ICASA Councillor Appointment: Finalisation; UK’s Experience with Digital Television Switch Over

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
16 October 2007
ICASA COUNCILLOR APPOINTMENT: FINALISATION; UK’S EXPERIENCE WITH DIGITAL TELEVISION SWITCH OVER

Chairperson: Mr I Vadi (ANC)

Documents handed out
ICASA councilor interview list
Profile on Greg Dyke

Freeview website

Audio recording of meeting [Part 1] & [Part 2]

SUMMARY
The Committee finalised the recommended candidates for the Independent Communications Authority of South Africa councillor position. The ANC and the DA announced their preferred candidates. A short discussion was held and a decision was made to recommend Mr Thembikile Ndlovu and Mr Refiloe Msiza to the Minister of Communication for appointment.

The Committee attended a presentation given by eTV outlining the United Kingdom’s experience with digital switch over. The focus was on how South Africa would use the UK as a model in the implementation of digital television and the concept of Freeview. The presentation also looked at marketing issues and challenges.

MINUTES
Finalisation of ICASA Councillor Recommendations
The Chairperson called for the parties to give their recommendations.

Mr R Pieterse (ANC) warned members that there were certain things that they needed to be more aware of. The Committee sometimes failed to check whether nominees had actually participated in some of the things that they had said they had. The Committee should find a system to verify the information that was given.

Mr Pieterse then recommended Mr Thembikile Ndlovu as well as Mr Refiloe Msiza on behalf of the ANC as their preferred ICASA councillors.

Ms D Smuts (DA) named Mr Mbulelo Kibido as the Democratic Alliance’s preferred ICASA councillor. She also wanted clarification on the number of nominations that should be put forward.

The Chairperson stated that ICASA legally required a minimum of two candidates to be named and that it would be best to follow the law.

The Chairperson said that the ANC preferred Msiza and Ndlovu as they were experienced and would therefore add value to ICASA.

Ms Smuts added that she thought Kibido was a good candidate as well.

Mr Pieterse agreed that most of the candidates interviewed well and added that the nominations indicated quite a gender balance.

Ms Smuts asked if the ANC could be persuaded to change their choice. She wanted to encourage choosing Mr Kibido. She reminded Committee members that the enterprise was state-owned and that Kibido was experienced in this regard.

The Chair said that members would have to look at the issues carefully as it was a difficult choice. He added that Ndlovu showed assurance during his interview which was something ICASA needed.

The Chairperson then read out the committee report naming Mr Msiza and Mr Ndlovu as the official candidates for the ICASA position. The recommended names would be forwarded to the Minister of Communications.

UK’s Experience with Freeview Digital Television
Mr Marcel Golding (CEO: ETV) stated that eTV had invited the Committee to a presentation on Britain’s experience with Freeview. Mr Greg Dyke was the driving force behind it and Etv would be using the United Kingdom as a model for the implementation of Freeview in SA.

Mr Golding listed similarities between UK and South African broadcasting. Similarities include the UK and SA both being traditional broadcasters, both have significant public service obligations and both the UK and SA want to make television and broadcasting cheaper and more easily available to all. He then introduced Mr Dyke to members focusing on his broadcasting career, his work with the BBC and his creation and further development of Freeview in Britain.

Mr Greg Dyke explained that he became interested in digital television in the early nineties. He commissioned research on it but because the advantages had not been clear, he dismissed the idea. This all changed when the British government decided to adopt Digital Terrestrial Television (DTT).

As the plans for DTT progressed, it was decided that channels would be given more spectrum. Essentially, this meant that every channel would be given two more channels. However, there had been a problem with signal. More channels meant an increase in technological difficulties.

According to Dyke, ITV Digital ran into trouble in August 2001. They held discussions on what they needed to do to save it. He thought again about the concept of free viewing and realised that DTT could be saved through Freeview.

He knew that people wanted more channels but they did not want to pay for them. At the time, about 40% of households had changed to digital viewing. Mr Dyke realised that they would have to broadcast fewer channels but increase the number of households able to view digital television. This also meant fewer technological problems.

Mr Dyke knew what ITV’s digital cost structure was and that Freeview would not be completely free as they would not be giving away the box. He also knew that the challenge would be to persuade viewers to buy the box.

