Draft White Paper on Audio and Audiovisual Content Services; PSB in Europe

Meeting report

The Chairperson greeted Committee members, delegation from the department, guests, fellow South Africans following from different platforms. He officially opened the portfolio meeting of the Committee which was in two parts, the first being the department presentation on the audio visual and content on the White Paper proposals that were being circulated for engagement by the public and all other stakeholders. The second part was a roundtable discussion on broadcasting which was facilitated differently as opposed to the portfolio Committee. The apologies were that the Minister and Deputy Minister were attending a cabinet meeting. The NAB and Multichoice did not participate in the meeting. The NCOP Chairperson Mr Matibe and Mr McKenzie were also unable to attend.

Ms Van Damme objected to the absence of the Minister and Deputy Minister as this was an important document that affects the broadcasting sector. It would have been advisable for at least one of them to attend even if it was to do the introduction and allow Committee members to ask questions. It happened too many times that the Minister was not present.

The Chairperson said when the meeting happens outside of allocated time then the Minister and Deputy Minister should be given the benefit of doubt and that Wednesday was declared a cabinet session and were also expected to represent the departments that they lead. With the current challenges that the department had it had to be a collective effort and also cabinet to assist the Committee on issues the department was facing. for meetings held on Tuesday the concerns had been raised. for special meetings relevant people should be sent to assist the Committee but the meeting held was part of a consultative process and were not expected to make a decision and that was why there would be roundtable discussions.   

Draft White Paper on Audio and Audiovisual Content Services  
Acting Director General, Ms Nomvuyiso Batyi, noted the Draft White Paper had been out for public comment since October 2020. The due date for submissions was supposed to be 30 November 2020 but a number of requests from stakeholders had requested an extension. The Minister granted the extension of deadline to 15 February 2021. She provided the historical background. As part of the National Integrated ICT Policy Review, the expert group responsible for the Draft White Paper on Audio and Audiovisual Content Services was led by the late Libby Lloyd and the White Paper is now dedicated to her. The Department was assisted by Ms Nadia Bulbulia from the National Association of Broadcasters (NAB) and other departmental officials. The policy was finalised and submitted to Cabinet in September 2020 for approval. The key message from Cabinet was that they appreciated the expert group route the department took and supported the policy process and would like to finalise some of the long running policy processes. It was impressed on the department that it should finalise the policies as soon as possible. DOC agreed and supported the Cabinet’s advice. The document was a draft as government would still finalise its position after hearing the comments and views from the public and interested stakeholders. It required evidence, policy inputs and public support to strengthen the proposal. The spirit behind the Draft White Paper is to ensure and secure a viable and competitive future for the South African audiovisual industry and sector. She asked South Africans to work with the Department to ensure the sector survived the challenges faced during and post COVID. The sector had the potential to create jobs and contribute to economic development. The Department would share a summary of the 153 page document and would not go through the document itself. DOC had received close to 20 000 comments and these would be summarised according to the policy proposals in the paper. DOC intended on engaging in consultations in the provinces while respecting COVID-19 regulations. Once the submissions had been summarized, it would engage in detail with those who made submissions and would revert back to Cabinet with a final White Paper. Once Cabinet had approved the White Paper, it would be drafted into legislation and that Bill would ultimately end up in Parliament after cabinet approval.

Mr Collin Mashile Chief Director, Broadcasting Policy at Department of Communications, spoke to the following items: New Policy Framework; Rationale for the Policy Review; Licence Framework and Thresholds for Audio and Audio-Visual Content Services; Public Broadcasting in the New Policy Framework; Content Regulation of Audio  And Audio-Visual Content Services (AAVCS); Support of Domestic Audio And Audio-Visual Production And Creative Industries Sector; Developing Human Capital, Digital Skills And Digital Media Literacy and Implications on the Public Broadcaster (see document).

Discussion
Ms Faku welcomed the presentation and said the draft was long overdue and it should have been read with the Integrated ITC policy. DOC must also look at areas of conversions in the policy or areas requiring review. The key principle is that content, particularly local content, must be the focus. The new framework must enhance media diversity, protect and promote public and community broadcaster services even in the digital future. The protection and promotion of the country’s cultural diversity must be represented. This was emphasised during the process of appointing the MDDA Board and it reaffirmed the ANC policy that digital broadcasting is the future.

