Broadcasting Bill: public hearings

Orbicom submission (Appendix 1)

Sentech submission (Appendix 2)

Telkom submission (Appendix 3)

Worldspace submission (Appendix 4)

Other submissions

Orbicom, Sentech, Telkom and Worldspace presented their submissions. All presenters stated that the Bill was undesirable in its present from. One of the issues was the quotas for local content with regard to satellite broadcasting. They also emphasised the need for global capital input as there was not enough local capital available to empower previously disadvantaged persons in this arena which is one of the aims of the Bill. Further the Bill did not consider sufficiently the technological advancements that were happening in this area.

Worldspace and Orbicom were asked how would global content (which they were so much in favour of) help to promote the African Renaissance if there was not a minimum requirement for local content. They replied that satellite broadcasting was an appropriate platform to introduce the African Renaissance to the rest of the world provided the Bill did not prescribe quotas for local content. Effectively they said that global content with a bias to Africa should dominate programming of the proposed satellite broadcasting services. It was pointed out by an ANC committee member that the term "global content" was meaningless as all they were going to do was to import the local programmes of other countries, such as the USA, and term it global content.

Appendix 1: Orbicom

Comments of Orbicom (Pty) Limited

on the BROADCASTING BILL, 1998

INTRODUCTION

Orbicom (Pty) Limited is a broadcast signal distribution company. We have established numerous satellite transmissions over the African continent and we are now managing earth stations and TV retransmission networks in twelve African countries. We have participated in the work on the Broadcasting Bill, and we support enactment of a clear legal structure for this important part of the South African economy.

As an overview to our submission, we offer the following:

The bill should operate in a broader economic strategy: This industry is one of the fastest growing parts of the South African economy. The bill, however, primarily focuses on regulatory burdens, without accounting for the broader contribution that this sector makes to jobs and the economy. How can these regulations be imposed in a context that lacks a specific economic strategy for the sector? Premature and excessive regulation will damage the industry, limit its creation of jobs and threaten export of services to the rest of Africa.

The bill should foster government - industry partnership: We have continually stressed the need for joint government and industry strategies to grow this sector and open markets. The bill does not contain this concept of partnership -- for example, § 30 on signal distribution talks only of new conditions, obligations and government intrusion into tariff setting. The bill contains too many costs and burdens, with multiple layers of licensing, but no incentives for development.

The White Paper context is missing: We understand that the Parliamentary Committee has no mandate to amend the White Paper, which was to provide the context for the bill. Without this context, the bill operates in a vacuum. For example, the White Paper called for a study into multi-channel signal distribution, but the bill authorises the IBA to start setting standards for this sector without adequate information and before any study is concluded.

We urge the Parliamentary Portfolio Committee on Communication to review this bill with a view to minimising bureaucracy and regulatory burdens. It seems that the current version has taken many regulatory approaches from other countries without always assessing their application to the developing status of our markets. The complicated approach of this bill will unnecessarily tie up the resources of South African companies as well as the IBA in hearings and regulatory proceedings, without allowing industry to get on with the business of contributing to our country’s advancement.

CHAPTER I

Definitions, Interpretation and Objectives

Definitions are not always clear: The bill says that it keeps some, but not all, definitions in the IBA Act. This approach is awkward in places. It is vitally important to correct and clarify what should be licensed and regulated under this bill.

• Definitions of "broadcasting service": These appear all over the place in the bill, in confusing and inconsistent ways. For example, the bill creates a new definition of "broadcasting service" but does not eliminate the IBA Act definition. There should be one single definition that applies throughout. That definition should be narrow and precise, so that it covers companies that are responsible for developing broadcasting content and delivering it to the public using a signal distributor.

• Some objectives are missing: Important concepts should be in this bill as well as in the IBA Act. For example, § 2(i) on efficient spectrum use does not refer to international practice, which is in the IBA Act and in other places in the bill. Several other helpful objectives from the IBA Act are missing, such as IBA Act § 2(n) on refraining from "undue interference in the commercial activities of licensees" and IBA Act § 2(r) on ensuring "stability of the broadcasting industry". The bill also should include the objective of "fostering government and industry partnership with the aim of ensuring the growth of the broadcasting industry and its contribution to national economic development".

CHAPTER II

The Broadcasting System

The Minister’s authority should be described carefully: This bill affects rights of free expression, so its wording has to be very careful.

• Language in the preface to this chapter and also in § 3(2) refers to the Minister’s "ultimate responsibility" to set policy. This could be interpreted to limit Parliament and court oversight. If the Minister has "ultimate responsibility", a court might give greater deference to the Minister’s decisions. Parliament should delete the world "ultimate" and add language that this authority should be "consistent with this Act".

• Parliament also should add to this bill the same type of sections that are found in the IBA Act on notice and comment. That approach would give the public an opportunity to respond to policy directions in a clear way. The same provisions should be added to § 37 of the bill concerning the process by which the Minister sets regulations.

The entire broadcasting system must achieve national goals: There should be language in § 3(1) stating that the South African broadcasting system "as a whole" should accomplish the goals listed in that section. This language should be included in the first line of § 3(1), so that it is clear that these social obligations are the general responsibility of the system. No one part of the system can serve all needs.

CHAPTER III

Classification of Broadcasting Services

Again, the definitions must be precise: It is important to get a correct definition of who is regulated under the Broadcasting Bill.

• The big problem comes up in § 4(2), where the bill seeks to define a "broadcast service". The terms in that definition could cover many more companies than is intended. This section does not say whether a company is a broadcaster if it does one or all of the activities listed in § 4(2). These activities extend too wide a net, and could even extend to business TV or data distribution.

• This definition could require a company or group of companies to obtain two, three or more licences, even though the customer is receiving only a single service. This system needs to be streamlined and made more efficient.

The broadcasting system is made up of the following levels, not all of which need to be licensed in the South African system:

• Content producers and directors, who are the first level in the system.

• Broadcasters, who develop and offer locally-compiled programming to the public. M-Net and SABC are examples.

• Signal distributors who operate facilities based on their technical expertise. Orbicom and Sentech are examples.

• Administrative or associated companies, who provide services to the broadcasting industry but do not control signal distribution facilities. MultiChoice is an example.

• Equipment suppliers and installation providers.

• Technology and software developers responsible for the technology that contributes to digital transmission and conditional access.

Not all these companies should be licensed, because they are not broadcasters. The goals of the bill and of South African policy can be achieved by issuing licences to broadcasters and signal distributors. It is unnecessarily complicated to require duplicative licences for the other levels. These companies may voluntarily comply with industry codes of conduct in order to assist the broadcasters or signal distributors that they serve to comply with regulatory requirements.

CHAPTERS IV and V

Public and Commercial Broadcasting Services

We mainly will defer to the public and commercial broadcasters for comments on these chapters. A few issues, however, should be reviewed.

SABC automatic licences for both broadcasting and telecommunications: The wording of § 18(2) on SABC licensing will cause confusion between the broadcasting and telecommunications laws. The current language says that the SABC is entitled to any licences it may want under the IBA or Telecommunications Act, "notwithstanding anything to the contrary contained in the IBA Act, or any other law". We are not certain that this sweeping approach was intended.

Chapter V is confusing: § 27 mixes provisions on subscription services in with objectives for commercial broadcasting in general. Several questions should be addressed.

• Coverage requirements: This provision in § 27(1)(d) is not consistent internally. It says that service shall be extended "to all South Africans and provide comprehensive coverage of the areas which they are licensed to serve". This language does not make it clear whether service providers must offer coverage of all South Africa or a specified coverage area.

• Content control: § 27(3) gives more discretion to the IBA to regulate the content of subscription services than is appropriate. It says that the IBA shall set licence conditions on local content "and other conditions relating to the licence". There is no guidance on what these conditions might be. The White Paper does not give sufficient guidance and such a broad grant of authority could conflict with freedom of expression. This issue is especially important if the White Paper is not amended to give government policy guidelines.

• Satellite services: § 27(3) should exclude satellite services with overseas content. It is not reasonable or practical for the IBA to review what is on the BBC or CNN. If every country within the footprint of a satellite signal applies different rules, then it will not be possible to provide those types of services.

CHAPTER VII

Signal Distribution and Multi-Channel Distribution

As we are a signal distributor, our main concern with the bill relates to this chapter. It sets out a long list -- or allows the regulator to set out a long list -- of new regulatory obligations without telling us precisely what those rules will be.

