ICASA eyes more pay-TV licences

By Damaria Senne, ITWeb senior journalist

Johannesburg, 21 Sept 2007

The Independent Communications Authority of SA (ICASA) could license more commercial and public broadcasters if the applicants can demonstrate the market's viability, it says.

This is despite talk that ICASA has already licensed too many pay-TV broadcasters, following ICASA's announcement of four new commercial TV providers last week. The new players are Walking on Water, On Digital Media, e-SAT and Telkom Media.

An ICASA official says the regulator is mandated through the Electronic Communications (EC) Act to provide South African consumers with ample choice in their communications services. "We still need to license more broadcasters," he says.

"As the Act stands, anyone can apply for a broadcasting licence. However, approval for the licence is subject to availability of spectrum, and whether the potential licensee can demonstrate there is a market that can sustain the business," says ICASA councillor Zolisa Masiza.

Additionally, the digital migration strategy and implementation plan provides that frequency be set aside for TV stations for education, health and regional TV, among others, he says. The EC Act also mandates ICASA to license municipal and community TV stations.

"The problem is how these TV stations will become sustainable; because, if you have regional TV in a poor province, generating advertising revenue is a challenge," Masiza says.

"Yes, we have to issue more of these licences, but we have to do it in an orderly manner, because we don't want the licensees to go bankrupt."

Next step

Masiza acknowledges that work needs to be done to ensure the sustainability of the four new broadcasting licensees, especially the smaller niche players.

ICASA needs to create an enabling environment for the provision of content for new broadcasters, he says.

MultiChoice and the SABC have had a stronghold on content due to their monopoly roles. However, ICASA will take measures to stimulate the local content industry. "As an authority, we cannot license for failure."

Defending the numbers

Brian Neilson, a director of BMI-TechKnowledge, says the company's research indicates the market "is unlikely to sustain more than two major players. The business case for a third or fourth player to invest to the same extent as Telkom Media, for example, has committed itself, is dubious."

Defending the decision to license four new broadcasters, Masiza says the regulator did not specify from the outset that it would license a certain number of broadcasters.

"As a result, licence applicants had to be evaluated against certain criteria and all those who meet the requirements were licensed."

Masiza says the debate as to whether the local TV market can sustain all the new broadcasters is "quite tricky".

An estimated seven million households have TV sets, with only 1.4 million of them on MultiChoice's subscription service, showing that there is room for growth. Additionally, some of the new licensees were able to demonstrate they would provide for niche, and sometimes, unserviced markets.

Walking on Water targets a Christian market, and its proposal shows it only aims to penetrate a maximum of 300 000 households, says Masiza.

Telkom Media will compete directly with MultiChoice. However, it also aims to provide Internet Protocol TV, which targets the defined market of households that have Internet access.

MultiChoice has responded to the upcoming competition by announcing a new bouquet that will cost R18 per month. The offering will be available from mid-October and is aimed at the lower end of the market. This is an about-turn for the company, which earlier this year said it would not compete on price.

Masiza notes that cellphone providers also face the same debate, with some people estimating a viable market at around five million subscribers. Today, that industry has an 89% penetration rate (in an estimated population of 46 million), showing that providers can grow a market.