The SABC should learn from this experience and develop strategies to grow its viewers and listeners on digital platforms which was an issue the Committee had raised to grow revenue. The ANC welcomes the proposal to repeal the repealing the must-carry regulation. Paid TV must not grow by expanding monopolies and abusing free air channels. This policy had regard to the increased affordability, fast speed of broadband and other policy strengthening public community broadcasting services resulting in access to connectivity by all as there were areas in the country that have connectivity problems. She was very impressed with the draft and applauded the good work done by the Department.

Ms P van Damme (DA) said it was refreshing and great for a change to be reading about policy designed to improve the work of the Department and providing solutions instead of the Committee resolving fights between the department and groupings. The document had many great proposals which she supported particularly repealing the must-carry regulation which would mean that SABC would be able to sell its own content and make revenue from that. It was good to see it proposed that government fund the unfunded mandate which had caused a hole in the SABC purse. She supported the amendment to the board which stipulated clearly that the board had final authority, the overhaul of the SABC funding model and that there would be a dedicated parliamentary channel for ordinary citizens who did not have access to DSTV could view parliament proceedings. She supported the proposal to establish a fund to support local content.

She hoped the proposals did not remain on paper and not implemented. The legislation should be escalated. She objected to three proposals which she thought to be dangerous. The first being the establishment of a team that would have the ability to blacklist, block, require banks to block payments by local subscribers to international streaming services. This would be a dangerous thing to establish as it would be a censorship bureau similar to what China was doing in Hong Kong. The blocking of access to certain websites was something that the Committee should not support as it was a limitation of a constitutional right that could not be limited. She hoped in the final draft it would be removed. She referred to the code of conduct for international streaming services and said that it could not be implemented as these were companies that were not based on South African soil but in foreign countries. Instead of trying to put in punitive measures, the Department should engage in discussions with companies such as Netflix instead of establishing punitive measures that could result in going to court and losing cases resulting in wasteful expenditure. There had been a public outcry about what would seem to be an extension of the TV licence fee to all broadcasting services. This would then apply to streaming services that were not viewed on television as viewers stream on laptops, phones and other devices. This was unacceptable. There were proposals to increase SABC revenue using creative measures. The focus should be on finding solutions to ensure SABC is able to self-sustain rather than requiring the public to pay more.

Ms N Kubheka (ANC) appreciated the presentation. She suggested the Minister should champion the policy as that was the role of the government. ICASA would play a role in the policy being tabled. The SABC was having key challenges and this could be an opportunity for the SABC on the must-carry regulations. This would be the perfect time to strengthen SABC and address content with content attractive to viewers. The ANC would support this. Key issues related to the 30% of SMEs to assist upcoming developments to ensure improvements. She fully supported the disability policy as well as the protection of the child and consumers. She asked for clarity on the Film and Publication Board (FPB) and the role it also played in the protection of children. She hoped there would be more inputs so the Department could finalise and implement the policy.        

Mr Molala (ANC) said the presentation was good but he wished the presentation would speak about the current Objects of the Act. The presentation mentioned ownership, while it was good that provision was made for SADC to also play a role, DOC should indicate how much ownership would be allowed in the 49% locally because the emphasis must be on South Africans and how South Africans were accessing the important aspect of ownership. Another important area that needed focus was the Objects of the Act. Commercial services were meant to subsidize the public services. We must avoid the challenge of the unfunded mandate. The objects of the Act state that commercial services are supposed to subsidize the public mandate. It needed to be established why the commercial service was unable to fund the public mandate which is a critical area of the funding model. Before amending the law, the commercial service challenges needed to be evaluated. On the South African local content, the amendment of the law must emphasize how South African content is to be protected from investors and protect how investors portray the country. We need to be careful on how the market is opened. The opening of the market needed to be weighed against who we are and what we want to achieve. Overall this was a good presentation and appreciated it. In future the discussion should do deeper into the details.

The Chairperson said the regulator ICASA would have a lot of work which would include monitoring interference which speaks to its capacity. She asked DOC how funding of the broadcaster would be done.

Mr Rehad Desai, Independent Producers Organisation chairperson, asked about the division between commercial and public broadcasting which had an impact on advertising and resulted in far less revenue.

Response
Acting Director General, Ms Nomvuyiso Batyi, said at this point DOC was still consulting and the consultation was based on what was happening currently on the ground. She thanked members for their responses and hoped DOC would improve. On the self-sustainability of the SABC, she said one had to move in the direction of ensuring the world’s equitability. Traditional broadcasters were treated the same as those that were not traditional. SABC should be enabled to compete effectively because as a public broadcaster it is struggling to compete with other broadcasters.