Undefined rules for signal distribution: § 30 on signal distribution says that the IBA is to propose "terms, licence conditions, obligations and a tariff structure" for signal distribution "upon opening of the sector to competition by the year 2000". Nowhere does this section or chapter also refer to supporting and growing the industry. The following issues should be seriously discussed:

• No criteria are given for the IBA proposals: Some terms of reference should be given for the IBA proposals in this section. Otherwise, the sweeping IBA authority is too wide and compromises the legislative process -- Parliament and industry are being asked to approve undefined new obligations.

• The language should be modified: § 30 talks of "opening" competition, when what we think the section means is to "expand" competition. There already is competition in the signal distribution sector. These technical details are important, because vagueness causes uncertainty and can lead to awkward interpretations by the regulator or the courts.

• The date and mandate given are this section is too vague: Is the year 2000 the date for the IBA proposals or the date for expanding (not opening) competition? Does this date co-ordinate with the report on multi-channel distribution that the White Paper says the IBA will conduct by 1999? The bill needs to be more precise.

Controlling signal distribution tariffs is inappropriate: There is no need for § 30 to call on the IBA to study or propose signal distribution tariff structures.

• Market forces set tariffs, as they already do for private signal distributors. It is inconsistent to seek to expand competition but also to set tariffs. In all other sectors of the economy, pricing problems are reviewed under competition and consumer laws.

• This greatly interferes with business planning: To set tariff structures, the IBA must second-guess every business aspect of signal distribution, including decisions on their technology, their staffing and marketing costs, their capital investment planning and so on. How is the IBA going to do this without interfering to an enormous extent in business planning?

• The IBA would have to hire many new staff: Reviewing complicated tariff structures and looking over the shoulder of signal distribution business decisions is not a reasonable burden for the IBA to assume, nor one that will work. This approach would require an expensive new IBA bureaucracy, at a time that the IBA’s budget is actually shrinking.

CHAPTER VII

Signal Distribution and Multi-Channel Distribution

(continued)

Reference to a local priority must be seriously debated: § 31(2) and also 33(1) talk of giving priority to South African service on multi-channel distribution systems. We are working to expand coverage of South African services and in principle we support giving priority to local channels on commercial terms. However, the bill creates Government requirements without explaining how the system will work.

• "Priorities" are dangerous: They could require the signal distributor to take an international channel off a saturated system in preference to a domestic channel, no matter what customers think about it. This result could seriously affect economic and programming decisions of the service provider and upset customer expectations.

• Private signal distributors should have discretion over channels: These sections do not explain (nor does the White Paper) how a signal distributor will handle "priority" channels. How will a private signal distributor decide about the quality or genre of the local "priority" channels? Absolute priorities could require a signal distributor to carry an adult channel that the distributor otherwise would refuse, just because that channel has local content.

• Priorities are premature: It is too early to decide that signal distributors must give priorities to local services, because there are not many local services yet. Government should create incentives for new local services, rather than impose restrictions on multi-channel distributors, as the way to contribute to progress in this area.

Rules on access are not clear or complete: § 31(2)(b - e) establishes access and other obligations that are not clear. This section calls on the signal distribution sector to provide universal access and diversity, distribute services in all official languages and deliver public services.

• § 31(2) confuses the obligations of the signal distributor with those of the content provider: It is not the signal distributor who provides diversity; instead, it is the content provider.

• "High site" access is missing: There is no reference in the bill to access to "high sites" which signal distributors need to provide universal access. Government committed itself to this access during stakeholder committee meetings and it should be in the bill.

CHAPTER VII

Signal Distribution and Multi-Channel Distribution

(continued)

The proposed rules on multi-channel distribution are not clear: It is premature to include these provisions in the bill, since the White Paper calls for an IBA investigation of what the rules for multi-channel distribution should be. A clear sequence of events should be set forth in the bill, starting with the terms of reference for a study on multi-channel distribution and an adequate time for thorough analysis of the issues. Only then should the IBA start to set rules for this new and complicated sector. We already see some questions in the bill that should be addressed.

• Reasonable cost for effective technology: We do not oppose reasonable costs and we always seek to implement effective new technology. However, § 33(1)(b) could create excessive Government oversight of those costs. "Reasonable" has to mean market-related. Only the signal distributor can determine what is "reasonable", based on market considerations, since only the distributor can balance technical issues versus market and business planning.

• Multi-channel agreements: § 33(1)(c) gives the IBA authority to set "reasonable terms" for multi-channel "packaging and retailing" agreements. This approach conflicts with private carrier operations and is intrusive. The IBA would have an impossible burden to determine what are reasonable terms, as this is a competition and marketing issue. The IBA would have to sort through all kinds of issues, including technical and investment decisions, which it is not designed or staffed to handle.

• Programme origination: § 33(1)(d) is not clear, but it says that IBA approval is necessary before a multi-channel distributor can carry "original" programming. We believe this section requires the distributor to obtain advance approval to "originate" programming, which if true intrudes into the free expression rights of operators.

• IBA terms and conditions: § 33(2) gives the IBA unclear authority to set terms and conditions for "the multi-channel delivery system", subject to objectives for broadcasting policy in Chap. II. Those objectives are too vague to provide enough guidance. This section is far too open ended. These provisions should not be adopted until the investigation into multi-channel service called for in the White Paper is complete.

CHAPTER VIII

Frequency Spectrum Directorate

We support creation of the Directorate, so long as its role is clarified and policy clearly shows that IBA decisions should be free of political interference.

• There may be some jurisdictional jostling between the Directorate and the IBA. The bill’s amendment to IBA Act § 31(2) says only that the IBA must "have due regard" to the national frequency plan developed by the Frequency Spectrum Directorate established in § 34. We support leaving the IBA authority to "manage" frequency bands, as is shown in amendments to IBA Act § 13(1)(b) in the bill schedule of changes to the IBA Act.

• There should be clear policy statements set forth preserving IBA authority and reinforcing the need for the directorate to balance all interests fairly. Otherwise, the directorate might have a natural tendency to tilt in favour of government-owned entities, in preference to private competitors.

Final Matters

In any bill with this importance to the economy and free expression, there are bound to be many details to be corrected. We offer the following final thoughts on various parts of the bill.

• Production Advisory Board: There should be additional guidance on the terms and conditions that the Minister will use to establish this board under § 35. Although this is an advisory board, its recommendations may be extremely important for financing strategies.

• Anti-Piracy provisions: Revision to § 66A of the IBA Act in the bill would amend provisions that protect against stealing signals from pay-TV providers. These provisions must be tightened, to put in place penalties for anyone who receives, assists in receiving or possesses equipment to receive any unauthorised signals. This section should be broad enough to cover stealing any signals that are unauthorised -- current sections of the IBA Act are too narrow and allow a lot of piracy to go on without effective penalties. We have attached as an annex to this submission proposed new language for this necessary protection.

• Limits on fees: There are no provisions defining or limiting the fees that the IBA can charge for licences issued under this bill. Licence fees should not be used to disguise new taxes and levies on the broadcasting industry, since heavy fees will harm our economy. They will only be passed along to consumers and create a high burden for expanding the broadcasting system. There should be explicit limits on the types of fees that can be charged under § 31(3), perhaps stating that fees can only be levied to fund the cost of administering the regulatory system.

• Study on Multi-Channel Distribution and the Digital Advisory Council: The White Paper promised to conduct these investigations, both with a deadline of the end of 1999. As we have noted above, there should be provisions for both investigations in the bill, since they are so important to the future of our industry. The bill contains a provision for a study on community broadcasting, so why should there not also be a provision for other investigations that Government has promised?

• Access to Intelsat: South African broadcasting signal distributors should be able to order space segment directly from the international satellite organisation Intelsat. This approach is the global trend among developed and developing countries. Direct access cannot harm Telkom, nor interfere with its core purpose of providing basic voice services. This issue was raised in the Green Paper and is an important element of national policy.

4 September 1998

Appendix 2: Sentech

Sentech

COMMENTS ON THE BROADCASTING BILL AS INTRODUCED IN THE NATIONAL ASSEMBLY (B94-98)

1. INTRODUCTION

Sentech wishes to express its appreciation for the opportunity to present our written comments on the Broadcasting Bill to the honourable members of the Communications Portfolio Committee. Sentech has supported and participated in the development of a democratic broadcasting system in South Africa, from the initial process to establish the IBA Act. That was a huge step forward and led to the introduction of a diversity of services over the past four years in private and community broadcasting. However, there is a pressing need for another step to be taken to deal with national policy, to finally remove the remains of the old system and to pave the way for the next millennium.

