Netflix must be taxed and regulated the same as DStv in South Africa

MultiChoice has called on ICASA to ensure the playing field for all broadcasters in the country is level, regardless of their underlying technology.

ICASA will hold public hearings for an inquiry into subscription TV services in May, and MultiChoice has briefed the media on the feedback they will give.

MultiChoice said ICASA must not go overboard with the regulations, and should look at the pay TV sector as a whole.

“Right now, it looks as though ICASA is focused only on what pay TV used to be, but it is moving from satellites to online,” MultiChoice SA CEO Calvo Mawela told MyBroadband.

In 2017, the regulator released a discussion document into the pay TV inquiry where it laid out options to address the issue of MultiChoice’s market dominance, through DStv, in South Africa.

These included forcing exclusive sports rights contracts to be shortened, unbundling and splitting the rights, and forcing MultiChoice to licence its rights to other broadcasters.

However, DStv as a satellite pay TV service is operating on borrowed time already, and Mawela said heavy-handed regulations will kill its business.

Over-regulating will hand the South African market to global online streaming giants like Netflix and Amazon.

Rather than imposing further regulations on MultiChoice, ICASA should liberalise the market and ensure that online services comply with the same regulations as local broadcasters, he said.

Netflix must be taxed

For a start, Netflix should pay tax in South Africa, Mawela said.

MultiChoice is currently working with Treasury to ensure overseas companies that do business in South Africa are paying their fair share, he added.

Mawela said MultiChoice contributed R5.8 billion in direct and indirect taxes to South Africa during its last financial year, and as its business comes under pressure from online players, this will decrease.

Companies like Netflix and Amazon must therefore be taxed locally to ensure they make up for the shrinking contribution of the local businesses they disrupt.

Asked whether MultiChoice pays tax in all of the countries in Africa where it operates, Mawela said it does.

“In many instances when we go into a country, we partner with locals,” said Mawela.

Regulations on traditional broadcasters are far more onerous than on online-only streaming services, he added.

Mawela said you will also find that there are restrictions on local ownership when it comes to broadcasting.

As a result, MultiChoice supports local content production and pays the relevant VAT and income taxes where it has services.

Regulations for Netflix

In addition to tax laws, streaming services like Netflix and Amazon should be subject to regulations such as:

  • Obtaining a broadcast licence.
  • Maintaining a local presence in the country.
  • Meeting BEE requirements.
  • Developing local content.
  • Abiding by the classification regulations of the FPB.

Mawela said ICASA’s online regulations must not be too stringent, however, and pointed to the European Union directive on audio-visual content as an example for regulation.

It focuses on entities which have editorial control over content, which means it doesn’t cover regulating user-generated content.

“I don’t think we should look at South Africa in isolation for these regulations, and I don’t think the EU directive is overly burdensome,” said Mawela.

Now read: Communications committee to look into MultiChoice and Muthambi

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Netflix must be taxed and regulated the same as DStv in South Africa