Mr Mashile replied that Mr Desai should check the BBC annual report to find most of the revenue comes from the commercial wing of the BBC and is used to fund the public service mandate which proves that it is workable. When DOC had engaged with SABC and the Government Technical Advisory Centre (GTAC) it was shown it was workable and possible for the commercial wing to generate revenue where some of it would be used to fund the public service mandate. According to the BBC annual report, BBC International was making a lot of money for BBC.

The concern raised by Ms van Damme about the code of conduct was a generally accepted principle within regulation. For example, the European commission had a code of conduct on hate speech online which has been signed by Instagram, Google, Twitter and YouTube. The spirit was one of cooperation between platforms, entities, regulators, civil society in how to work together to ensure policy principles were achieved and challenges discussed, and how to continue working together to achieve results over time. The intention was to ensure that punitive measures would be avoided, as mentioned by Ms van Damme, and go for collaboration.

Mr Mashile replied that there had been good collaboration between FPB and online platforms to ensure that protection continues to happen. DOC worked very closely with the FPB on various other matters. The same had been done when dealing with amendments in the sector. DOC checked the While Paper and was unable to find where DOC would extend the licensing of Phase 2 operators and tax the public as such. DOC had looked at other broadcasters and found they usually use electricity suppliers. In South Africa it is collected by the broadcaster itself. Other possibilities could include tax agencies or a commission or a private company and these were the fee collection mechanisms DOC was aware of. DOC would engage and reach out to various sectors and groups on this.

The Acting Director-General said there would be further engagements that DOC would do and welcomed any input, positive or negative, from the public but it have to be substantiated within the South African context. She thanked Chairperson and the Committee for the support. 

Ms van Damme said to Mr Mashile that the definition of 'broadcasting services' meant it would apply to streaming services and, if that was not the intended meaning, it should be corrected. She asked the Acting DG if it was correct that the Minister had said in the media that she would directly be taking part in the facilitation process to explore options to minimise Section 189 retrenchments.  

However, the Acting Director-General had left the meeting due to connection difficulties and the Chairperson replied that the question would be posed during a DOC briefing.

Public service broadcasters in Europe
Ms Abongile Mashele, Acting FPB CEO, introduced the presentation by noting that the sustainability of the public broadcaster and its public service mandate was in the public domain. The discussion should not focus on the problems but rather the solutions to resolve what needs to be implemented to ensure the public broadcaster  continues. The key parameters in the prior discussion was the regulatory and policy framework which the public broadcaster needed to abide by that can serve as an impediment in reinventing itself to be agile and adaptive to new market requirements. The second factor is the funding model to ensure sustainability. The third factor is leveraging of new technologies. The Committee would want concrete recommendations to take the matter forward. She handed over to Ms Scaramuzzi.

Ms Elena Scaramuzzi, Head of Global Research at Cullen International, spoke to the evolution of audiovisual media regulation in the EU to improve the level playing field between TV and video-on-demand (VOD) services (see document). Special rules for PSB are defined at the national level for:
- Advertising
- Local content quotas
- Investment obligations
- Performance indicators to measure compliance with public service obligations (Spain, UK, France)
- Licence fee
- Investment obligations (Italy)

Discussion
Mr Desai said the Independent Producers Organisation was following the developments in Europe closely particularly the revival in Italy of Italian TV given the funding that had been put into independent production and its ability to generate international interested audiences. He asked for information on the funding obligations and what they meant in real terms. He asked if there were hard figures that could be provided of how much money the European broadcasters actually invest in local production because it would shed some light on the commercial and public divide that did not exist in the previous system.

Ms Mashele asked if the question of sustainability could be linked to ownership with regard to the cinema industry as there was no link in South Africa between the broadcasting sector and cinema sector as well. 

The Chairperson asked about the separation in the special rules applicable to public service broadcasting (PSB) advertising in the various countries and how some countries would not allow advertising on the public service side. He raised the question because of the comment about the BBC which was generating a lot of revenue from its commercial side but it would not allow advertising. Advertising can be a source of revenue by turning viewership into revenue. Was not a ban on advertisements a limitation? It would appear that it was being driven to the commercial sector. In South Africa there was a debate on commercializing public service broadcasting meant to be for informing the people.

Dr Mashilo Boloka asked about the France model which introduced a special tax to fund its PBS and requested that the modalities be shared on France’s revenue collection system.

Response
Ms Scaramuzzi replied to the question on funding of independent productions and said it was an important discussion but she did not have the data but could send it at a later stage. There were quota obligation in some countries to invest in independent production and this was a recent change such as Italy but she did not have the details at hand.

