REPORT

THE PROPOSED SWITCHOVER FROM ANALOGUE BROADCASTING

TO DIGITAL BROADCASTING IN SOUTH AFRICA

DIGITAL BROADCASTING MIGRATION WORKING GROUPFinal version - 17 November 2006

Document Status

The preparation of this report has been facilitated by the Digital Broadcasting Migration Working Group (“WG”), established by the Minister of Communications. The report has been compiled by acknowledged industry experts with the aim of providing recommendations on specific terms of reference set by the Department of Communications. While every effort has been made to ensure accuracy and to provide a consensus view when required, it should not be assumed that all member organisations of the WG support all aspects of the report. The views expressed in the report are those of the industry experts working in the WG and are not necessarily binding on the organisations that the experts represent in the WG.

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TABLE OF CONTENTSAcronyms...........................................................................................................................51. INTRODUCTION.......................................................................................................82. SCOPE OF DIGITAL BROADCASTING..................................................................10

2.1 DEFINING DIGITAL TELEVISION STANDARDS AND DELIVERY PLATFORMS...............................................................................................................11

2.1.1 Digital Terrestrial Television.....................................................................112.1.2 Satellite Digital Television........................................................................112.1.3 Digital Cable Television............................................................................122.1.4 Internet Television and IPTV....................................................................122.1.5 Digital Mobile Television..........................................................................14

2.2 DEFINING DIGITAL RADIO STANDARDS AND DELIVERY NETWORKS....142.2.1 Digital Terrestrial Radio............................................................................152.2.2 Digital Satellite Radio...............................................................................172.2.3 Internet Radio and Mobile Radio..............................................................18

2.3. STANDARDS, FORMATS AND APPLICATIONS RELATED TO DIGITAL BROADCASTING........................................................................................................19

2.3.1 Image Quality and Digital TV Formats.....................................................192.3.2 Aspect Ratios...........................................................................................212.3.3 Interactive Broadcasting and Return Path Channels...............................212.3.4 Electronic Programming Guide (EPG).....................................................232.3.5 Set-top Box (STB)....................................................................................23

2.4 POLICY APPROACH TO TELEVISION AND RADIO.....................................312.5 POLICY CONSIDERATIONS IN PLATFORM SELECTION............................33

3. PUBLIC POLICY OBJECTIVES FOR DIGITAL BROADCASTING SWITCHOVER363.1 GLOBALISATION AND NEPAD......................................................................373.2 GLOBAL INFORMATION ECONOMY.............................................................383.3 NATIONAL GOVERNMENT POLICIES...........................................................393.4 GOVERNMENT INTERVENTION....................................................................403.5 PUBLIC POLICY ADVANTAGES OF DIGITAL BROADCASTING.................41

4. PUBLIC INTEREST ISSUES IN SWITCHOVER FROM ANALOGUE TO DIGITAL BROADCASTING............................................................................................................44

4.1 PUBLIC TRUSTEE MODEL.............................................................................454.2 PUBLIC INTEREST OBLIGATIONS................................................................474.3 PUBLIC INTEREST IN A DIGITAL BROADCASTING ENVIRONMENT.........49

4.3.1 Fostering Democracy and Democratic Values (Diversity)........................494.3.2 Reflection of National Identity, Culture and Character.............................534.3.3 Universal Access and Redress................................................................594.3.4 Consumer Protection...............................................................................604.3.5 Public Broadcasting..................................................................................604.3.6 Community Broadcasting.........................................................................674.3.7 Minimum public interest requirements.....................................................70

4.4 IMPLEMENTATION POLICY CONSIDERATIONS.........................................755. IMPACTS OF TRANSITION ON BROADCASTERS AND THE EXISTING LICENSING REGIME......................................................................................................77

5.1 CONTENT DELIVERY AND THE CONTENT VALUE CHAIN.........................785.1.1 Content Delivery in a Digital Environment................................................785.1.2 Digital Content Value Chain.....................................................................89

5.3 EVALUATION OF EXISTING POLICY AND LICENSING REGIME................925.3.1 Policy and Licensing of Digital Terrestrial Television in Europe...............925.3.2 Policy and Licensing of Digital Sound Broadcasting in Europe..............1035.3.3 Existing Digital Broadcasting Satellite Model in South Africa.................1065.3.4 New Legislative Framework and Digital Broadcasting Licensing...........107

5.4 APPROACHES TO NEW BROADCASTING SERVICES, ICT ACTIVITY AND BROADCASTING ON NON-TRADITIONAL NETWORKS........................................124

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5.4.1 New Broadcasting Services...................................................................1245.4.2 ICT Activities within the traditional broadcasting spectrum....................1265.4.3 Broadcasting on non-traditional networks..............................................128

5.5 IMPACT OF TRANSITION ON EXISTING BROADCASTING SERVICES AND PROTECTION OF RIGHTS.......................................................................................129

5.5.1 Impact of Transition................................................................................1295.5.2 Protection of rights in transition..............................................................130