The convergence of broadcasting, telecommunications and information technology activities in the wake of the establishment of digital technology will change the landscape and provide numerous new opportunities to improve communications and to leapfrog ahead in doing things differently and much more efficiently. Electronic media on the various distribution systems that are now available on terrestrial, satellite and cable systems, will spread to a wide range of applications, far exceeding the traditional broadcasting domain. All institutions in the public and private sectors should use the opportunity to improve their service and product delivery to the public by using the media.

Electronic media and distribution, inclusive of broadcasting services is destined to grow and change substantially in the time ahead. It is therefore necessary that policy and regulatory structures are reviewed from time to time to facilitate the optimum deployment of this resource to the benefit of the South African society.

The particular sections of the Bill on which Sentech wishes to comment, are itemised below with reference to the section involved. A proposed revision or additional wording for the Bill is provided, which is followed by a motivation and discussion.

2. SECTION 1 - DEFINITIONS AND INTERPRETATION

2.1 The definition of a commercial broadcasting service in item (iv) does not align with the existing definition in the IBA Act for a private broadcasting service due to the use of the word commercial in lieu of private and different parties involved in control and ownership. The new definition for a public commercial broadcasting service included in the amendments to the IBA Act in schedule 1 of the Bill also needs to be reviewed.

2.2 The definition for a free-to-air service contained in item (ix) needs to be expanded to provide for both the "open" and "free-to-air" options. As the term free-to-air is used in many parts of the Bill it must be determined which option applies, although it is the "open" option that is generally referred to.

The advent of digital and subscription broadcasting has created more options for both sound (radio) and television broadcasting, as it will later for data broadcasting (e.g. Internet). These options are the following:

(a) Open broadcasting, where the signals are not encrypted and scrambled, nor does it require a smartcard, therefore, the reception is uninhibited and does not require interaction with the point of origin. This option should be applied to any service which must be highly accessible and which is relevant in terms of universal service.

(b) Free-to-air broadcasting, where the signals are encrypted and scrambled requiring a uniquely identified receiving facility where the facility is controlled from the point of origin, to enable or disable reception, but where no payment is charged. This option is used where a subscription operator offers a number of service levels, including free channels, but where the receivers involved are subject to subscriber management for marketing and commercial benefit.

(c) Subscription broadcasting, where the signals are encrypted and scrambled requiring a uniquely identified receiving facility where the facility is controlled to enable or disable reception and where payment is charged.

PROPOSED NEW DEFINITIONS

(ix-a) "Open" service means a service which is broadcast without encryption or scrambling of the signal and which is capable of being received on universal receivers without payment by the end user to enable reception and without there being any control over the receiving facility involving enabling or disabling.

(ix-b) "Free-to-air" service means a service which is broadcast with encryption and which is capable of being received on uniquely identified universal receivers without payment by the end user but involves the use of a control system which may enable or disable reception.

Following on the above it is also necessary to review the definition for encryption as contained in item (viii) as follows:

(viii) "Encryption" means a method for changing a broadcasting signal in a systematic way so that the signal would be unintelligible without a suitable receiving facility

The classes of broadcasting licenses referred to on page 14 of the Bill in section 5, subsection 2, in items (a) and (b) for free-to-air radio and television, and items (c) and (d) for satellite-free-to-air radio and television need to be expanded to make provision for both open and free-to-air options.

3. SECTION 4- LICENCES

Sentech supports the provision in the Bill that broadcasting and signal distribution providers be required to hold a license or authorisation from the regulator.

4. SECTION 8 - OBJECTIVES OF CORPORATION

Sentech proposes that the two subsections, (c) and (h), be deleted, or if retained, there should be a qualifier that these activities could be undertaken by the SABC only outside the Republic.

The arguments in support of the above proposal are the following:

· These subsections give the SABC the right to engage in signal distribution. The above subsections read with section 21 gives the SABC the right to establish signal distribution stations. This position appears to contract the White Paper policy which states in section 3.1 "as a way of promoting fair competition there will be a separation between broadcasting licensees and signal distribution licensees. Vertical integration between broadcasting and signal distribution licensees will be discouraged to draw investments into the signal distribution sector and also to introduce new players and services" Accordingly, the provisions of the bill appear to contradict the recently established policy especially because the SABC is the dominant broadcaster in the country.

· The IBA Triple Inquiry report of 1995 proposed and parliament adopted the recommendation that Sentech be separated from the SABC and that Sentech be licensed as a common carrier , wholly owned by the state . Subsequently, the Sentech Act was passed in 1996.

· The establishment of the common carrier and the planned opening of the signal distribution sector to full competition will give all broadcasters, including the SABC greater choice regarding providers for signal distribution services.

· Clarity is needed whether the SABC is expected to compete with other signal distributors as one of its core functions in the same manner that it will be expected to compete with other broadcasters.

· Sentech would argue that outside the Republic, the SABC might need and should be granted such powers, but that these are unnecessary in the Republic.

5. SECTION 10- PUBLIC BROADCASTING SERVICE

Another item should be added to subsection (1)

(j)Reflect the proceedings of the National Assembly on an on going basis, particularly on radio.

The SABC presently televises meetings of the National Assembly on SABC3 in the afternoon but does not have similar coverage on their radio services. Considering that radio is the most utilised medium in South Africa and has lower operating cost, it stands to reason that this medium should be used to reflect more of the proceedings of the National Assembly than television. The SABC may be able to provide a full time radio service on which the proceedings of the National Assembly, also in its various branches, provincial legislatures and other public processes may be covered for distribution to the general public. It may be possible that the frequencies and signal distribution facilities that became available after the integration of the former TBVC broadcasting services into the SABC and Sentech respectively, could be utilised for this purpose.

6. SECTION 21 - ACQUISITION OF LAND

Sentech proposes that this section be deleted for the following reasons:

· Arguments stated in the discussion of section 8 (c) and (h) above

· The Sentech Act of 1996 (section 9) makes provision for the acquisition of land for the purpose of providing, as a common carrier, broadcasting signal distribution for broadcasting licensees in accordance with the provisions of the IBA Act. This section further provides for land acquisition by the expropriation in the event that normal acquisition methods fail and no alternatives are available. The process require the approval of the Minister in accordance with the relevant provisions of the Expropriation Act of 1975.

· The proposed section 21 seems to be a carry over of a provision in the Broadcasting Act of 1976 which, at the time of promulgation, there was no common carrier and signal distribution was still an integral part of the SABC

The proposed legislation could make provision for the SABC to acquire and erect signal distribution stations, with the Minister's approval, outside the Republic of South Africa.

7. SECTION 29- COMMUNITY BROAIDCASTING SERVICES

Sentech proposes that after the merger of the IBA and SATRA, the Universal Service Agency, should have the added responsibility of developing mechanisms to support community broadcasting services.

The following reasons are advanced to support the proposal:

· The Broadcasting Bill is silent of the issue of financial support for community broadcasting services while several provisions of section 2 of the IBA Act and section 2 of the Broadcasting Bill address the need for broadcasting services to contribute towards democracy, diversity and plurality of news and other programming. Furthermore community broadcasting services in particular, are recognised in other sections of the IBA Act and the Broadcasting Bill as vital to the development and maintenance of democratic principles. The IBA and other interested parties have noted the dire financial constraints of many poor communities who need and want community broadcasting services but are unable to afford them. This need will continue to exist because there are community broadcasting services in parts of the country that will never be self sufficient even as they provide much needed service to their communities.

· The same public policy imperatives that led to the proposal for the establishment of the South African Production Advisory Body apply to the survival of the community broadcasting sector.

· The Universal Service Agency (USA) has extensive experience in working with communities in the establishment of telecenters. The added responsibilities would require minimal resources while and a small learning curve on the part of the USA.

· While it is essential that communities, business and industry should be encouraged to support community broadcasting services, there is a need for government to assume the role of a catalyst in this regard.

8. SECTION 30 - SIGNAL DISTRIBUTION

8.1 Sentech proposes that section 30 be revised as follows:

"The Authority shall as soon as may be reasonably practicable after the commencement of this Act and as a matter of urgency, conduct an inquiry into and recommend to the Minister; who shall finally determine, a policy for the economic regulation of broadcasting signal distributors upon the opening of the sector to ful4 regulated competition".

