Introduction

On 20 February 2024, the President of South Africa announced the date for the next national and provincial elections: 29 May 2024. In a young democracy, every election is important, but this really will be a critical one as it is expected that the African National Congress (the ruling party)’s electoral support will drop to its lowest level ever, with some commentators (academic and political) anticipating it could even fall below 50% for the first time since the transition to democracy 30 years ago.

“So what?” you may well ask. What has this to do with the TMT field? As is the case in the political realm, the Technology Media and Telecommunications (TMT) sector is holding its breath, itching to break the legal and regulatory mould that has characterised the South African TMT market since the democratic transition.

Every country facing a highly contested election finds itself interrogated over the regulation of its media. So, it is a good time to take stock.

This bird’s eye view of the TMT sector focuses on the legal, regulatory and policy developments in the country and on the continent to assist in navigating a TMT sector driven by rapid technological change as well as political change.

Regulating TMT: Where Are We?

The existing legal framework governing South Africa’s TMT sector is essentially that which was put in place decades ago at or shortly after the transition to democracy: there is an independent sector regulator, theIndependent Communications Authority of South Africa (ICASA), which regulates broadcasting, telecommunications (infrastructure and services) and postal services.

The regulation of content services delivered over the public internet or Over the Top (OTT) content services are expressly excluded from the definitions of “broadcasting” and “electronic communications” in the Electronic Communications Act 2005 (the ECA) (part of the legislative framework that gives ICASA its mandate(s)) and so OTT content services are excluded from ICASA’s regulatory ambit.

So how are OTT content services regulated? Currently, these services are the subject of intense political wrangling.

Policy Development is Dragging

Since 2011, the Department of Communications and Digital Technologies (the “Department”) has been engaged in a policy-development process to update broadcasting policy and to create policy for the regulation of OTT content services. Various iterations of draft policy statements have been published over the years. Currently, the Department has published a second iteration of a Draft White Paper on Audio and Audiovisual Media Services but, as South Africa heads into the May 2024 elections, it is unlikely to be finalised anytime soon.

Lack of Regulatory Parity Between Broadcasting and OTT Content Services

Meanwhile, the regulation of OTT content services is, increasingly and worryingly, being taken over by the non-independent Films and Publications Board (FPB), which operates as an arm of the Department.

For many years, films and games (and, to a certain limited extent, publications) have been required to be classified by the FPB in order to supply audience advisories as to the nature of the content. Amendments to the Films and Publications Act which came into effect recently have included audio-visual content distributed over the internet within its ambit.

Why is this a problem?

Given convergence of platforms and technology, it is hard, if not impossible, to distinguish between broadcast content and other audio-visual content made available over the internet. But in South Africa, broadcasting is subject to a much heavier touch regulatory regime than OTT services are.

• Content regulation– Broadcasting services (radio and television) are subject to licensing and the imposition of licence conditions include content-related conditions such as language obligations (South Africa has eleven official languages), local content obligations, news and current affairs obligations, format restrictions and the like. These have an obvious and significant cost implication for broadcasters.

Consequently, broadcasters are increasingly frustrated at having to compete with OTT content service providers whose content is hard to distinguish from their own services, but which have no ICASA-imposed programming obligations of any kind and only FBP-imposed registration, content classification and audience advisory-related obligations.

• Foreign ownership restrictions– Similarly, broadcasters are subject to foreign ownership restrictions, with foreign participation in broadcasters limited to 20% shareholding in a broadcasting licensee in terms of the ECA. In contrast, OTT services have no such restrictions and so Netflix, Google Play, Apple TV and the like are able to provide services without any localisation of ownership obligations.

The inequality between regulatory playing fields in which broadcasters and OTT providers operate benefits OTT service providers (most of whom are foreign) at the expense of broadcasters (all of whom are overwhelmingly locally owned). And the inability of the Department to finalise the policy review process after 13 years means that broadcasting is increasingly at a disadvantage as OTT services, understandably, take advantage of the policy and regulatory vacuum in which they operate to secure and increase market share.

Threats to the Independence of Electronic Communications Regulation

Another problem is that while Section 192 of the Constitution of the Republic of South Africa, 1996 (the “Constitution”) requires broadcasting to be regulated by an independent regulator in the public interest, there is no such independence requirement for the regulation of the distribution and classification of films, games and publications, which is carried out by the FPB, all of whose members are directly appointed by the minister who heads up the Department.

As the FPB’s mandate expands, it increasingly moves into the audio-visual content regulatory space which, in the writer’s view, ought to be carried out by a body that is independent of government in accordance with international best practice. Worse, the FPB has begun to appropriate for itself titles that are not even contained in governing legislation. Currently, the FPB styles itself as the “Content Regulatory Authority of South Africa”, a mandate that is not contained in any legislation whatsoever.

Unfortunately, the policy and regulatory vacuum enables this and more.

Public Broadcasting at Risk

At particular risk is South Africa’s public broadcaster, the South African Broadcasting Corporation (SABC) (initially founded on the BBC model), which is the largest media organisation in the country, with three analogue and digital terrestrial television services, 18 radio stations, a news channel flighted on the country’s main subscription DTH (direct-to-home) satellite broadcaster and with an online offering too.