6. IMPLEMENTING DIGITAL BROADCASTING IN SOUTH AFRICA......................1326.1 OPTIONS FOR DIGITAL SWITCHOVER......................................................1336.2 ECONOMIC MODELING OF DIGITAL SWITCHOVER IN SOUTH AFRICA 137

6.2.1 Scenario One.........................................................................................1386.2.2 Scenario Two.........................................................................................1386.2.3 Scenario Three.......................................................................................138

6.3 LICENSING AND SURRENDER OF ANALOGUE FREQUENCIES.............1396.3.1 Digital Radio...........................................................................................1396.3.2 Digital Television....................................................................................139

6.3 DRIVERS OF CONSUMER ADOPTION.......................................................1486.4 CO-ORDINATION OF DIGITAL MIGRATION PROCESSES........................1496.5 DIGITAL TELEVISION SWITCHOVER PROCESS.......................................150

6.5.1 Digital Switch-on.....................................................................................1506.5.2 Digital Switchover...................................................................................1506.5.3 Analogue Switch-off...............................................................................151

6.6 DIGITAL DIVIDEND.......................................................................................1516.6.1 Where does the Digital Dividend come from?........................................1516.6.2 Digital Broadcasting needs post-2015...................................................153

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Acronyms

3G Third Generation Mobile Technology capable of carrying voice,

data and multimedia

AM Amplitude Modulation; often used to refer to medium wave

broadcasting

API Application Programme Interface

ATSC Advanced Television Systems Committee

BEE Black Economic Empowerment

BFN The Black Filmmakers Network

CA Conditional Access

CAM Conditional Access Module

CODEC Encoder/Decoder

COFDM Coded Orthogonal Frequency Division Multiplex

CSN Community Services Network (TV channel operated by M-Net)

DAB Digital Audio Broadcasting (usually applied to Eureka 147)

DBAB Digital Broadcasting Advisory Body

DMB Digital Multimedia Broadcasting

DR Digital Radio

DRM Digital Radio Mondiale

drm Digital Rights Management

DSB Digital Sound Broadcasting

DTG Digital TV Group

DTH Direct to Home satellite delivery of content

DTT Digital Terrestrial Television

DTV Digital Television

DVB Digital Video Broadcasting

DVB-C Digital Video Broadcasting – Cable

DVB-H Digital Video Broadcasting-Handheld

DVB-S Digital Video Broadcasting – Satellite

DVB-S2 Digital Video Broadcasting – Satellite version 2

DVB-T Digital Video Broadcasting–Terrestrial

DVD Digital Versatile Disk

ECA The Electronic Communications Act, No. 36 of 2006

EDTV Enhanced Definition Television

EPG Electronic Programming Guide

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ETSI European Telecommunications Standards Institute

FCC Federal Communications Commission

FM Frequency Modulation; sound broadcasting system in the VHF-

band

FTA Free-to-air

HD High Definition

HDTV High Definition Television

IBOC In-Band On-Channel

ICASA Independent Communications Authority of South Africa

ICT Information & Communication Technology

IPO The Independent Producers Organisation

IPTV Internet Protocol Television

ISDB-T Integrated Services Digital Broadcasting for Terrestrial

ITU International Telecommunication Union

ITU RRC-06 ITU Regional Radiocommunication Conference for the planning of

digital broadcasting

LSM Living Standards Measure

MAPPP-SETA Media, Advertising, Publishing, Printing And Packaging Sector Education Training Authority

MBMS Multimedia Broadcast/Multicast Service

MediaFlo Media Forward Link Only

MFN Multi-frequency Network

MHP Multimedia Home Platform

MPEG Moving Picture Experts Group

MPEG-2 Compression technology developed by MPEG currently in use for

digital broadcasting

MPEG-4 Improved compression technology developed by MPEG currently

being introduced globally for digital broadcasting

MW Medium Wave

OS Operating System

The PANSALB Act Pan South African Language Board Act, No.59 of 1995

PDA Personal Digital Assistants

PPV Pay-Per-View

PVR Personal Video Recorder

QAM Quadrature Amplitude Modulation

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RCT Return Channel- Terrestrial return path from viewer to broadcaster

