Government to crack down on Netflix and YouTube in South Africa

The Minister of Communications and Digital Technologies of South Africa, Stella Ndabeni-Abrahams, recently published a white paper which proposed a complete overhaul of the regulations that govern the country’s broadcasting industry.

Titled “A New Vision for South Africa 2020”, Ndabeni-Abrahams published a draft of the white paper in the Government Gazette on 9 October.

It proposed regulatory reforms in several areas, including imposing licence requirements on Internet streaming services such as Netflix, Amazon Prime Video, and Apple TV+.

The white paper proposed two different types of licences: individual and class licences.

On-demand services which had an annual turnover of between R50 million and R99 million in the previous financial year will require a class licence. Services which turned over R100 million or more in the previous financial year must apply for an individual operating licence.

The white paper includes the table below as an “illustrative example” of the proposed licensing framework.

While international services such as Netflix will require licences to operate in South Africa, video sharing platforms like YouTube will be exempt.

However, while YouTube will be exempt from licensing, it will not be exempt from regulation.

In addition to proposing new regulations on advertising, the white paper also stated that video-sharing platforms must abide by regulations around hate speech, incitements to violence and public provocations to commit a terrorist offence, and the protection of minors.

The white paper added that government is of the view that platforms must take steps to protect the general public from such content.

Video-sharing platforms will need to set up a self-regulated code of conduct or be subject to a statutory code, the white paper stated.

Service type Individual licence Class licence Licence-exempt
Broadcasting services Broadcasting services which have an annual turnover in the previous financial year of R100m or greater.

Public free-to-air (SABC), commercial free-to-air (e.tv, OpenView), subscription (MultiChoice), and community broadcasters using terrestrial frequency spectrum licensed through a competitive Invitation To Apply process.

Broadcasting Services which are on electronic communication networks that either do not use radio frequency spectrum (e.g IPTV, cable, Internet) or do not use radio frequency spectrum licensed through a competitive Invitation To Apply process (e.g satellite).

This license category includes linear streaming TV channels and retransmissions of over-the-air TV channels by third parties an the Internet.

Audio Broadcasting Services available on the Internet
On-demand content services On-demand audio-visual content services which have an annual turnover in the previous financial year of R100m or greater. On-demand audio-visual content services which have an annual turnover in the previous financial year of between R50 million to R99 million. On-demand audio content services available on the Internet.

On-demand audio-visual content services which have an annual turnover in the previous financial year less than R50 million.

Video Sharing Platform Services Video-Sharing Platform Services for sharing user-generated content.

SABC funding overhaul

In addition to creating regulations that take services such as Netflix and YouTube into account, the white paper also proposed a comprehensive overhaul of the SABC’s model to ensure the public broadcaster is funded adequately.

This new funding model will be based on international best practices, the white paper stated.

It also proposed changes to “must carry” obligations, which required broadcasting service providers to carry SABC channels.

According to the white paper, the must-carry rules have achieved their intended objective and may distort competition if kept in their current form.

Instead of requiring that SABC channels be carried for free on broadcasting platforms like DStv, the white paper proposed that the rules be changed to allow the SABC to negotiate carriage fees from these platforms for its channels.

The SABC may negotiate such commercial terms under the condition that retransmission consent agreements for the content on its free-to-air channels may not be exclusive to a single subscription service.

South African content quotas

The white paper stated that quotas for South African content should remain in place for broadcasting services.

However, the current approach of specifying a minimum percentage of total broadcasting time does not work in a regulatory environment which aims to cater for on-demand content services like Netflix, as well as traditional linear broadcasting.

When it comes to on-demand services, the white paper proposed that the Independent Communications Authority of South Africa (ICASA) should impose a South African content requirement — up to a maximum of 30% of the video catalogue available in South Africa.

“The review should consider applying rules in a graduated manner distinguishing between linear and non-linear individual and class licensees and whether the service is public, commercial or community/non-profit in nature,” the white paper stated.

Making major sporting events on DStv free to watch

The white paper also proposed changes to the way events and sports of national interest are determined.

While DStv is already required to broadcast certain important events on a free-to-air basis, the whitepaper proposed that existing legislation be amended.

“It should remain the policy intention to continue to ensure that key national sports events are aired free-to-air, whilst acknowledging that certain exclusive sports events are critical to the viability of the subscription model,” the whitepaper states.

According to the proposal, an event would have to meet all of the criteria below to qualify as being in the public interest:

  • The event must involve the South African senior national team (i.e. the most senior official South African team) or an individual representing the Republic.
  • The event must be in a major sport, taking into consideration the number of South Africans who play it and/or watch it at the venue or on television, or listen to radio coverage.
  • The event must be of major importance to South African society, and not just to those who ordinarily follow the sport.
  • The event is appropriate to list, given its structure and duration.
  • The event takes place in South Africa. The only events which take place outside South Africa which should be eligible for listing are international confederation sporting events such as a World Cup or Olympic event in which a South African team nor individual is representing the Republic.

Advertising

The white paper proposed that current legislation and regulations for advertising standards in South Africa need to apply to platforms such as Netflix and YouTube in the same way as it does to the SABC, e.tv, and DStv.

“In respect of protecting children, the draft white paper proposes that the regulator must in respect of the scheduling of adverts make regulations for all AAVCS licensees on the advertising of alcoholic beverages and harmful foods that are high in salt, sugars, fat, saturated fats or trans-fatty acids or that otherwise do not fit national or international nutritional guidelines,” the white paper stated.

It also proposed a review of legislation to include provisions on online political advertising to ensure that it is done in a fair and non-discriminatory manner with the proper disclosures.

The white paper also proposed that the industry regulator (ICASA) must conduct an inquiry into whether the current share of advertising revenue by subscription services is appropriate and what the impact of online advertising will be on the TV advertising market in the short and long term.

“If it is detrimental to the survival and viability of free-to-air services, the regulator must make regulations to protect the sustainability and viability of free-to-air services in South Africa.”

Foreign ownership

In the interests of promoting foreign investment and growing the sector, the draft white paper proposed the amendment of legislation to empower the regulator to consider allowing foreign ownership of linear broadcasting services to a maximum of 49% to stimulate investment.

In the case of foreigners from African Union member countries, the maximum of 49% may be waived so long as there is a reciprocal agreement between South Africa and the relevant AU country.

Now read: The new plan to make major DStv sports free to watch

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Government to crack down on Netflix and YouTube in South Africa