Big changes government wants to make to DStv and Netflix

The South African government plans to make a number of changes to broadcasting and other regulations which could have major repercussions for platforms like DStv and Netflix.

These include the imposition of a digital tax on international services, a crackdown on TV licence compliance, quotas for local content, and new laws that would make more sports events free-to-watch.

The relevant regulations and proposals are listed below:

• Draft Sports Broadcasting Services Amendment Regulations 2020 – ICASA
• Draft White Paper on Audio and Audio-Visual Content Services Policy Framework – Department of Communications and Digital Technologies
• Report of the Presidential Commission on the 4th Industrial Revolution – Commission on the Fourth Industrial Revolution
• Parliamentary Budget Office presentation to parliament – Parliamentary Budget Office (PBO)

The draft regulations and white paper listed above are proposals by the government which are open for comment and aim to implement new laws that affect broadcasting services in South Africa.

The 4IR Commission and PBO reports contain proposals for the implementation of a digital tax in South Africa which would affect companies such as Netflix, but these have not been drafted by the government yet.

We have summarised the effects of these proposed regulations below to give an idea of the changes which the government may make to the local broadcasting environment in future.

TV Licence crackdown

The SABC is in discussions with parliament around the compliance levels with its TV licences, arguing that the definition of a television should be expanded to encompass devices such as smartphones and laptops.

It has also floated the idea of asking pay-TV broadcasters like DStv to help crack down on TV licence compliance and possibly require decoder buyers to own valid TV licences before they complete their purchase.

Submitted regulations also aim to make it obligatory for Internet streaming and television streaming websites to pay a percentage of subscription fees to the SABC, where these websites stream SABC content.

The SABC’s main aim in proposing new regulations is to improve TV licence compliance and expand the definition of devices for which South Africans should pay a TV licence fee.

Local content quota

The government plans to enforce a 30% local content quota for Internet streaming services in South Africa to promote local content and languages.

This requirement is part of the changes proposed in the Draft White Paper on Audio and Audio-Visual Content Services Policy Framework, which aims to “reposition the audio-visual media sectors for future growth and promote investments”.

“[The white paper] indicates that in respect of on-demand content services targeting South African audiences, they should also have South African content obligations,” Communications Minister Stella Ndabeni-Abrahams said.

“These South African content obligations can apply in a cascading manner distinguishing between individual and class licensees and whether the service is public, commercial, or community/non-profit in nature and should not exceed 30% of the video catalogue.”

It is not clear whether the government will require international streaming services such as Netflix to adhere to this content quota, as it may be defined as a “streaming service targeting South African audiences”.

Free-to-watch sport

The Independent Communications Authority of South Africa (ICASA) has expanded the list of sports which it states should be made free to watch in the public interest.

The licences for many of the sporting events on this list are held by DStv and SuperSport via MultiChoice, meaning the pay-TV broadcaster would need to make these events available through channels that are not locked behind a subscription service, such as allowing them to be aired on SABC channels.

ICASA cited the inequalities in access to television content in South Africa as a major consideration of the new regulations.

It argued that only 12.6% of TV viewers in South Africa subscribe to a pay-TV service, which means the majority miss out on important national sporting events.

The draft regulations list the following national sporting events which would be available to be broadcast “live, delayed-live, or delayed” by free-to-air broadcasting licensees:

Digital tax

Various government bodies have proposed a digital tax on international services in South Africa, including the African Tax Administration Forum, which has drafted regulation guidelines for its members – one of which is South Africa.

This follows international regulatory practice, with many countries attempting to tax revenue obtained by Netflix, Amazon, Google and other companies from their country.

The result of this may be increased prices for Netflix subscriptions in South Africa unless the global streaming giant opts to take the tax hit without passing the additional cost onto its customers.

However, the willingness of many countries to impose a tax on companies such as Netflix is inhibited by the lack of a unified approach.

Many nations are waiting for the Organisation for Economic Co-operation and Development (OECD) to design a unified digital tax approach to be adopted globally to avoid more countries unilaterally imposing a digital tax.

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