in interactive broadcasting

QPSK Quadrature Phase Shift Keying

RDS Radio Data System

RF Radio Frequency

RRC Regional Radiocommunication Conference for the planning of

digital broadcasting services

SABC The South African Broadcasting Corporation

SADIBA The Southern African Digital Broadcasting Association

SATFA South African Table of Frequency Allocations

SDMB Satellite Digital Multimedia Broadcasting

SDTV Standard Definition Television

SFN Single Frequency Network

SMS Subscriber Management Service

STB Set Top Box

SW Short Wave

TBN Trinity Broadcasting Network

TDN The Digital Network Group

TV Television

VHF Very High Frequency; sound and television broadcasting services

in the band 88- 254 MHz

VOD Video on Demand

VOIP Voice Over Internet Protocol

UMTS Universal Mobile Telecommunications System

UHF Ultra High Frequency; broadcasting services in the band 470-3000

MHz

WG Digital Broadcasting Migration Working Group

WARC ITU World Administrative Radio Conference

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1. INTRODUCTION

Digital technologies are changing the way services are delivered, leading to a blurring of the boundaries between types of services and the means of delivery, and eroding the traditional distinctions between text, audio and video. This process of change is often referred to as convergence, alluding to the convergence that is taking place between the previously separate sectors of print media, data, telecommunications and broadcasting. The pace of change is not uniform across all sectors. In South Africa, for example, convergence first took place at the level of transactions where digital technology allowed consumers to carry out a number of familiar activities such as banking, buying and selling in new ways. This led to the promulgation of the Electronic Communications and Transaction Act, No. 25 of 2002, to regulate this new way of transacting electronically and create certainty in the market on the use of electronic transactions. The next area where convergence has been active is that of telecommunications, which has grown to be more than just the provision of voice services and value added services to include broadcast content delivery. This convergence between telecommunications and broadcasting led to the promulgation of the Electronic Communications Act (ECA), No. 36 of 2006, and the Independent Communications Authority of South Africa Amendment Act, No. 3 of 2006 (ICASA Amendment Act). However, as mentioned previously the pace of change is not uniform and this convergence between telecommunications and broadcasting is likely to be a protracted affair if left to market forces alone unless specific steps are taken to ensure that the current public, commercial and community terrestrial broadcasting services switchover1 from analogue transmission networks to digital transmission networks, thus opening the doorway to an enhanced and perhaps interactive broadcasting experience for the public.

The Minister of Communications (“the Minister”), in her Budget Speech in 19 May 2005, announced the establishment of a Digital Broadcasting Migration Working Group (“WG”) to develop recommendations and contribute towards the development a national strategy for the migration of broadcasting systems from analogue to digital. The Minister indicated that the WG would consist of representatives from the broadcasting industry, Independent Communications Authority of South Africa (ICASA), government, civil society, organised labour and consumer groups.

The WG was mandated to assist government in creating a digital agenda that informs broad communication policy in South Africa, as well as key national economic policy that integrates the knowledge economy into the vision of the information society.

The first meeting of the WG was held on 26 August, at the Indaba Hotel in Fourways, Johannesburg. This inaugural meeting focused on setting the terms of reference for the WG and organising the WG into working committees. At this plenary meeting four committees were established, namely the:

Policy Working Committee; Content Working Committee; Economic Working Committee; and Technical Working Committee (the terms of reference of each working committee

are set out in Appendix A).

Given the differing terms of reference, each committee determined the research and drafting process it would follow in developing its recommendations. In respect of the 1 Switchover, for the purposes of this report, is defined as the progressive migration of households from analogue-only reception to digital reception of broadcasting

transmissions.

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technical and policy working committees, the broader working committee divided the work among smaller task teams who then provided drafting for discussion and agreement.

In respect of the content working committee, a questionnaire was developed and completed by members of the independent production sector, in order to assess the level of production readiness. Both the Independent Producers Organisation (IPO) and the Black Filmmakers Network (BFN) were asked to consult their members on their state of readiness for digital production. The BFN subsequently provided a report and briefing to the committee. Broadcasters were also asked to make a presentation outlining their state of readiness for a digital domain. Presentations to the committee were made by the SABC, M-Net and e.tv. The committee also approached the MAPPP-SETA to provide advice on its training and development activities for a digital domain. Finally, the committee was of the view that a specialised legal expertise was required to make meaningful recommendations on intellectual property issues. Consultants were briefed to advise the committee in relation to various matters arising from the migration of broadcasting services from analogue to a digital.

In respect of the work of the economics working committee, the need was identified for an economic modelling exercise in order to determine the economic viability of digital switchover in South Africa. The economics working committee subsequently drew up a task directive and approached the Department of Communications (DoC) for funding in order to engage economic experts to conduct the above study. Consultants were engaged to provide an economic model that would allow for scenario planning taking into account the costs and benefits to government, the consumer, broadcasters and the signal distributors.

The scenarios presented in the economics report provide a broad framework for the impact of Digital Terrestrial Television (DTT), based on three alternative timeframes. The model that has been developed by the consultants is appended to this report and should be used to develop further scenarios in managing the digital switchover process on an ongoing basis.

The WG would recommend that the Minister not disband the WG immediately after the handing in of the report on digital switchover in South Africa. This would put government, the regulator and even the proposed independent body in a position to access or utilise the collective expertise of the WG in developing a digital switchover strategy and managing the switchover process.

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2. SCOPE OF DIGITAL BROADCASTING

The scope of work of the WG was clearly set out by the Minister as being limited to developing recommendations and contributing towards the development of a national strategy for the switchover of broadcasting systems from analogue to digital broadcasting in South Africa. It is clear from this scope that the digital switchover of existing analogue broadcasting networks is not limited to the terrestrial broadcasting platform, as the broader term of “digital broadcasting” is used.