The problem of funding independent production existed in countries like Brazil and funds had been developed including funding cinema productions as independent works which is something Cullen International was monitoring. Special funds were developed in Europe and in other parts of the world. There had been the development of research on the topic and she would come back with more information and involve some of her colleagues who were involved directly in the research.

It had been a decision by certain countries to completely ban advertising from public service broadcasters while other countries had maintained the different forms of advertising. In Italy despite having introduced the review on a licence fee collection system, they had maintained advertising and changed the timing and the form of advertising. For example, children TV programmes did not include advertising on the public service channel. It was important to say that other forms of advertising had been adopted. There had been specific programmes that have sponsors in Italy during prime time – like a very popular quiz show before the news hour that has a sponsor and has product placement in the show. It was important in each of the countries to ensure there was a fair balance between the funding mechanism and funding commitment of the public service broadcaster in funding content and ensuring they participate in specific content that was sold abroad. It was important there were good mechanisms to control how funding worked in practice.

She would consult her colleague who specialises in investigating France to answer the question on the modality of tax system used to fund the PSB.  

There had been attempts to cross-subsidize elimination of advertising from the public channels with mechanisms to collect funds from licence fees from viewers but she did not have the details with her and would provide all the information later.

Ms Mashele said a comment from the Both Worlds production company had noted that there is a special body that collects the fee and then directs it to the relevant bodies.

Further discussion
 Mr K Sharif (Media Group) said it was always interesting to know what was happening in other parts of the world but South Africa is unique and could not adopt and adapt the European methods. He wished and hoped for a very strong SABC, for the SABC to have free broadcasting it must be very strong. In South Africa television advertising amounted to R6 billion net and all had to share in that amount. The cost to run the SABC, even if it took all the money from advertising, it would still be unable to afford the mandate it has been given including the multiple languages. He did not think that SABC should not have advertising. SABC must have advertising because South Africa marketing and business depends on enticing customers to spend more money from a marketing perspective. SABC was an important carrier of that message for business and it must have advertising. How much advertising it should have is a point that needed to be considered. Presently the system was fine as SABC has 60% of the market, the media has about 25-30% of the market. If there came a time where more private broadcasters were licensed in the free to air space then the money available to advertising would be insufficient to make a profit or break even.

The status quo was okay but when other licences are granted then this Committee must review the share of advertising on how it would impact SABC. If the number of minutes had to be curtailed in terms of broadcasting advertising then other means of funding the SABC need to be considered. Licence fees were compulsory in many parts of Europe and South Africa should strive to make it compulsory. Of the 15 million SA households, three million were indigent which leaves 12 million households remaining. 10 million households were probably pay-per-view if it is a must-pay situation. If there are 10 million households that are pay-per-view at R300 a year that is about R3 billion a year. If there is R3 billion on advertising then payment must be compulsory and government must make it its duty to find a way to get South Africans to commit to paying the TV licence. Ms Scaramuzzi mentioned the various ways other countries had done it. Mechanisms need to be found to protect the tax further and to ensure the SABC survives. He wished there were better circumstances where there had not been such a waste or loss of so much money in previous years and the state could afford to fund SABC. The Media Group supported that SABC needed to be supported and should take a uniquely South African route to deal with the issues.

Ms Mashele agreed that revenue collection was a big thing and if SABC was able to collect all its revenue through licence fees then its sustainability would not have been at stake. Perhaps a discussion was needed on what the shortfalls were about collection and was it fair for it to be left to the SABC to collect the fee because in other countries it is not left to the broadcaster to do the fee collection and maybe that is something policy makers needed to look into.

Mr Desai noted what Ms van Damme had asked about the Minister’s comments about the retrenchment process and wondered about the dissolution of the SABC board. The SABC board had been put into place to ensure the independence of the SABC. There was a legislative framework for labour disputes within the Labour Relations Act. There were noises from people in the Committee with a desire to interfere. There was a dichotomy between interference and intervention. There was a ruling that said these are two sides to the same coin. While he was opposed to the SABC being commercialized, the undermining of quality and that there was less local content on air, the wage bill is forcing its hand on the matter. He would like more discussion on the matter to get clarity from Parliament on where it stood and how it would hold the Minister accountable on that matter. The independence of the public broadcaster was critical in many regards.

Ms Khubeka replied to Mr Desai saying that he must not panic and the Minister – from a shareholder’s perspective – was not there by mistake. The Committee knows the Minister and the Deputy Minister need to play their role. The Committee was aware about the constitutional provisions and he should not panic as the Committee is working with the Minister. The Committee must work with all entities under DOC and for the Minister to champion her role. There was a challenge arising in the SABC and solutions should be discussed which would never be discussed on air as there are designated people to discuss and engage with the people. The Minister was aware of interference. If there was a problem, the Minister and Committee must intervene and they were not interfering. The Committee knows when to intervene and when it cannot. She gave the example of ICASA which is independent yet it still needs to be accountable – and the same goes for the SABC.

