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ICASA urged to tighten regulations

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 06 Oct 2014
ICASA needs to start regulating the broadcast sector and stop dishing out licences, says the industry.
ICASA needs to start regulating the broadcast sector and stop dishing out licences, says the industry.

If the Independent Communications Authority of SA (ICASA) had any doubts about how its effectiveness as sector regulator is perceived by the market, these should have been removed by the chorus of disapproval voiced by ICT players last week.

ICASA came in for a severe lashing at its hearings into the state of competition in the ICT sector, with many industry players accusing the regulator of failing to create an environment that is favourable to competition.

Mobile operator Cell C was especially scathing in its presentation, charging that the ICT sector - dominated by a duopoly in the telecommunications sphere and a monopoly in broadcasting - effectively amounted to a market failure. The operator defined market failure as "a situation where normal market forces do not work sufficiently well - or at all - so as to ensure allocative and productive efficiency".

In terms of the pay-TV space, ICASA's attempts to create competition to dominant broadcasting giant MultiChoice and its DStv service has all but failed, with the only other pay-TV player barely clinging to life and unlikely to make a meaningful comeback.

Broadcaster On Digital Media's (ODM's) pay-TV service, established in 2010 and originally dubbed Top TV, received a severe beating when it tried to enter the space 95%-dominated by the DStv brand. The newcomer ran aground almost immediately after starting operations, and was forced to enter a business rescue process in April last year. Chinese-based media group StarTimes took a 20% equity stake in ODM at the start of the business rescue, renaming the pay-TV service StarSat.

No progress

Despite remaining bullish about still becoming a significant player, StarSat has since all but disappeared off the radar. This morning, ODM interim CEO Eddie Mbalo said the company has not moved beyond the closing stages of the business rescue process, adding it now has to apply for the transfer of ODM's electronic communications network services licence to StarTimes.

"We've had some shareholder issues to sort out and the only outstanding issue is the licence application that has to be lodged with ICASA." However, Mbalo says the company is working on a timeline for this process, and notes there is thus no indication of when this might happen.

Mbalo was also critical of ICASA and the current regulatory environment, blasting the regulator for issuing broadcast licences, without making any provision for new entrants to have a fair and realistic chance at competing. "The truth is that ICASA can't just go around dishing out licences, without doing proper market research. It baffles me why they are doing this. There is one dominant player in the market and it is extremely difficult for new players to survive."

He explains the uncompetitive environment also makes it difficult to secure funding - which is lean within the media space to start with - as investors are turned off by the inadequate regulatory landscape. "The role of the regulator should be to ensure that businesses can survive in the sector. That is not happening."

Hold off on licences

Meanwhile, ICASA last month issued an invitation to apply for individual commercial free-to-air TV broadcasting licences - a move criticised by etv. The broadcaster, presenting at ICASA's hearings, reportedly called on the regulator to not issue new licences, before it conducts market research into the viability of new entrants and reviews current regulations.

Independent broadcast analyst Kate Skinner says ICASA should have held the hearings into the state of competition in the ICT sector much sooner. "Nonetheless, this is a good thing. We need a regulated market that is able have sustainable competitors."

Skinner says civil society and business need to be vocal about issues such as set-top box interoperability, access to premium content and a wider choice of services. She adds that despite ODM's failure to launch, its appearance on the market prompted DStv to introduce a host of cheaper bouquets. "Competition is obviously much needed."

Skinner suggests ICASA should, in the meantime, be held accountable by Parliament for failing to regulate the sector properly.

However, any changes that could come from ICASA's hearings are unlikely to happen fast. ICASA spokesperson Paseka Maleka says the regulator will consider all submissions made, and recommendations for regulatory changes could arise from this. "In this case, we would then consider drafting new regulations."

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