This led to the WG attempting to determine what is captured in the scope of the term “digital broadcasting”. The WG decided that Digital broadcasting essentially means the practice of using digital techniques to encode audio and video signals and to transmit digital data rather than analogue waveforms on networks. Coupled with the use of advanced digital compression techniques this will result in more efficient bandwidth usage compared to analogue broadcasting services, allowing a content provider more room to provide broadcasting and electronic communication services, or to provide a higher-quality signal than has previously been available.

It was decided by the WG, that in line with implementation globally, digital broadcasting can still be divided into two streams, namely television and radio (audio or sound broadcasting). In practice though, it was admitted that this distinction is difficult to maintain in a digital era as sound-broadcasting services can now be provided by digital television technologies and video can be broadcast using digital radio technologies. The WG, therefore distinguished on the basis of the primary content offering between services and the following definitions were identified. Digital television (DTV) means the use of digital modulation and compression to transmit video, audio and data signals to consumer access devices (or receiver sets), and Digital Sound Broadcasting (DSB) or Digital Radio means the use of digital modulation and compression to transmit audio programmes (music, news, sports, etc.) only.

In the future when multimedia content, irrespective of the nature of the content, is distributed on any network and on multiple platforms it is likely that this distinction between television and radio will fade away to be replaced by a distinction between fixed, nomadic and mobile delivery of multimedia content.

Broadcast systems were invented on the basis that signals would propagate terrestrially. Although satellite broadcasting systems became a possibility in the 1960’s, terrestrial networks continue to be the primary delivery systems for television and radio broadcasting services. All broadcast systems require significant frequency spectrum which are a finite resource. One of the main benefits of a switchover to digital broadcasting is the freeing up of such valuable frequency spectrum, as well as improving the quality and quantity of broadcasting services. There have been a number of developments over the past twenty years and various technology platforms are capable of providing digital television and radio. Around the world, satellite direct-to-home (DTH) operators have been launched, new digital cable networks have been built and many analogue cable networks upgraded. Recently, traditional telecommunications networks (broadband) and mobile telecommunications networks have begun offering broadcasting content (television and radio programming services) using digital technologies, allowing offering such as Internet Protocol Television (IPTV) and 3G mobile television.

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The implication of these different technologies is that as the switchover from analogue to digital broadcasting takes place, there is no reason why the traditional focus on the terrestrial platform should be maintained. In fact a scenario is possible whereby multiple platforms (cable, broadband, terrestrial or satellite) collectively and individually could provide full digital television or radio services.

The WG felt that despite recent moves towards technology neutrality, in legislation such as the ECA, there was still merit in distinguishing for the purposes of this Report between the different technologies by which digital content is delivered to the public or subscribers.

2.1 DEFINING DIGITAL TELEVISION STANDARDS AND DELIVERY PLATFORMS

In line with the traditional policy approach in South Africa, with regards to broadcasting, of distinguishing between delivery on the basis of terrestrial, satellite and cable/broadband the following means of delivery and relevant technologies were identified by the WG.

2.1.1 Digital Terrestrial Television

Digital Terrestrial Television (DTT) means the implementation of digital technology to provide a greater number of channels, especially when using Standard Definition Television (SDTV); and/or better quality of picture when using Enhanced Definition Television (EDTV) or High Definition Television (HDTV); and sound when using Dolby Digital2 through a conventional aerial instead of a satellite dish or cable connection. The main technology standards used are Advanced Television Systems Committee (ATSC) standard in North America, Integrated Services Digital Broadcasting (ISDB-T) standard in Japan, Digital Video Broadcasting (DVB-T) in Europe. These and other transmission standards were developed to replace traditional analogue terrestrial broadcasting with a digital broadcasting equivalent.

2.1.2 Satellite Digital Television

Satellite Digital Television means the implementation of digital technology to combine large numbers of channels onto available bandwidth via satellite for reception by consumers via satellite dishes. The greater radio frequency bandwidth available to satellite operators usually allows them to outperform DTT operators in terms of the number of channels offered. The costs of satellite dishes have been reduced in the past three years making them affordable to the average consumer.

The technology standard used globally is Digital Video Broadcasting - Satellite (DVB-S), although the other main standards such as ATSC and ISDB have also made provision for satellite direct-to-home broadcasting (DTH) in the standards. Digital satellite

2 Dolby Digital, also known as AC-3, is a digital audio coding technique that reduces the amount of data needed to produce high quality sound. Dolby Digital takes

advantage of how the human ear processes sound. Dolby Digital is used with digital versatile discs (DVDs), high definition television (HDTV), and digital cable and

satellite transmissions. It has been selected as the audio standard for digital television ( DTV) in the United States of America. The European DVB standard, however,

does not use Dolby Digital for audio, but instead uses MPEG standard technology for both the audio and video signals.

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television is based on the DVB-S (EN 300 421) standard and has been deployed in South Africa since 1995. Digital satellite television has similar spectrum efficiency advantages to DTT.