The arguments in support of the revision are the following:

(a) The opening up of the sector to full, regulated competition will have a substantial and serious impact on the role and viability of Sentech. A strategic review is being undertaken in terms of the National Framework Agreement for the restructuring of State Enterprises which may result in a re-positioning and part-privatisation process. Sentech's value will be affected by its license conditions, market potential and the exploitation rights concerning its assets. The strategic evaluation of Sentech has so far indicated that Sentech is vulnerable due to its narrow market focus. It is deemed essential that an inquiry be conducted into the opening up of the sector to full competition in order to be able to recommend a policy.

(b) The pre-determined time frame from now to the year 2000 is not regarded as feasible considering the workload of the IBA and the time required for Sentech to reposition itself. The IBA is presently engaged in the licensing process for community broadcasters and for Capital Radio, and is subject to a merger with SATRA. An inquiry into a policy for economic regulation needs to be scheduled. The opening up of the sector to full, regulated competition could not occur while all these activities are still going on and before reasonable preparations have been made, without a high degree of risk to damage the position of Sentech.

(c) Sentech believes that subsections (2) and (3) of section 31 of the Bill, read with the relevant provisions of the IBA Act, adequately sets out a broad policy framework for the regulation of broadcasting signal distributors. But the question of tariff regulation, broader economic regulation and the related application of competition law have still to be resolved.

Sentech's position on these questions can be sumarised as follows:

· Sentech is subject to the common carrier's public interest principles and obligations as set out in the IBA Act and, as such, its tariffs have to be consonant with such principles and obligations;

· Sentech should submit its tariffs to the Authority for scrutiny and to the Minister for final approval;

· Sentech submits that full, regulated competition should only be introduced in the signal distribution sector after an inquiry and the final determination by the Minister as to the extent and implications of such competition.

· This inquiry would include the possibility of various public-private partnerships with Sentech, strategic equity partners, partial privatisation etc. and would take into account the views of all the telecoms, broadcasting and competition regulatory authorities.

· Sentech does not support heavy tariff regulation for the signal distribution sector, but rather a light-touch regulatory system which allows the licensing of competitors in the sector together with Sentech as common carrier.

(d) The proposed section 30 in the Bill is incorrect in that it creates the impression that no competition exists in the South African signal distribution sector. It should be noted that the introduction of the IBA Act actually introduced a new, limited system of regulated competition for broadcasting signal distribution in 1993. The creation of three categories of such licences - the common carrier licence (Sentech), the private carrier and a limited-use licence for broadcasters - set in law limited competition. The Authority has only licensed a few operators within this system of limited competition. At present there is limited competition in terrestrial distribution but full competition in satellite distribution.

Sentech therefore proposed that the final passage of section 30 should read rather:

"upon the opening of the sector to full, regulated competition"

(e) It is assumed that the merged SATRA-IBA regulatory body will be primarily responsible for regulating and licensing broadcasting signal distributors. This body will have to regulate the sector in terms of a policy and economic framework that will finally determined by the Minister. In effect, SATRA-IBA will regulate general competition issues in the sector.

However, Government has recently taken the question of overlapping regulatory authority in competition matters into account. The latest version of the Competition Bill effectively excludes broadcasting signal distribution and the general business of Sentech from its ambit.

Subsection 3(1)(d) provides that:

"This Act applies to all economic activity within, or having an effect within, the Republic, except acts subject to or authorized by public regulation"

Subsection 1(1)(xx) provides that:

"'public regulation' means any national or local government legislation or subordinate legislation, or any license, tariff, directive or similar authorization issued by a regulatory authority or pursuant to any statutory authority"

Subsection 1(1)(xxii) provides that:

"'regulatory authority' means an entity established in terms of national or provincial legislation responsible for regulating an industry, or sector of an industry".

As stated above, the IBA (or the merged SATRA-IBA) will still be responsible for regulating competition in the broadcasting signal distribution sector. Sentech's proposal for an inquiry into the key matters effecting economic regulation is even more critical in a context where broadcasting signal distribution will be excluded from the Competition Bill's ambit.

(f) Sentech wishes to comment on access to high sites as it was raised in another submission to the Portfolio Committee:

The so-called high sites issue needs to be distinguished from the general question of competition in broadcasting signal distribution. Sentech's statutory common carrier obligations and the licensing of competitors in the sector could be regarded as general competition matters - to be dealt with by the Authority.

With regard to the high sites issue, Sentech refers the Committee to the IBA's Triple Inquiry Report, presented to Parliament in August 1995. The recommendations, adopted by Parliament, included the recommendation that issues, such as access to Sentech's high sites", "be addressed in the broader context of national policy relating to essential services not only in broadcasting services alone, but in all other sectors".

In other words, the Authority recognised that the high sites issue had such strategic economic importance that it had to be dealt with alongside access to other "essential services" such as Eskom, Telkom, Transtel and various fuel and energy facilities.

High sites are in any case a facility that is not unique to Sentech as such facilities are not only used in signal distribution but are also necessary for telecommunications of various kinds (microwave, paging, cellular telephony, etc.) and water distribution. A high site needs to defined, which may be as follows:

A land area of a sufficient size to accommodate the activity involved and which is elevated above the surrounding terrain to serve the required geographical area or as much of it as possible.

An artificial high site can be created or the potential of a particular site improved by putting up a steel or concrete structure. Requirements for height and reach varies according to the application and local objectives involved. Availability of very high sites is limited and may involve high investment with access roads, power lines and engineering structures. The value of these sites is determined by the population density of the surrounding area. Different operators and services tend to accumulate on common sites. The infrastructure establishment is not an inherent part of a high site and is very much part of each particular business enterprise and their competitive strategy.

Sentech's high site infrastructure is an integral part of being a common carrier and a viable efficient commercial business. It owns this infrastructure and has the exclusive rights to exploit it to the benefit of its shareholder (the State) the South African public and the broadcasters using its services. Sentech operates a secure national network of high sites in both metropolitan and rural areas to provide universal access distribution in consort with the broadcasting services involved. It forms the backbone of broadcasting in South Africa and provides a scale of economy with its large operating base to spread the cost over both metropolitan and rural areas, which is beneficial to the latter. Sentech was unbundled from the SABC as determined by the National Assembly to establish an independent and neutral entity that is not vertically integrated. Access to Sentech's infrastructure would have a dramatic impact on its position, heralding the end of the common carrier enterprise and severely reducing Sentech's value.

Sentech hopes that, in so far as the Competition Bill intends to regulate such access to Sentech and other parastatals, Sentech will definitely be allowed to participate in the final determination of such a system.

8.2 Sentech proposes that the contents of section 30 (as revised) form a subsection and that a second subsection be added as follows:

The common carrier service for broadcasting signal distribution is provided by Sentech Limited, established in terms of the Sentech Act of 1996. Its objectives are determined in clause 31 of this Act and the IBA Act.

The Broadcasting Bill does not recognise the public carrier as it does public broadcasting. The PUBLIC CARRIER and the PUBLIC BROADCASTER are twins who play key roles in delivering broadcasting services, inclusive of universal service, to the South African society. The public carrier role is fulfilled by the common carrier for broadcasting signal distribution licensed by the IBA and which operates as Sentech Limited in terms of the Sentech Act of 1996, as a wholly state owned enterprise. Obligations for Sentech are specified in the IBA Act, the common carrier license granted to Sentech and those specified in section 31 of the Broadcasting Bill. Most of the latter requirements may only be met by Sentech, being the only common carrier which is unlikely to be duplicated Competitive private carriers would probably concentrate on certain market sectors while broadcasters licensed in the third (self help category) would involve low power or small numbers of transmitters. Sentech with its country wide network of transmitting stations accommodating various transmitters provides a unique scale of economy in its role as the backbone of broadcasting in South Africa.