The SABC’s governing statute (the “Broadcasting Act”) dates back to 1999 and is in desperate need of updating. Parliament is in the process of considering an SABC Bill which has alarmed and disappointed the industry by, essentially, repeating the failed legislative provisions of the Broadcasting Act (particularly a woefully inadequate funding model) even although the Draft White Paper has acknowledged its myriad deficits.

Worse, in the writer’s view, the SABC Bill paves the way for the transformation of the public broadcaster back to being a state broadcaster by enabling a degree of governmental interference in the operations of the SABC not seen since the Apartheid era. This is despite a High Court judgment, in two cases brought by civil society organisation SOS Support Public Broadcasting against the SABC and the Minister, recognising the importance of the independence of the public broadcaster, and which determined that a number of acts of operational interference by the Minister in the affairs of the SABC were unlawful.

Less than an hour after the announcement by the President of the election date, the Parliamentary Portfolio committee that was due to deliberate on the SABC Bill abruptly cancelled the hearings and announced they would be rescheduled to a later date. Many breathed a sigh of relief, hoping that the shoddily drafted, regressive Bill at odds with the direction of policy developments would die a quiet death between Parliaments.

However, on 26 February 2024, the committee announced its revised programme until the end of this session and, while deliberations and indeed the finalisation of the SABC Bill in the committee stage are provided for, there is no provision for any public hearings. This sets an extremely bad precedent as a number of written submissions (including those of ICASA and the SABC itself) made it clear that the SABC Bill suffered from fatal flaws, so this rush to finalise without public participation is a very bad sign.

Ownership Restrictions Impede Investment in Broadcasting and Telecommunications

Similarly, the lack of forward progress in finalising broadcasting/OTT content sector policy is deeply worrying as the lack of growth in the South African TMT landscape is notorious.

For over two decades now, ICASA has developed policy statements in the form of position papers which have called upon Parliament to amend broadcasting legislation to ease ownership restrictions on the number of broadcasting outlets a single entity may control and to ease foreign ownership restrictions (currently pegged at a 20% maximum shareholding of a broadcasting licensee). But these ownership restrictions have remained unchanged since the now-repealed 1993 Independent Broadcasting Authority Act as they were repeated verbatim in the Electronic Communications Act 1995 (ECA), which governs commercial broadcasting.

ICASA is going to be faced with a real challenge on this issue as South Africa’s largest commercial subscription DTH broadcaster, MultiChoice (which operates the DStv service in South Africa and in many countries on the continent) has announced that Vivendi’s Canal+ is to purchase the remainder of the shares in MultiChoice that it does not already own. This proposed acquisition is at odds with the 20% foreign ownership limit set out in the ECA, and ICASA lacks the statutory authority to grant an exemption from that foreign ownership limitation.

Ownership restrictions have also, controversially, affected the roll-out of broadband services in rural areas. For example, Elon Musk’s Starlink service (providing internet services) could not get off the ground in South Africa (one of Africa’s largest economies) despite being operational in at least eight other African countries. The reason for this is not a restriction on foreign ownership as these restrictions pertain to broadcasting (the 20% foreign cap on shareholding), but the general requirement that the kinds of licences which the Starlink service would require, namely an Individual-Electronic Communications Network Service licence and an Individual-Electronic Communications Service licence, can be issued only to a licensee with a 30% shareholding by Historically Disadvantaged Groups, as is provided for in Section 9(2)(b) of the ECA. Essentially, this requirement is that the 30% shareholding be held by Black South Africans.

According to press reports, Starlink has not even approached ICASA about getting the relevant licences “as countries that have no registration or licensing requirements are assigned highest priority for its expansion. Those that have stringent registration rules like South Africa get lowest priority”. Nevertheless, thousands of Starlink units are operational in South Africa under the guise of “roaming” from the African country (often Mozambique) that the units were sourced from. ICASA is sufficiently concerned to have issued a notice warning that Starlink does not have a licence and reiterating the need for service providers to adhere to applicable licensing requirements.

Potential Impact of the African Continental Free Trade Area Agreement

But a game-changer is on the horizon: the African Continental Free Trade Area Agreement (the “AfCFTA Agreement”). The aim of the AfCFTA Agreement is to reduce barriers to trade as between the countries of the Continent and to foster intra-African trade in much the same way as the Common Market (the European Economic Community, which evolved into the European Union) has done for Europe. Communications has been identified as one of the five priority services sectors for the implementation of the AfCFTA Agreement. It is likely that trade with non-African countries will not benefit from the opening up of the commercial communications sector, which includes: telecommunications (services and infrastructure); OTT services; OTT content services; broadcasting; and postal services (including courier services).

Just as it is unclear what the upcoming election results will be, it is unclear whether the South African government will pay greater attention to the communications sector, which has traditionally played an important role in the economy. However, given the impetus of the AfCFTA Agreement, it is unlikely that South Africa’s extremely restrictive ownership requirements, which are clearly hampering direct foreign investment in the TMT sector, will remain the same in the medium to long term.