DVB-S2 (EN 302 307) is the next generation of DVB family standards that is 30% more bandwidth efficient than DVB-S. In addition, digital satellite television has the benefit of providing universal service at a more affordable transmission cost than DTT. DVB-S2 (TR 102 376) is the successor to DVB-S announced in 2005. It offers a 30% efficiency gain achieved through:

New modes of operation, namely Variable Coding and Modulation (VCM) and Adaptive Coding and Modulation (ACM).

New error correction code called Low Density Parity Code (LDPC), and New modulation schemes

DVB-S2 is targeted not only for traditional broadcast, but also for interactive services and professional applications like contribution and distribution for DTV networks.3

2.1.3 Digital Cable Television

Cable television (often shortened to cable) means a system of providing television, radio or sound programming and other services to consumers via radio frequency signals transmitted directly to people’s televisions through fixed optical fibres or coaxial cables as opposed to the over-the-air method used in traditional television broadcasting in which a television antenna is required to receive signals. Although prevalent in other parts of the world, cable television was never introduced in South Africa. In North America and Europe analogue cable television is being upgraded to digital. Digital cable television means a type of cable television that delivers more channels than possible with analogue cable by using digital video compression. Digital cable also enables bi-directional (two-way) communication, enabling services such as the ability to purchase pay-per-view (PPV) programming and video on-demand (VoD) services.

2.1.4 Internet Television and IPTV

Traditionally, television was only distributed via cable, satellite or terrestrial systems. However, with the increase in Internet connection speeds, advances in technology and decreases in connection costs a new trend has emerged where traditional broadcast television content and “internet only” television content has become accessible on the Internet and traditional telecommunications broadband networks. A clear distinction is being made between Internet Television and Internet Protocol Television (IPTV), which lends itself to regulatory distinctions as well.

Internet television is seen, in terms of the internet model, as being similar to the normal consumer internet experience in that the model is open to any rights holder as it is based on the same publishing model that exists on the World Wide Web (Internet), namely that anybody can create a website and publish that on a global basis. In fact, Internet Television operates in the same fashion as it is accessible from any type of computer (or any other consumer device that can access the internet) and connection, it is also not tied to a specific household or Set Top Box (STB). In other words, it gives the content publisher the ability to reach consumers anywhere in the world on multiple devices independent of any specific carrier or network operator using streaming technology

3 Eutelsat S.A. High Definition TV via Satellite (Paris, France: Eutelsat S.A., 2006)

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based on the Moving Pictures Expert Group (MPEG)4 compression standard usually. The content publisher may be from the formal media sector or the informal sector (user generated content). The model can be free-access or restricted access subject to payment. Internet Television is transmitted over the Internet using the Internet Protocol (IP), which sometimes results in it being called Internet Protocol Television (IPTV). However, most advocates of the open model Internet Television approach reserve the term IPTV for another model, namely the model of marketing video and television-type content through secure and protected IP telecom networks.5

IPTV in this context is not television that is broadcast over the internet, but the method of sending information over a secure, private network that is geographically bound. IPTV is generally funded and supported by large telecom providers who intend providing a competitive product for digital cable and satellite broadcasting services. Traditionally, voice and broadband telecommunication networks have been viewed as a way of delivering voice, internet or data type services, however, convergence is leading to broadband networks being seen as a way of delivering a range of data, voice and video services to households. The IPTV service is often provided in conjunction with Video on-demand and may also include Internet services such as Web access and voice-over-internet protocol (VOIP), where it may be called Triple Play and is typically supplied by a broadband operator using the same infrastructure. In businesses, IPTV may be used to deliver television content over corporate local area networks (LANs) and business networks. IPTV STBs are essentially cut down PC's in their own right and are capable of interacting with other devices such as PDA's, mobile phones, and the Internet to provide a truly flexible solution allowing local information to be tailored to specific regions (e.g. weather and news from a local area).6

The nature of internet television being based on a global internet model means that similar to the internet it is not possible to regulate this type of service as it usually operates outside the borders of countries in which it is received. IPTV in contrast, works on the same model as cable and satellite television as it entails the deployment of infrastructure and devices to access it within the borders of a country which are all managed and operated by the broadcasting service and network operator. The fact that the infrastructure deployed is based in regions and in suburbs which are connected to consumer premises (households) makes it possible to subject IPTV to regulation similar to that in place for traditional broadcasting networks.

In South Africa, where there is no legacy cable television infrastructure to upgrade to digital, a “greenfields” roll-out of IPTV seems to make more sense than introducing digital cable television. An advantage of IPTV is that it uses Internet protocols to provide two-way communication for interactive television. It is also possible to receive Internet based service notifications for things such as incoming email while watching IPTV. If IPTV is packaged with a digital phone, a caller ID could pop up on screen when the telephone rings. IPTV is already being introduced in international markets, with providers in many countries including Japan, Hong Kong, Italy, France, Spain, Ireland, and the United Kingdom.

2.1.5 Digital Mobile Television

4 MPEG is the name of a family of standards used for coding audio-visual information (e.g. movies, video, music) in a digital compressed format. The major advantage

of MPEG compared to other video and audio coding formats is that MPEG files are much smaller for the same quality. The use of MPEG is not restricted to the Internet

it is the preferred compression standard on terrestrial and satellite platforms as well.