9. SECTION 31 - OBJECTIVES

(a) Subsection (2) seems to provide an expansion of the principles set out in the IBA Act and as such Sentech welcomes it. However, one could suggest an important addition to the introduction to subsection (2). It could read:

"The signal distribution sector; in conjunction with the broadcasting sector but

(b) Sentech supports the laudable objectives set out in this subsection. But these objectives can only be achieved by the signal distribution sector in the second instance. It is the IBA that sets, within the license conditions of each broadcaster, the area that the licensed service is to cover. The signal distributor may not exceed the IBA approved coverage area of each specific service. The public, private and community broadcasters must first prioritise universal access, diversity of services and content and a multiplicity of languages. The signal distribution sector is not responsible for the creation of content but the rather for the distribution of that content. At the request of broadcasters, the common carrier can help the broadcasters achieve universal access and other public interest obligations. Therefore, the objectives of this section can only be met by the signal distribution sector in conjunction with the broadcasting sector."

NOTE: "conjunction" may not be the best word - perhaps "together with the broadcasting sector".

(c) Sentech support the policy provisions contained in subsection (3).

The only question left to be determined by this section is the legal meaning, extent and nature of "control" as set out in this Bill.

Will a maximum percentage of foreign ownership be set? Is control" to be understood as it is in terms of the IBA Act, noting that such definition has caused problems with the Courts?

Sentech would appreciate clarity on these issues.

10. SECTIONS 32 & 33 - MULTI-CHANNEL DISTRIBUTORS

(a) It is just too early to finalise a South African policy for multi-channel broadcasting. The Broadcasting Bill needs to establish the basic requirement for licensing and regulation but the expansion on a framework should be held over until a further study and evaluation has been carried out. An amendment should then be made. It is therefore proposed that only section 32, subsection (1) is retained, that subsections (2) and (3), and section 33 are deleted, and that a new subsection (2) is added to section 32, as follows:

As soon as possible after the promulgation of this Act, the Authority must conduct an inquiry in terms of section 28 of the IBA Act, into the terms required to effectively regulate multi-channel broadcasting which need to be included into an amendment to the Broadcasting Act of 1998.

(b) The licensing and regulation of multi-channel broadcasting in the world have so far occurred on an ad hoc basis. The deployment of new technology moved ahead of regulatory practices, however, governments and regulators have realised the significance of these technologies embracing digital techniques and are now instituting consultative and transparent processes to establish policy and regulatory measures. It became essential when applications moved beyond initial deployment on satellite systems, with its tendency to high end markets, into terrestrial transmission which will eventually replace the existing terrestrial analogue transmissions to serve the public at large. In order to timeously provide for the public interest, before sectorial interests and early starters take advantage of a situation where an effective policy has not yet been established, arrangements should be made to institute the necessary study and consultation processes.

(c) South Africa has just spent a considerable effort in reviewing its broadcasting policy and regulatory system. It had a large back log due to a democratic regime having only recently been established. Most of the attention was therefore spent on basic issues to establish a broadcasting system which would be globally competitive with open democracies where freedom of speech is practised. Only a small proportion of the time was spent on debating the issues concerning multi-channel broadcasting. These issues are complex and far reaching, and is only now being grappled with on a global basis.

(d) The European Community in December 1997, embarked on a full scale policy process by publishing a green paper to which a large response was received. A summary of the results of the green paper response has been published together with areas for further reflection. Another response is required by November 1998. The areas concerned are the following:

· Access to networks and digital gateways in a converging environment.

· Creating the framework for investment, innovation and encouraging European content production, distribution and availability.

· Ensuring a balanced approach to regulation.

Access issues have been highlighted in many comments as a key commercial and regulatory issue in the converging environment. Access issues relate to set-top boxes, application programme interfaces, electronic programme guides and the local loop itself, as well as digital services besides television.

The individual countries in the EU are also following on with local policy processes in conformance with the EU policy. The resources and expertise applied in this region are huge. Although South Africa would not want to follow the Europeans blindly, it would be prudent to evaluate the outcome of the European policy process and to adopt those parts that suite South Africa. It would also be wise to adopt a South African policy that is in line with global trends in order to be competitive and not to disadvantage South African initiatives that would follow. The adoption of appropriate standards to maximise inter-operability would be a prime issue for the digital transformation process and future universal access.

(e) Access to distribution systems is a prime public interest issue and is directly linked to the inter-operability of decoder boxes. The basic policy should be determined at legislative level. The White Paper stated a policy requirement but no provision was made in the Bill. It needs to be addressed in the proposed inquiry. The European policy process expressed the following in their first green paper report:

· a major issue of concern for many commentators was that of access to customers through conditional access, navigation and operating systems;

· open access was needed not only for reasons of fair competition but also to ensure plurality and consumer choice; the need to safeguard against abuses of market power by vertically integrated companies;

· a move away from current vertical regulatory divisions to a more horizontal approach;

· future regulation should be technology and Platform-neutral;

· a clear and predictable regulatory framework to facilitate investment decisions.

11. SECTION 34- FREQUENCY SPECTRUM DIRECTORATE

(a) It is proposed that section 34 of the Broadcasting Bill be deleted.

(b) This section does not belong in this Bill nor does it clearly specify the functions of the proposed directorate viz a viz the functions of the IBA and SATRA as specified in the respective legislation. The objectives for the merger of the IBA and SATRA which is destined to occur in the near future include inter alia the creation of a more effective organisation in terms of resource utlilisation, dealing with the convergence of technologies and a more effective frequency assignment process than the existing arrangement. The creation of a Frequency Spectrum Directorate within the Department will have a negative effect on these objectives. It is therefore proposed that a Frequency Spectrum Directorate rather be created within the merged IBAISATRA and that it deals with all aspects of frequency planning and management. Higher level policy concerning the frequency spectrum could still be provided by the Ministry along with other policy aspects of broadcasting and telecommunications.

12. SECTION 35-SOUTH AFRICAN BROADCAST PRODUCTION ADVISORY BODY

Sentech supports the establishment of the South African Production Advisory Body

It is international acknowledged that convergence and digitalisation will eliminate the scarcity of frequencies and increase access to international programming from virtually anywhere in the world. The challenge of appropriate and relevant content and diversity of services will lie in the long term be driven nor sustained by local content quotas but rather, the development of the South African film/video production industry.

13. SECTION 37 - REGULATIONS

Sentech proposes the following change to section 37 (2)

"In the exercise of his or her powers under subsection (1), the Minister is obliged to consider the commendations of the Authority (and interested parties through a public process), and is not obliged to accept such recommendations."

The following arguments are presented in support of the proposed change

· The right of the Minister to make regulations is accepted.

· The process of making regulations must be transparent and benefit from input from interested parties

· The prescribed process of making regulations in the IBA Act and Telecommunications Act have worked very well and must be used as a model

· Legislation should not assume that the Minister will as a matter of course engage in a public and transparent process in the making of regulations but must prescribe the manner in which regulations can be made.

· The open and transparent process complies with the objects of the IBA Act and the Broadcasting Bill in that it would encourage investment in and promote stability of the broadcasting industry.

South African Broadcasting Corporation (SABC)

SOUTH AFRICAN BROADCASTING CORPORATION

SUBMISSION ON THE BROADCASTING BILL [B94-98]

1. PREAMBLE

The SABC welcomes the process of writing new legislation for the broadcasting industry.

The Corporation, indeed, believes that this development will strengthen broadcasting in the country and consequently benefit all stakeholders, as well as the viewing and listening public.

The SABC agrees with most of the provisions of the Broadcasting Bill and does not deem it necessary to indicate here those areas with which it is in agreement. In this document we have indicated those areas that the Corporation does not agree with, or that it feels further discussions with the drafters and other stakeholders are necessary.

The Corporation's comments and concerns raised in this document are based on the belief that the independence, editorial and otherwise, of the Public Broadcaster should be unequivocally protected by this legislation.

This is of vital importance so that the Public Broadcaster can play its role well into the future without any form of interference resulting from ambiguous legislation.

2. GOVERNANCE OF THE CORPORATION

The general thrust of the Bill regarding the governance of the Corporation is that the SABC will be governed in accordance with the provisions of the Companies Act.

While a number of provisions in the Companies Act may be appropriate for the Public Broadcaster, several are not, given the role and need for independence of the SABC.

A fundamental distinction between the SABC and any other company governed by the Companies Act — including state corporations — is that the board of the SABC is appointed by the State President on the advice of the relevant Portfolio Committee of Parliament, and in accordance with certain principles as outlined in Section 12 (a)(b)(c) of the Bill.

This point of departure is important in understanding the role of the SABC and the distinction thereof between its Board and any other Companies Act board, or any other state corporation board.