Mr Dyke told members that the process had moved very fast from that point onward. ITV went bankrupt in June 2002 and Freeview was awarded their licence in July. It was clear a few months down the line that Freeview was going to be a success.

The BBC had introduced a new marketing plan that looked at more television with fewer contracts. This would be an important strategy. In the first eighteen months, four million boxes were sold.

Mr Dyke also spoke about the relevance of the BBC’s involvement in Freeview. He told members that it was in the BBC’s own interest to become involved in Freeview as all channels would be made free to the public thus ensuring that the BBC would be made available to all households given that they paid their licences. Then, if everyone wanted BBC, they would buy the box.

According to Mr Dyke, Freeview became a success quickly because it was a good idea. People were given more of a viewing choice for free.

Mr Dyke said that some people called DTT intermediate technology. He warned that spectrum was still limited and that additional spectrum was expected to be released. This would ensure competitiveness in the future.

He said that other countries could learn from the UK’s experience but that all countries were different and that there would be variances. There were many factors to take in to account such as the country must have something to sell, there must be a simple proposition, boxes must be inexpensive and easy to install and the country must have in place a good marketing strategy.

Mr Dyke warned members of some challenges. There could be an issue with public service broadcasting. More channels in more homes could bring about audience fragmentation. In terms of advertising, this would mean less money being spent on individual channels. There would be a challenge for governments in finding ways to sustain values when digital programming is in every home.

Mr Dyke also warned that if the SA government wanted the SABC to remain, then it would mean changing the funding base. This could mean less money from advertising and more money being taken from the public.

Mr Dyke told members that Freeview was not a business, it was a platform. The problem with ITV had been that the payoff was not good value for money. If people did not want that programming then they would not buy it. What this meant for the BBC was that if people liked the BBC then they could get other programmes for a once-off payment for the box.

He also noted that SA’s processes were more bureaucratic and that he had started out in an environment that was not very conducive to those kinds of ideas.

Discussion
Mr D Mashile (Senior Manager: Broadcasting, ICASA) queried Mr Dyke’s comments about marketing being important. He wanted to know from where the marketing would have to come.

Mr Dyke told him that this was a difficult question to answer as marketing was very important. For a concept like Freeview to work, a lot of money would have to be spent. They would have to convince television operators that it would be worth the funding. He did not know how South Africa would do it as he did not know what the relationship was like with the SABC. Mr Dyke warned that they would have to negotiate and decide who gave the most marketing and how many channels they would get.

Mr Mashile said that the reason he asked the question was because he knew what had happened between the parliamentary committee and the department of communications in the UK.

Mr Dyke replied that they did not have a regulatory problem in the past but now that things were more technologically complex, it became harder to approve regulations dealing with communications.

Mr Dyke noted that they had launched digital radio but that it had not done as well as they had hoped. They then implemented it via Freeview and satellite. The advantage of Freeview was that it was a good way of getting new digital radio services out to the public.

Ms Smuts commented that it was interesting that the BBC was the driving force behind Freeview. It would be important for local broadcasters to do that in SA. However, she warned that this was a situation where the public and Committee members seemed to be rather uninformed. In order to be able sell and market the transition to the public, it would have to come from the broadcasters. She asked if the process had started already.

Mr Golding replied that they might have to subsidise the boxes but they were not sure yet. He said that they have had dialogue about it.

Ms Smuts replied that subsidisation would be the likely scenario but that they would have to think it through carefully.

Mr Golding commented that they were in the process of finding funding for more transmitters.

Mr Dyke told members that they would need to ask themselves how much the extra spectrum was worth. He also stated that it was a public policy issue.

Mr Pieterse said that there seemed to be some challenges but that people needed to know when to take a leap of faith. He wondered whether Freeview should be given to people who would not normally get it. He commented that state intervention would be needed in the form of subsidies but he wondered if there was any other way that they could tackle the issue.

My Dyke agreed that there was the issue of funding. There was a challenge with regard to licence fees as collection of fees was quite a great cost. This was an issue in the UK.

Ms Smuts agreed expressing her appreciation for SA’s licence agreements.

Mr Golding thanked Mr Dyke and Committee members for attending the presentation.

The meeting was concluded.