5 Good, R. IPTV vs Internet Television – Key Differences. <http://www.masternewmedia.org/2005/06/04/iptv_vs_internet_television_key.htm> (4 June 2006)

6 Ibid.

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Digital Mobile Television is a new television broadcasting service that has become possible due to convergence, where the content is broadcast or streamed not to traditional television sets but to mobile phones or other portable devices. There are three main radio technology families for delivering broadcast content to mobile phones or devices:

In-band cellular broadcast techniques such as the Multimedia Broadcast/ Multicast Service (MBMS) extension to Universal Mobile Telecommunications System (UMTS);

Terrestrial digital broadcast networks and their extensions, such as Digital Video Broadcast transmission to Handheld terminals (DVB-H) based on DVB-T standards, Terrestrial Digital Multimedia Broadcasting, based on T-DAB standards (T-DMB), Media Forward Link Only (MediaFLO), a Qualcomm proprietary solution improving DVB-H, and ISDB-T, a Japanese digital television allowing HDTV as well as reception on handsets; and

Hybrid satellite/terrestrial systems, such as Satellite Digital Multimedia Broadcasting (SDMB) in Korea, MobaHO! in Japan, and the recent DVB-H adapted for S-band and the hybrid operation concept, which Alcatel is proposing to the DVB Forum as an extension of DVB-H.

It is important to note that these technologies all offer varying degrees of mobility and reception performance versus cost of deploying a network for mobile reception.7

The principle of technology neutrality in regulation should prevail and mobile services could be allowed on any of the multitude of mobile digital broadcast platforms available, including T-DAB, DMB, DRM, DRM+ and DVB-H. There is also a potential in South Africa that DVB-H and DVB-T could be used in hierarchical modulation mode, both being broadcast from the same transmitters in a digital broadcasting network. However, such a choice by the broadcasting service and/or electronic communications network service would introduce some limitation in terms of coverage and number of services, as DVB-H requires denser coverage. This would therefore result in DVB-H being confined to only using Quadrature Phase Shift Keying (QPSK) modulation. The decision to use this mode should therefore be left to the commercial decision of broadcasting services operating on a DTT platform.

2.2 DEFINING DIGITAL RADIO STANDARDS AND DELIVERY NETWORKS

There are numerous digital terrestrial sound broadcasting standards in operation throughout the world, as well as some new standards that are currently under development. The ITU Regional Radiocommunication Conference (RRC-06) on Digital Broadcasting has adopted the Eureka 147 DAB standard for countries in Africa and Europe. Eureka 147 is able to operate in the frequency ranges 174- 240 MHz (Band III) and 1452-1492 MHz (L-Band). However, globally most of these services have been deployed in Band III.

7 Satellite-evolution.com. “Mobile Television: Stronger Together, Weaker Apart” in Satellite Evolution EMEA March/April 2006, pp. 28-36 <http://www.satellite-

evolution.com/portal/_portal.cgi?page=emeaissues2006.htm>

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The sound broadcasting sector, in South Africa, are of the opinion that the existing AM8

and FM9 services do not meet the needs of all South African listeners. The analogue services in the congested spectrum are currently unable to deliver on the published policy objectives to amongst others adequately serve the 11 official national languages provide the expansion of Greenfield station’s service coverage and facilitate the licensing of new services in key markets10. In certain cases, a shortage of spectrum in the Very High Frequency (VHF) - FM band prevents the licensing of new sound broadcasting services, or the expansion of existing broadcasters’ coverage. The introduction of digital sound broadcasting services could remedy this situation. It is argued, that the same reasoning and motivation for the introduction of DTV applies to radio and that the digitisation of radio is critical to ensure its continued relevance in a converged digital environment in the future. It should be noted that Digital Radio, in addition to what is listed below, can also be provided in the form of audio bouquets using any of the standards and platforms identified above for DTV. In the context of DSB, it is once again possible to distinguish between terrestrial, cable/broadband and satellite delivery together with the accompanying technologies or standards.

2.2.1 Digital Terrestrial Radio

Digital Terrestrial Radio is more commonly known as digital audio broadcasting, which is used both to identify the generic technology of digital audio broadcasting, and specific technical standards, particularly the Eureka 147 (DAB) standard. The technology used includes Digital Radio Mondiale (DRM) globally in medium wave (MW) and short wave (SW) bands In-Band On-Channel (IBOC) in North America, Integrated Services Digital Broadcasting (ISDB-Tsb) in Japan, and Eureka 147 in Europe, Canada and parts of Asia.

