Netflix – don’t pay R795,000 to the FPB

The Film and Publications Board (FPB) recently stated it wants to regulate Netflix content.

It said it has “communicated to Netflix their obligation to comply with the Film and Publications Act, regarding both registration and classification requirements and the prescribed licensing fee”.

This followed reports that the FPB threatened to sanction Netflix if it did not comply with its regulations.

The FPB denied giving Netflix an ultimatum, saying that discussions between them were “amicable”.

Amicable or not, telecommunications lawyer and regulatory expert Dominic Cull, from Ellipsis Regulatory Solutions, said the FPB is acting outside the scope of its powers in requiring Netflix to register as an “online content distributor”.

Netflix should be regulated, but it doesn’t need to pay a licence fee

“Netflix is actually an excellent example of online content that the FPB should regulate,” said Cull, referring to the board’s controversial Draft Online Regulation Policy.

Cull said that unlike platforms such as YouTube, social media, blogs, comments, and other user-generated online content, regulating Netflix was practical.

The FPB has already rated much of the content on Netflix, and to comply with regulation it must register as a distributor, obtain copies of ratings certificates, and display the ratings.

However, the FPB isn’t only interested in Netflix displaying its ratings as required by law, it also wants the US company to pay a “licence fee”.

In asking for a licence fee to act as an online content distributor as opposed to any other distributor, Cull said the FPB was acting extra legally – exceeding the powers conferred on it by the Film and Publications Act.

FPB cagey on what it wants to charge Netflix

The FPB declined to give MyBroadband a straight answer regarding how much it wants to charge Netflix, stating that “the fee is an amount that has been gazetted by the Minister in pursuant of the Act”.

Looking at the gazette, the fees applicable to Netflix in South Africa are as follows.

FPB tariffs for 2015-2016
Registration 2015/16
Distributor or exhibitor of films… Online registration R1,121
Annual renewal of distribution certificate: online R152
Film classification: Home entertainment format 2015/16
New release of original English film * R1,007-R2,015
New release of original non-English film (subtitled) R1,500
Re-release of original English film R504
Re-release of original non-English film (subtitled) R750
SA or Bollywood film R544
Series classification: any language or format 2015/16
Foreign productions * R2,243-R3,577
South African productions * R2,243-R3,250
Exemptions 2015/16
Film in home entertainment format R721
Film in home entertainment format (additional disc) R182
Licensing fee for online distribution R795,000
Appeals 2015/16
New release of film R4,486
Penalties 2015/16
Incorrect display of ratings on movies distributed online R15,000
Late annual renewal of distribution licence (pay per title for each month with an expired certificate) R106
* Classification rates differ depending on running time.

R795,000 “licence fee” a money-making scheme

In its 2016 Budget Vote, the Communications Ministry told the National Treasury that the licensing fee for online content distribution was introduced “in response to harsh economic conditions.”

“Further research on this fee structure is being conducted to ensure it assists the board to remain financially sustainable.”

Cull stated that any fee the FPB charges must be related to the costs it incurs to provide its classification services.

Even when the FPB’s online content regulations and other legal amendments are approved, making provision for a flat exemption or “licence” fee, it should not be used to make up the financial shortfall of the board.

He said any attempt by the FPB to levy this fee should be resisted, as it is not a lawful demand.

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Netflix – don’t pay R795,000 to the FPB