Thus, its powers and responsibilities should be drafted — in the Bill — in such a way that the board of the SABC will be able to play the kind of role that is expected of the public broadcaster by the South African public, Parliament and the State.

The Bill seems to have given more powers to the Minister on the grounds that he or she is the representative of the shareholder.

The role of the board in the governance of the corporation is almost non-existent, without ministerial over-shadow.

We contend that a board appointed in the manner above should be entrusted with the responsibility to represent the shareholder, and this should be provided for in this law.

Finding an appropriate solution to this problem would enable the drafters to find suitable provisions that will relieve the Minister from the kind of responsibilities that are apportioned to this office by Sections 16, 17, 19, among others.

2.1 Composition of the board

The composition of the board of the SABC has the potential of presenting certain serious problems for the governance of the SABC.

2.1.1 The reduction of the board from the present maximum of 16 to a maximum of 11 with three directors being executive members will present problems for the SABC, if account is taken of the need for broader representivity and the accumulation of skills as provided for in Section 13 (1) (a) (b) (c) of the Bill.

It is proposed that the size of the board be increased to a minimum of 12 and a maximum of 15 with three directors being non-executive members. The quorum for meetings of the board should be adjusted accordingly.

2.1.2 Qualification of Board Members: In order to ensure more diversity and representivity on the board of the SABC, it is proposed that disability and gender be added in Section 13 as a qualification for appointment to the board.

2.1.3 Executive Directors: The Bill proposes the appointment of three executive

directors. These, the Bill says, should be the Chief Executive Officer of the Corporation, the Chief Operating Officer and the Director of Finance.

This seems to have been drawn from the Companies Act.

However, as indicated above, the governance needs of the SABC may very well differ from those of ordinary Companies Act corporations.

It is our view that, given the strategic and structural needs of the Corporation that may change from time to time, it would be limiting to specify the positions of the executive directors.

For example, at the time of breaking up the SABC into two arms — commercial and public broadcasting — the board and the Group Chief Executive may decide that the heads of each of the arms should be the two other executive directors because of the importance of their roles.

Therefore, it is suggested that, save for the position of the Group Chief Executive or Director General of the Corporation, the other two positions should not be specified.

2.1.4 Executive Committee: On the other hand, the Bill proposes that the Corporation will have four additional executives as members of the Executive Committee (Section 14 (1)).

Our view is that specifying such a number in law could have practical problems that might make it difficult for the SABC to appoint more executives, if it so requires in view of strategic or structural needs.

It is proposed that Section 14 (1) be amended to omit the positions of the Chief Operating Officer, the Financial Director and the four additional members.

It could then read: The affairs of the Corporation are administered by an Executive Committee consisting of the Chief Executive Officer, two executive directors and other executive members of the Corporation appointed by the board.

2.2 The Regulator and the Public Broadcaster

Section 18 (3) of the Bill indicates that the IBA will monitor the SABC for compliance with the Charter.

This is an unusual arrangement in the broadcasting world, where one statutory body is supposed to monitor another.

Our understanding of the role of the board of the SABC is that of ensuring that the SABC delivers on its mandate or the Charter and that — like the IBA — it accounts to Parliament through its annual report or other mechanisms.

We would like to suggest that the IBA monitors only the Public Commercial Broadcasting Services arm of the SABC, because this arm is supposed to operate in an environment where it competes with private broadcasters, and that its mandate will be drawn by the IBA through its licence conditions.

In many countries the arrangement is that where public broadcasters are established by law, they account to either Parliament or Government for their compliance with mandates, and the regulator is there to create norms and monitor the private industry which can not be regulated by law.

The role of the IBA as far as the public broadcaster is concerned should be limited to the issuing of licences for the purposes of spectrum allocation and governance. Otherwise, the mandate is allocated by Parliament through legislation and the Charter and the SABC should account to Parliament on its compliance.

3. FINANCES OF THE CORPORATION

The cornerstone of any editorial independence is financial independence or the independence to use resources to achieve editorial ends.

The thrust of the Bill, given its Companies Act foundation, is to give financial control to the government of the day, on grounds that it represents the shareholder.

This arrangement, however managed, will tend to lead to perceptions of state interference in the affairs of the SABC in areas that could compromise or constrain the journalistic, creative and programming independence of the Corporation.

Indeed, to avoid this, the law governing the Canadian Broadcasting Corporation, the Broadcasting Act, states in Section 52 (2) "...The Corporation is not required to

(a) submit to the Treasury Board or to the Minister or the Minister of Finance any information the provision of which could reasonably be expected to compromise or constrain the journalistic, creative or programme independence of the Corporation; or

(b) include in any plan or summary thereof submitted to the Minister... any information the provision of which could reasonably be expected to limit the ability of the Corporation to exercise its journalistic, creative or programming independence."

The implication in the Bill that the SABC will submit business plans and financial statements to the Minister may be construed as going against the sentiments of the above provisions.

Such a practice may indeed be abused by an irresponsible Minister or government to exercise all forms of controls over the SABC, including the editorial area. At present, or in the past, the SABC has not submitted business plans or financial statements to the Minister.

We would like to propose that any provisions requiring or complying that the SABC will present financial statements to the Government be removed, and that the accountability of the SABC for the usage of its funds be kept in the requirement to present an Annual Report to Parliament.

3.1 Payment of Dividends

Section 16 (4) of the Bill suggests that "Any dividends received by the state must be paid into the National Revenue Fund".

This provision supposes that the dividends of the SABC will be forwarded to the state.

The SABC advises against this. Over the years, legislation has protected the SABC from this practice, thus enabling the Corporation to use its surpluses for developmental projects.

The emerging competitive environment in the country's broadcasting industry makes the above arrangement even more necessary.

We suggest that this provision be amended and Section 18 of the present Broadcasting Act be kept.

3.2 Cross-Subsidisation

Section 11 (4) of the Bill suggests that the public broadcasting services of the SABC will be subsidised by the public commercial broadcasting services "to the extent recommended by the Board and approved by the Minister".

We do not understand the logic and the need for the Minister's approval in a transaction

of this nature.

As we have indicated above, we believe that the Board's composition should make it appropriate to perform such a function.

We believe that a Board so constituted should have enough powers and authority to decide on the usage of resources of the Corporation within the Corporation.

4. TELEVISION LICENCES

The Bill has omitted legislation governing TV Licences entirely. We would like to propose that the entire legislation on TV Licences in the Broadcasting Act 73 of 1976 and the Radio Act 3 of 1952 be included in this Bill with some amendments.

The Bill, as well as the White Paper on broadcasting Policy, places TV Licence fees as one of the major sources of funding the Public Broadcasting system.

At present neither radio nor television at the SABC break even.

Television licence fees revenue is used to cover the losses of the two services and enable the SABC to have a surplus.

The emerging competitive environment might very well worsen the situation as advertising revenue may decrease.

This will require that the collection of TV Licence fees be improved dramatically.

This can only happen if legislation enabling and enforcing TV Licence payment is tight enough to close all possible loopholes that make it possible to evade payment.

Thus, a few additions to the TV Licences legislation are proposed.

4.1 Enforcement Mechanisms

A provision should be inserted to enable the SABC to issue licences for TV sets from the manufacturing and importing point, against payment.

This will enable the SABC to register all persons purchasing TV sets.

Current estimates are that there are over 1,5 million owners of TV sets that are not

registered as TV Licence payers.

The legislation proposed here would eliminate, or at lease minimise, this problem.

4.2 Payment for more than one set

A provision should be inserted making it mandatory for the payment of a TV Licence fee for additional TV sets at a cost equivalent to a third of the total TV Licence fee.

During our inspections we have come across families living at one address possessing

several TV sets but paying for one TV Licence only.

This is an exploitation of the current legislation that allows a situation where only one licence is required for any number of TV sets provided that they are all at the same address.

The amendment proposed would enable the SABC to claim at least a third of the TV Licence fee in instances like this.

4.3 Payment of TV Licences by the State

Current legislation requires the Minister to pay the SABC an amount of money for TV sets owned by the State.

To our recollection this has never happened.

A few months ago the Minister told Parliament that he was in favour of a situation where each State organisation pays for the licences of the TV sets they possess.

This is indeed the practice with services rendered to the State by other parastatals. The State pays for water and lights, postage, telephones, etc. It does, therefore, follow that the payment of TV Licences should be handled in the same way.