The main objective of radio stations converting to digital systems is to enable higher fidelity, greater noise immunity, and new services. However, since FM stereo with good reception provides hi-fi sound, digital radio systems around the world find it difficult to motivate consumer take-up based on improved audio quality alone, its introduction is also hampered by a lack of global agreement on standards. Eureka 147-DAB uses Coded Orthogonal Frequency Division Multiplexing (CODFM) modulation which is also used for the DVB family of standards and is designed to operate in Band III (174 MHz to 240 MHz) and the L-Band (1452 MHz to 1492 MHz). Roll-out of large area coverage of T-DAB services has been largely in Band III. The T-DAB rolled-out in Europe has been predominantly in Band III. The ITU Regional Radiocommunication Conference on Digital Broadcasting 2006 (RRC-06) has recommended the adoption of the Eureka 147 (DAB) standard for countries in Africa and Europe. Mass produced receivers for T-DAB (Eureka 147) are available from more than 15 different suppliers in numerous mobile, portable, car and home forms. Prices have fallen to below $7711, but this is still more than what the lower LSMs (Living Standard Measure) in South Africa can afford.

8 AM broadcasting is broadcasting using amplitude modulation and is also often used to refer to mediumwave broadcasting (MW).

9 FM broadcasting is broadcasting which makes use of frequency modulation.

10 Independent Communications ASA. The Review of Ownership and Control of Broadcasting Services and Existing Commercial Sound Broadcasting Licences,

Position Paper. (Johannesburg: ICASA, 13 January 2004)

11 www.worlddab.org

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In the United States of America (USA) digital radio schemes maintain compatibility with traditional analogue broadcasting schemes based on a 200 kHz channel allocation grid for FM and a 10 kHz channel allocation width for AM, enabling an approach known as IBOC. With IBOC, both analogue and digital signals are sent in the same channel, allowing older analogue radio sets to still receive the signal. There is an increase in noise and the associated degradation to the analogue signal to noise ratio is managed through increasing the power ratio between the analogue carrier and digital signal blocks. This has the benefit of simplifying the problem of frequency allocation in the USA, since the existing radio broadcast frequencies can be used for digital transmissions. Initially, three schemes were being promoted in the USA all based on CODFM modulation, these have now collapsed into one scheme known as High Definition (HD) Radio for digital broadcasting using existing FM and AM stations. As the South African FM radio band plan is based on 100 kHz channels and not 200 kHz, as is the case in the US, it is not possible to introduce HD Radio in South Africa without re-planning the entire South African radio broadcast frequency allocations and retuning every FM transmitter. Accordingly, the WG do not consider this technology to be viable or relevant to the South Africa situation.

In addition to the T-DAB technology and HD Radio there is also DRM. Digital Radio Mondiale is an international non-profit consortium focused on designing and implementing an open-source platform for digital radio broadcasting, especially on shortwave. DRM uses COFDM technology and can operate in several modes with varying degrees of spectrum bandwidth requirements, signal robustness and audio quality. One hybrid mode allows both digital signals and analogue signals to be combined and broadcast simultaneously. In this mode the digital audio quality is highly limited and voice based speech codecs are used. With multiple 9 kHz channels combined DRM can deliver FM-like quality stereo services.

The main advantage of DRM is that it provides a means of radically improving the audio quality of services using frequencies below 30 MHz. Depending on the mode selected DRM can also transmit other digital data besides digitised music, including text, pictures, and computer programs (data-casting) — as well as RDS-type12 metadata or programme-associated data like DAB does. DRM has been designed especially to use older transmitters designed for audio AM, so major new investments are not required for early adopters. The encoding and decoding can be performed with digital signal processing, so that small computers added to a conventional transmitter and receiver can perform the rather complex encoding and decoding. The WG hold the view that it may benefit South Africa to investigate opportunities for the introduction of broadcasting services using the DRM standard.

DRM+ is an extended version of the existing DRM standard, which is being developed to operate in all broadcast bands below 120 MHz; i.e. primarily the VHF-FM Band 87.5-108 MHz. DRM+ is being developed to meet a requirement by certain European and South American broadcasters who need a switchover path to digital broadcasting for both AM and FM systems using a single standard. Given the current utilisation of the FM Band in South Africa, and the demand for additional sound broadcasting services, DRM+ may provide a solution to the problem in future. The standard for DRM+ is expected to be adopted by European Telecommunications Standards Institute (ETSI) in 2007, and the design, development and testing phases are expected to be completed by 2008-2010.

12 Radio Display System (RDS) is a radio broadcast technology for displaying the artist, album, and track title information on FM radio receivers.

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As currently envisaged the standard will require bandwidth within the FM band and will require broadcasting services in the FM band to be switched off before the DRM+ services can be introduced. DRM receivers are not currently available nor mass produced. Japan in contrast to other countries has adopted a different technology that it developed called ISDB as its DTV and DSB format to allow radio and television stations to convert to digital. This standard, which has not been used outside of Japan, would not be recommended by the WG as there do not appear to be worldwide economies of scale developing to reduce the costs of the radio sets based on this standard.

