership issues captured in s13 of the Convergence Bill
But the SABC believes that the policy / social goals for ownership regulation ought to be clearly stated by the legislature so that ICASA has guidance when formulating its ownership regulations
These goals for ownership regulation should include:
to guard against foreign control of the dissemination of news and information to South Africans
to promote Broad Based Black Economic Empowerment and the empowerment of other historically disadvantaged groups
to develop local industries
to ensure ownership diversity and thereby content / view point diversity

33. Subscription Broadcasting

34. Subscription Broadcasting
Sports broadcasting
SABC is concerned about the issue of subscription broadcasters acquiring exclusive rights for the broadcast of national sporting events
Section 30(7) of Broadcasting Act has given rise to regulations which do not meet the public interest of giving broad access to national sporting events
The regulations allow subscription broadcasters to acquire exclusive rights provided these are offered on a sub-licensing basis to free-to-air broadcasters
The regulations envisage this happening on a commercial basis – if the free-to-air broadcaster cannot pay then the rights continue to be held exclusively by subscription broadcasters

35. Subscription Broadcasting
Sports broadcasting (cont.)
There is nothing in the regulations to prohibit subscription broadcasters from broadcasting national sporting events exclusively and there are no penalties if they fail to sub-licence
Given this, the SABC suggests that the Portfolio Committee use the opportunity of the Convergence Bill to guarantee that the public will have access to national sporting events
This can be achieved through making relatively minor amendments to section 30(7) of the Broadcasting Act (refer to p46 of the SABC’s original written submissions)

36. Subscription Broadcasting
Advertising and sponsorship on subscription broadcasting
Currently s30(6) of the Broadcasting Act states that advertising and sponsorship cannot be the biggest source of revenue for subscription broadcasters
This provision has not been carried over to the Convergence Bill, although s57 of the Convergence Bill deals with subscription services
The SABC believes this provision must be included in the Convergence Bill to maintain appropriate regulatory distinctions between subscription and free-to-air broadcasters

37. Contributions to the USF

38. Contributions to the USF
The Convergence Bill imposes an obligation on all licensees, including broadcasters to contribute to the Universal Service Fund
The SABC acknowledges the important role played by the USF but notes that USF monies cannot be used to for the extension of access to broadcasting services
The Convergence Bill does also not take into account broadcaster’s existing contributions to the Media Development and Diversity Agency
The SABC proposes that this section be amended so that broadcasters are exempt from making contributions to the USF

39. Conclusion

40. Conclusion
The SABC thanks the committee for the opportunity to make these written and oral submissions
The SABC is pleased to be part of the discussions on this important piece of legislation and we look forward to the finalisation of the Convergence Bill
The SABC is available to provide any further assistance that the Committee may require and we will be providing detailed submissions on further amendments which may be required to the Broadcasting Act
We are available for questions and discussions

41. Thank you