Since the Minister's remarks in Parliament we have registered almost all Government departments. To strengthen this, Section 20 of the Broadcasting Act 73 of 1976 should amended to read: The Accounting Officer of each State Department shall be required to pay the SABC and amount of money for the TV Licence, in relation to all TV sets in the Department’s possession.

4.4 TV Licences and tariff increase

The present legislation requires approval by the Minister to increase TV Licence tariffs.

This has created certain practical problems resulting in a situation where the SABC has not been able to increase tariffs for the past three financial years.

This has led to an increase in collection costs from 12% in the first of the three years to about 30% in the present financial year as the gap between costs and revenue narrows.

This leaves the SABC with less and less money to fund the activities for which TV Licence fees are collected.

The norm overseas is about 5%.

We propose a clause enabling the SABC to increase the TV Licences tariff every year by an amount that is not above the Consumer Price Index, as defined by the Central Statistical Service.

5. THE SABC CHARTER

We are concerned that the Bill is tabled without the promised SABC Charter.

We would like to point out that in some cases, the Charter of the Public Broadcaster is actually the document setting not mandate or content issues as well as governance provisions (See BBC Charter here annexed).

If this were to be the case with us, most of the provisions of the Bill would be in the Charter, together with the mandate or content issues.

On the other hand, passing the Bill without the Charter does not enable us, or even Parliament, to ascertain whether some provisions of the Bill would not end up constraining the drafting of the Charter and forcing Parliament to amend the Broadcasting Act or live with a defective Charter.

6. MISCELLANEOUS

Other issues that we would like to raise are as follows:

1(c) (XM) "old" should rather be "previous"

3(4)(e) should not read "… disabled programming"

but "… programming for the disabled".

7. CONCLUSION

As we have indicated above, we welcome the process that began with the drafting of the White Paper on Broadcasting Policy and will lead to the passing of new broadcasting legislation.

The concerns we have raised here are based on our understanding of the industry and what we think would be both legally and constitutionally sound, as well as practicable.

Appendix 3: Telkom

Telkom

TELKOM'S SUBMISSION ON THE BROADCASTING BILL (B94-98)

This submission is made by Telkom SA Limited (Telkom) to the Portfolio Committee on Communications of the Parliament of the Republic of South Africa.

Telkom is grateful to be given the opportunity to make this submission.

1. INTRODUCTION

The Broadcasting Bill addresses the issue of licensing broadcasting and broadcasting-related activities.

The Bill addresses the current environment both in terms of the already regulated services, such as the single channel broadcasting and signal distribution services, and the already existing, but as yet unregulated, services such as multi-channel services broadcast by satellite.

The Bill also attempts to make provision for future developments, such as for instance cable television and multimedia, foreshadowing the convergence between broadcasting and telecommunications.

Telkom's comments on the Bill will focus on the following main areas:

· the nature and scope of broadcasting services,

· the nature and scope of signal distribution services,

· the special characteristics of multi-channel services in relation to the above.

2. BROADCASTING SERVICES

2.1 Telkom understands that, in terms of the definition given in section 1 of the Bill, read in conjunction with section 4(2), a broadcasting services consists in the creation or packaging of television or sound material in a form suitable for distribution to customers, including those activities ancillary to it, such as for instance the soliciting of advertising, or the obtaining of rights to existing material..

2.2 Telkom broadly agrees with the definition of broadcasting service given in the Bill. However, it proposes the substitution of certain terms in the definition, as further discussed below, which in Telkom's opinion would assist in providing more clarity and certainty.

2.2.1 The use of the term "that delivers . . ." may create confusion between broadcasting and signal distribution. While the broadcast service is provided when delivered to a customer, the process of delivery is more properly one of signal distribution. The same problem is found in the defined term "local delivery service", for which an amendment is also proposed.

2.2.2 The use of the term "programmes" may be unnecessarily restrictive as it is conceivable that "unprogrammed" broadcasting may take place. Therefore, the corresponding terminology used in the BA Act is considered preferable.

2.2.3 The use of the term "person" does not convey the essence of broadcasting having a wide audience simultaneously receiving the broadcast. In fact the definition is careful to exclude "on demand" services. Therefore, the corresponding terminology used in the IBA Act is considered preferable.

2.3 The concept of multi-channel broadcasting service is not well captured in the definition of broadcasting service. While "multi-channel distribution service" is defined, the definition is more relevant to signal distribution than to broadcasting. Telkom proposes that a separate definition be provided for multi-channel broadcasting, consistent with the definition of broadcasting service but that captures the nature of a multi-channel service.

2.4 Telkom is of the opinion that the Bill intends to make provision for technological developments such as the convergence of broadcasting and telecommunications and the multi-media phenomenon. Telkom, however, believes that this area still requires much study and investigation. Telkom therefore suggests that legislative provision in this regard be deferred to after the consultative processes envisaged in the White Paper, and that the distinction between telecommunications and broadcasting be retained at this stage.

Telkom believes that the distinction is extremely important. A telecommunications service is essentially a bi-directional point-to-point or point-to-multipoint service, whereas a broadcasting service is the uni-directional broadcasting of television and sound material intended for the public, regardless of the fact that the same technology may be used to provide the different types of service.

Many large companies, for instance, use video conferencing networks for distance training of their employees. Such application is defined as a telecommunications Value Added Service.

2.5 The text of Telkom's proposed amendments in regard to the above is provided in paragraph 5 hereafter.

3. SIGNAL DISTRIBUTION

3.1 Telkom understand signal distribution to be the technical process of delivery of the material provided by the broadcaster to the target audience. This is essentially a telecommunications process.

3.2 Signal distribution is not defined in the Bill, and is omitted from the list of terms explicitly incorporated from the BA Act. Telkom proposes that the relevant definitions in the IBA Act be recognised. This would then suffice for any signal distribution for single-channel broadcasting services, while the existing definition of "multi-channel distribution service" would cater, with minor amendments for multi-channel signal distribution services.

3.3 The text of Telkom's proposed amendments in regard to the above is provided in paragraph 5 hereafter.

4. LICENSES

4.1 Telkom believes that it is of fundamental importance that a clear distinction be made between the various types of licences. Telkom believes that the Bill, save for minor inconsistencies of terminology adequately caters for the various classes of single-channels service licences. However, Telkom believes that the treatment given in the Bill to the licensing of multi-channel services may lead to serious disputes as to the legislative intention in this regard. In particular, Telkom believes that the distinction between broadcasting and signal distribution licences, both in the single-channel as in the multi-channel services be clearly delineated.

5. PROPOSED AMENDMENTS

Telkom respectfully suggests the following amendments to address the issues discussed above.

5.1 Section 1: Definitions and interpretation

In the light of the substantial revision to the term "broadcasting service" in sub section 1 (iii) it would be preferable the term be deleted from the list of definitions in section 1(i) derived from the IBA act. In turn it would be preferable if the term "signal distribution" were added to the list of definitions derived from the IBA Act with the meaning assigned thereto.

1. In this Act, unless the context otherwise indicates, Authority, broadcasting, broadcasting licence, broadcasting licensee, [broadcasting service,] community broadcasting service sound broadcasting service, signal distribution, sound radio set have the meaning assigned thereto in the IBA Act, and -To address the issues discussed in paragraph 2.2 above it is suggested

that the definition of "broadcasting service" be amended to read-

(iii) "broadcasting service" means a service that [delivers] consists in the broadcasting of television [programmes to a person] or sound material to the public or sections of the public or to the subscribers to such service having equipment appropriate for receiving that service, [whether the delivery uses] irrespective of the means of signal distribution used, including but not limited to radio frequency spectrum, cable, optical fibre, satellite or a combination of those means, to make the service available to the end user but does not include-

(a) .......

(b) a service that makes [programmes] television or sound material available on demand on a point to point basis including a dial up service; [and]

(c ) Internet and associated services; and

[(c)] (d) a service or a class of service that the Minister

(iv) .......

(xv) "multi-channel content distribution service" means a service which [transmits] makes available more than one broadcasting service at the same time, [by means of radio waves or telecommunications] in a packaged format, to a signal distributor for simultaneous transmission to end users;

(xvi) "multi-channel signal distribution service" means the signal distribution service specifically provided to multi-channel content distributors;

[(xvii)](xviii) "old Corporation means ........ "

{ renumber all sub-sections from (xvii) onward}

Telkom believes That the suggested amendments to the definition of broadcasting service allows for a clear distinction between broadcasting services, signal distribution services, and telecommunication services which the services described in sections (a) (b) and (c ) of sub-section (iii) are part of.

