The scrap has well and truly begun for the precious subscription broadcasting licences that the Independent Communications Authority of South Africa (Icasa) intends to issue.
Last week saw the launch of public hearings held by the regulator, which will allow it to whittle down the 18 applicants to those deserved few, who will be given an opportunity to make their fortune in the billion-rand pay-TV industry.
The hearings began controversially with the withdrawal of Worldspace SA from the licence application process, following a determination from the Minister of Communication Ivy Matsepe-Casaburri, who asked Icasa to allow Worldspace to continue broadcasting until a long-term solution to their lack of a licence had been found.
Some analysts have queried whether this interference by the minister could be seen to be eroding Icasa’s independence, but Icasa spokesperson Jubie Matlou says this is not the case.
Matlou says Worldspace is not a true broadcaster because it just relays content, but this then raises questions about the difference between Worldspace and other applicants such as Deukom, who relay German television for German-speaking South Africans.
The question also has to be raised as to why a decision like this was only taken on the brink of the hearings and not at an earlier date.
The opening of the hearings also saw a presentation by the SABC which tried to get the regulator to force all subscription broadcasters to carry the public service channels and to pay the SABC for access to these channels.
This proposal came under heavy fire on the opening day, mostly from E-Sat, a sister company of e.tv and a subscription broadcasting applicant.
E-Sat’s Dan Rosengarten rubbished claims that the SABC’s proposed “must carry/must pay” regulations were enshrined in the Electronic Communications Act (ECA), by pointing out that the ECA only mentions that public service channels must be carried and fails to mention anything regarding payment.
He said in effect that applicants would have to carry the SABC channels at their own cost as well as pay the state broadcaster for its intellectual property.
Icasa has not ruled on the must-carry provisions and the chairperson of the public hearings, Zolisa Masiza, said they would be dealt with in a parallel process, which would result in the drafting of regulations.
E-Sat also made a general presentation to the Icasa panel, warning against the over-licencing of new entrants into the market.
Until now, Icasa has refused to discuss how many licences were up for grabs, but E-Sat warned that due to the massive costs of producing a quality pay-TV service, new entrants will need a large subscriber base to break even and there was therefore a high risk of failure if the market was over-licenced.
E-Sat also pointed out that international experience had shown that most countries couldn’t sustain more than two subscription broadcasters.
Later in the week, Sentech muscled its way into the hearings during the cross-examination of Ndabenhle, which had just made its presentation to the panel.
Ndabenhle is currently in discussions with Sentech to iron out details for the distribution of its signal, should it be successful with its application.
Sentech, in an obvious bid to protect its interests, argued before the Icasa panel that Ndabenhle’s partner Telemedia was not a licenced broadcast signal distributor and therefore Ndabenhle would have to find a licenced signal distributor such as Sentech if it was successful. This brought a few wry smiles to the faces of the Icasa panel.
Ndabenhle also suffered a grilling at the hands of the Icasa panel, with Icasa councillor Marcia Socikwa describing its bid application document as “incomplete”.
Ndabenhle also had to repeatedly apologise to the Icasa panel for embarrassingly failing to paginate their bid document and for supplying the regulator with contradictory and inaccurate information.
Ndabenhle has been given a further seven days to submit a substantial amount of information that was not included in its initial application.
The hearings are set to continue over the next two weeks with the last applicant, Telkom Media, set to present on June 12.
Who’s who in the pay-tv zoo
In the first of a two-part series, the Mail & Guardian profiles the applicants vying for subscription broadcasting licences. We bring you the contenders, the pretenders and the also-rans.
Telkom Media: The newly formed Telkom subsidiary, Telkom Media, looms large over the subscription-broadcasting applicants.
Two factors make Telkom Media a strong contender; the first is its comprehensive fibre network that gives it the ability to deliver content to the home effectively and cheaply, and the second factor is the R7-billion that Telkom Media has been allocated to get its subscription broadcasting, video on demand and television via broadband (IPTV) services up and running.
Telkom Media is thinking big and has hired former SABC and e.tv head of news Jimi Matthews, to head up its new 24-hour news channel. Besides the news channel, Telkom Media’s 15-channel bouquet will offer middle-income consumers a range of sports, movies, music and educational channels for under R100.
Ketha: Ketha is a consortium made up of companies called Friedshelf 730, prepaid specialists Blue Label 1 and Arengo.
Nkenke Kekana, who was previously the group executive for regulatory affairs and public policy at Telkom, is one of the directors. He was also the chairperson of the parliamentary portfolio committee on communications. Ketha will have 21 channels, and according to Kekana will be “really new” and based around themes, such as a news channel and a women’s channel.
It is targeting the 7 to 10 black LSM groups as well as a secondary target group of LSM 5 to 7. It also promise strong local content. Kekana says they have assembled an experienced team and is confident they’ll succeed, saying “very few [other bidders] will be able to match what we have”. The consortium will also manufacture its own IPTV set top box.
Black Earth Communications: Black Earth Communications (BEC) is a South African-based multimedia production company that has been trading for the past 10 years.
In 2005, Multichoice turned down BEC’s proposal for a new channel on the DStv bouquet, which led the company to apply for a broadcast licence with the national broadcasting board of Botswana. In 2006, it was granted a licence by Botswana to provide a low-cost pay-TV service aimed at people of colour, but it is not broadcasting yet. BEC says it plans to explore the emerging black middle class market that it claims has been ignored by Multichoice.
The company is proposing an 8 to 10 channel television bouquet as well as a 10 to 20 radio channel bouquet over the next five years, which will set consumers back less than R100 per month. The bouquet will feature a mix of “black entertainment”, information and sports and will have a dedicated Aids channel.
BEC maintains that it will be selling smart cards to existing decoder owners, however, it is still not clear whether this is legally permissible. BEC says that low-cost dishes and decoders will be sold to new consumers in the pay-TV market. It is unclear how much secured funding BEC has to launch its proposed service, but it does claim to have a committment from a leading South African bank to provide the finance if the pay-TV licence is secured.
Ndabenhle: Ndabenhle will only be offering a video-on-demand service in its first year, but has plans for six- and 10-channel packages as well as a “gold” option with 30 channels and a “platinum” option with 60. There will be a mix of local, African and international content.
At the moment it has R70-million to start the channel, but doubts have been raised about their ability to secure additional funding that will be required in addition to this amount. Its partners include Telemedia, which will provide up-linking and studio facilities, Mindset Network, an educational content partner and I-TV, a sister channel that will provide local content.
It is targeting the lower and middle-income groups of LSM 4 to 6. However, doubts have been raised about Ndabenhle’s target-audience research. The Independent Communications Authority of South Africa has also requested that it resubmits substantial sections of its application, which the regulator described as incomplete and at times contradictory.
Laegoma Digital: 60% of this company’s shareholding is in previously disadvantaged hands. Directors include Ken Modise, who brings media, communication and broadcasting experience, and Don Seokane, who brings journalistic and media experience.
Laegoma claims to have already spent over R10-million on the project and is expecting to be profitable by the fourth year of operation. It has teamed up with a company called NDS, that will provide the subscriber management system.
Laegoma plans to target the LSM 7 to 9 groups with a bouquet that consists of at least 30% local content. However, its bid application, which is littered with spelling errors, brings into question its ability to get a subscription broadcast service up and running when they can’t even operate a spell-check.
Deukom: Deukom has been broadcasting a selection of German-language television and radio channels via satellite to South Africa’s German-speaking community since 1996. The bouquet includes a mix of public and private free-to-air and subscription channels. The Deukom service is very niche and it will not be competing with the big players for their slice of the multi-billion rand Pay-TV market.