Ms Faku said Ms Scaramuzzi had explained the mandate of a public broadcaster well and it was very important to state what the role of a public broadcaster is. She shared revenue collection options and other means in which a broadcaster can improve and the policy perspectives of other countries. The session allowed for members to engage and learn about the draft audio visual policy. The role of Members of Parliament as public representatives was clear. Members know what their role is and they cannot be told what their roles are. The Minister was coming up with options to address the wage bill challenge and hearing the views of all stakeholders. The independent producers had made good remarks on certain items that the Committee needed to consider going forward.

Mr Norman Munzhelele, eNCA Managing Director & Broadcasting Digital Migration Advisory Council member, said the Broadcasting Act and its regulations made it mandatory that everyone owning a TV was meant to pay for a TV licence. The question had been on the table for a very long time and there had been attempts in the past to address licence fees. What he did know was that the SABC does not have the capacity to collect licence fees. What is possible to be collected and what was actually collected was just a drop in the ocean according to the annual report. Parliament needed to focus on this question to find the best institutional mechanisms to ensure optimal collection of licence fees.  The fees would go a long way in funding the SABC. The costing of the public service mandate would have to be done so that costs could be established. The future was putting a challenge on the entire broadcasting sector. The plethora of OTTs and online mechanisms were eating a lot from advertising revenue. Partnerships between South African broadcasters needed to be looked at very closely to ensure the industry worked together. A stronger SABC meant a stronger broadcasting industry. It should not be allowed for the SABC not to be strong.

Ms Z Majozi (IFP) said in future there should be discussion on effective ways to collect revenue as the amount collected did not correlate with the number of people with TVs. If people were able to pay monthly subscription fees for DSTV then they should be able to pay for their TV licence. She suggested that there be a public mandate that says every person should pay their TV licence. Strategies for collection of licence fees should be discussed in the next session so that SABC is able to sustain itself with the revenue received. They needed to consider how SABC could become digitized and be able to broadcast in that forum. A stronger SABC would be one that is sustainable because it cannot always come back asking for money. Focus should also be on current circumstances as it would be delusional to focus on futuristic solutions to ensure it maintained its mandate as a public broadcaster. For example, an SABC with government having only a 3% stake in it was not justifiable. Those discussions  were needed in the next meeting.

Ms Duduetsang Makuse, National Coordinator: SOS Support Public Broadcasting Coalition, wanted a public broadcaster that was independent from political and commercial interference and there are democratic systems set up to deal with such issues. She referenced the Section 189 retrenchments and said there was a clear court ruling on what was allowed and not allowed There was no public funding for the public broadcaster and one had to determine what was needed to make parliamentary appropriations available for the public broadcaster as there is 80% reliance on the advertising industry which is broken. In the next 10 to 15 years advertising would be more broken and more challenges would arise. People in Europe had already been formulating these discussions ten years ago. The difference between them and South Africa is that South Africa discussed but had yet to implement strategies. While the White Paper was in process, a funding model had to be found. On finding a future model, a big part of the future was already happening as it was a reality in other countries and other parts of the economy. The reality was that people were stuck in the Second and Third Revolution where there was no electrification. There would not be a digital economy if there was not infrastructure for ICT and broadband access for everyone. Otherwise people would miss out and be confined to digital slavery and digital apartheid if things did not move with the spectrum. The spectrum needed to move with the sector and the proceeds needed to go back into funding the local creative economies.

Ms Duduetsang Makuse said it could not be expected for stakeholders in the sector to think they could leverage or have negotiations with the Netflixes of the world if they had not been enabled to do so. The SABC needs for there to be movement on digital terrestrial television (DTT), direct to home (DTH) and satellite migration which was low hassle. The deadline cannot keep on being postponed. There needed to be innovation and experimentation to ensure that the market survived by finding what the new business models are. Loopholes and barriers needed to be removed in order to implement quickly. 

Ms Mashele said short, medium and long term interventions needed to be found to assist the SABC.

The Chairperson appreciated the comments made and applauded the effort made by all stakeholders to find a solution to the immediate problem. The current issue of section 189 retrenchments was just one of the problems. The main discussion should be about repositioning SABC to ensure that it becomes sustainable but relevant to South Africans.

Meeting adjourned.