Telkom also believes that the intention of the Bill is to treat multi-channel distribution as a service distinct from both existing broadcasting services and signal distribution services. The suggested amendments to multi-channel service definitions are intended to allow for a clear differentiation of multi channel distribution from other broadcast services.

It would appear that the term "local delivery service" refers to a type of signal distribution which is limited in its geographical reach. This is however, not clear. If this interpretation is correct, it would be preferable if the definition were made more specific.

5.2 Section 4: Broadcasting Licences

4. (1) Any person who intends to provide either a broadcasting service[, including] and/or signal distribution services, inclusive of the provision of multi channel distribution services, whether satellite or terrestrial, which offer [programming] television or sound material to the public from within the borders of the Republic, is required to obtain a licence or authorisation in accordance with the conditions which the Authority may determine from time to time.

(2) For the purposes of this Act, [a broadcast] the term broadcasting service [means] shall include any activity, [which provides a service which] a constituent element of which is the provision of the following services -

(a) [has] the provision of a signal of packages of signals receivable in South Africa;

(b) [acquires] the acquisition of programme rights for South Africa;

(c) [solicits] the solicitation of subscribers or advertising or [activates and deactivates] the activation or deactivation of the decoders of South African subscribers.

It would be preferable if the word "incidentally" in the third line of subsection 4.(3) were to be defined in a manner that would allow for the determination of the parameters of the term.

5.3 Section 5: Classes of Licences

5. (1) ......

(2) .......

(a) .......

(b) .......

(c) satellite-free-to-air radio broadcasting service;

(d) satellite-free-to-air television broadcasting service;

(e) satellite-subscription television broadcasting service;

(f) terrestrial-subscription television broadcasting service;

(g) [direct-to-home delivery service, including multi-channel satellite distribution] multi-channel content distribution service;

[(h) local delivery service, including local multi-point distribution systems;]

[(i)](h) cable television subscription service.

Telkom suggest the amendment of sub-section 5(2)(g) as direct-to-home is in fact synonymous with satellite broadcasting, and to refer specifically to multi-channel broadcasting licences, regardless of the signal distribution system used. The deletion of sub-section 5(2)(h) is suggested on the understanding that local delivery is signal distribution.

Telkom is also of the opinion that the new proposed category of Low Power Sound Broadcasting Service in the IBA Act is in the nature of free-to-air radio broadcasting, and therefore included in 5(2)(a). It is suggested that the proposed amendment of the IBA Act to include this additional category may not be necessary.

5.4 Section 7: Incorporation.

7. (1) .......

(6) The Board of the old Corporation [may] shall be required to promptly comply with every direction issued under subsection (5).

5.5 Section 18: Rights and Obligations

18. (1) ........

(2) Notwithstanding anything to the contrary contained in the IBA Act, or any other law, the Corporation is entitled, against payment of the annual fees (if any), which the [Authority] relevant authority may from time to time determine, to be issued of any licence contemplated in subsection (1).

This amendment is suggested on the basis that SATRA issues licences under the Telecommunications Act.

5.6 Section 27: Objectives

27. (1) .......

(7) Commercial subscription broadcasting services may not

5.7 Section 28: Subscription television service.

28. (1) As soon as possible after the promulgation of this Act, the Authority must conduct an inquiry in terms of section 28A of the IBA Act, into the economic feasibility of the provision of [more than one] an additional subscription television service and make known its finding by notice in the Gazette.

5.8 Section 29: Community broadcasting services

29. (1) ......

(2) The licence of a community broadcasting service must always be held by a licensee and may not be ceded, assigned or transferred to any other party except with the prior approval of the Authority.

5.9 Section 31: Objectives of Signal Distribution.

31. (1) All signal distribution service providers, whether providing

services by means of terrestrial frequencies, satellite

(2) The signal distribution sector must -

(a) ........

(b) provide universal access by all South Africans to [broadcast and multimedia} broadcasting services.

The amendment is suggested because Multi Media service currently falls within the realm of telecommunications service provision in terms of the Telecommunications Act.

5.10 Section 32: Multi Channel Distributors

32. (1) Multi-channel signal distributors

(2) All broadcast services to be distributed by the multi-channel signal distributors must [hold licenses issued] be licensed by the Authority.

(3) Multi-channel signal distributors may carry other signals, domestic or foreign, [upon approval by the Authority] if licensed to do so by the competent authority.

The amendment to sub-section 32(3) is required where the "other signal" constitutes telecommunications, which needs to be licensed by the telecommunications regulator.

Appendix 4: Worldspace

Worldspace (South Africa)

1 This representation is made by WorldSpace (Southern Africa) (Pty) Ltd ("WorldSpace SA"), a company which forms part of a group of international WorldSpace companies and which is in the process of establishing a satellite digital radio broadcasting service in South Africa, as a key element in its plan to deliver digital radio services globally via three regional geostationary satellites operating in the L-band frequency range.

2. As an aspirant satellite digital radio broadcaster, WorldSpace SA has an interest to contribute to and assist the process of national broadcasting policy formulation in South Africa.

3. WorldSpace SA has made comprehensive submissions on the Green Paper and the White Paper on Broadcasting Policy ("the White Paper").

At the time of writing and lodging the said submissions to the Parliamentary Portfolio Committee on Communications, the Broadcasting Bill, 1998, ("the Bill") had not been tabled in Parliament. Consequently, WorldSpace made no comments on the Bill.

4. In this submission, WorldSpace SA limits itself only to those provisions of the Bill which, in our view, call for comment. The separate comments of WorldSpace SA on the White Paper remain unaffected and are attached hereto for ease of reference.

5.1 The definition of "broadcasting service" in the Bill provides for a restrictive interpretation of the phrase.

5.2 Internationally there are technological developments that are changing the classical understanding of broadcasting. While the current proposed definition accords with classical views, it does not take into account these international and technological advancements.

5.3 Recognising the changes brought about by technology, the International Telecommunications Union (ITU) has recommended that Member Administrations, of which South Africa is one, to adopt national policies that are favourable and receptive to new technologies.

5.4 Relevant parts of the Recommendation (ITU-R BO. 789.2) for Broadcasting Satellite Service (Sound) or (BSS (Sound)), are reproduced herein for completeness.

"The ITU Radiocommunication Assembly, considering

…

that there is an increasing requirement worldwide for suitable means of broadcasting a range of sound qualities up to high-quality stereophonic two-channel/multi-channel sound with subjective quality indistinguishable from high-quality consumer digital recorded media ("CD quality") to vehicular, portable and fixed receivers;

…

that a large series of demonstrations and field trials in various parts of the world have confirmed the technical and economic viability of digital sound broadcasting systems from a system design point of view;

…

further considering

that the World Administrative Radio Conference (Geneva, 1979) (WARC-79) adopted Resolution No.505 which encouraged technical experiments in the band 1

429 - 1 525 MHz and the Second Session of the World Administrative Radio Conference on the Use of the Geostationary-Satellite Orbit and on the Planning of Space Services Utilizing It (Geneva, 1988) (WARC ORB-88) adopted Resolution No.520 which proposed to give a mandate for a frequency allocation for one or more bands in the frequency range from 500-3 000 MHz to a competent ITU conference;

that the World Administrative Radio Conference for Dealing with Frequency Allocations in Certain Parts of the Spectrum (Malaga-Torremolinos, 1992) (WARC92) has allocated the band 1 452 - 1 492 MHz to the broadcasting-satellite service (BSS) (sound) and complementary terrestrial broadcasting service for the provision of digital audio broadcasting. Also, additional footnote allocations were included for specific countries in the band 2 310-2 360 MHz and in the band 2 535-2 655 MHz in Radio Regulations Nos. 750B and 757A,

recommends

that, when sound broadcasting from satellite and complementary terrestrial services, intended for vehicular, portable and fixed reception (see Note 1), are introduced into the frequency ranges allocated by WARC-92 to BSS (sound), digital sound broadcasting systems should be used and should have the following technical and operational characteristics and capabilities for the transmitter/receiver components of a total BSS/BS (sound) system:

SUBMISSION BY WORLDSPACE (SOUTHERN AFRICA) (PTY) LTD TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATIONS, ON THE BROADCASTING BILL, 1998

INTRODUCTION