2.2.2 Digital Satellite Radio

Digital Satellite Radio can be described as a satellite-based direct-broadcast radio service in which digitally encoded audio entertainment material is broadcast to terrestrial-based receivers, either directly from an orbiting satellite, or in cases in which the receiver is in a shielded location--from the satellite to the receiver via a terrestrial repeater station. Unlike, Digital Terrestrial Radio, Digital Satellite Radio services are commercial business entities, which offer a package of channels as part of their service — requiring a subscription from end users to access its channels. Currently, the main providers are WorldSpace, XM Satellite Radio and Sirius Satellite Radio. Satellite radio uses the 2.3GHz S band in North America, and generally share the 1.4GHz L band with local Digital Audio Broadcast (DAB) stations elsewhere. It is a type of direct broadcast satellite, and is strong enough that it requires no satellite dish to receive. Due to the high orbit of the satellites, two or three are usually sufficient to provide coverage for an entire continent. Local terrestrial repeaters may be required to enable signals to be available if the view of the satellite is blocked, for example, by high rise building in metropolitan areas.

XM Satellite Radio and Sirius Satellite Radio dominate the American market with satellites providing coverage for the continental USA. This dominance extends into Canada as both satellite radio providers are partners in two of three satellite radio services which have applied for licences in Canada and been approved by the Canadian Radio-television and Telecommunications Commission (CRTC). Elsewhere in the world, WorldSpace tends to be the main sound broadcasting player and it has its own satellites covering most of Europe, Asia and Africa. Only proprietary WorldSpace receivers can receive the signal and many of the programs are available only to subscribers. Of course all the satellite subscription television broadcasting services also provide an audio bouquet in addition to their television bouquets. The main difference being that they target the household, rather than the car and mobile receiver market primarily addressed by satellite sound broadcasting services.

In 1992 the ITU World Administrative Radio Conference (“WARC 92”) allocated the frequency band 1 452 – 1 492 MHz to the broadcasting service and the broadcasting-satellite service. In terms of the provisions of ITU Radio Regulation No 5.345 (“RR 5.345”) the use of the band 1 452-1 492 MHz by the broadcasting-satellite service, and by the broadcasting service, is limited to digital audio broadcasting and is subject to the provisions of Resolution 528 (“Res 528 WARC 92”).The South African Table of Frequency Allocations (SATFA) confirms the allocation of the band 1452 -1492 MHz to digital audio broadcasting and states in the foot note that “This band has been allocated internationally for use for digital broadcasting (S-DAB and T-DAB).”

Due to the fact that satellite radio experiences dead spots (satellite shadows) and multipart interference in metropolitan areas in between skyscrapers, the Federal Communications Commission (FCC) adopted rules allowing for the licensing of

17

complementary terrestrial repeaters operating in the same frequency band to resolve the problem. The receiver switches automatically from satellite to terrestrial repeater without any interruption in service. The WG suggests that when ICASA licenses satellite sound broadcasting services they must plan and assign terrestrial frequencies for complementary terrestrial repeaters.

2.2.3 Internet Radio and Mobile Radio

Internet Radio is a broadcasting service, which is transmitted via the Internet using streaming technology based on any number of audio compression standards and media players. Internet Radio can be the re-broadcast of a licensed terrestrial radio station, but many internet radio stations are independent of traditional terrestrial radio stations and only exist on the Internet. As the service is streamed over the internet it is possible to access the stations from anywhere in the world. Internet users tend to find internet stations by going to online radio networks, such as Live 365 or SHOUTcast which list thousands of Internet Radio stations covering a variety of music genres. The Internet Model means that it is not really possible to regulate Internet Radio at a national or local level and regulators in most overseas jurisdictions tend to exempt Internet Radio from licensing regimes. In contrast, Mobile Radio is a new sound broadcasting service that has become possible due to convergence, where the content is broadcast or streamed not to traditional radio sets but to mobile phones or other portable devices. As this service is linked to national, regional or local networks, it is capable of being regulated in the same manner as traditional broadcasting services. It utilises the same three main radio technology families for delivering broadcast content to mobile phones or devices, as were identified for digital mobile television

RECOMMENDATIONS:

Based on the above discussion on digital broadcasting standards, the WG makes the following technical recommendations, namely that:

1. Based on decisions taken at the ITU Regional Radiocommunication Conference 2006 (RRC-06), the DVB family of standards should be adopted in South Africa for digital television broadcasting.

2. The principle of technology neutrality in regulation prevails and mobile broadcasting services must be introduced on any platform using any mobile digital broadcasting standard.

3. In the digital switchover process, provision should be made for the introduction of at least one DVB-H mobile broadcasting service on the frequencies planned at RRC-06 for metropolitan digital transmission networks in South Africa.

4. The Eureka 147 (ETSI EN 300 401) and Digital Radio Mondiale (DRM) (ETSI ES 201 980) standard be adopted as complementary standards for digital sound broadcasting in South Africa.

5. The temporary allocation for T-DAB in 238.432-239.968 MHz in the current National Table of Allocations must be made permanent and licensed without further delay to allow for the introduction of a multi-channel Digital Sound Broadcasting Service in South Africa;

6. As there is currently no global standard for digital satellite sound broadcasting, market forces should be allowed to dictate the take up of digital satellite sound broadcasting in South Africa; and

7. When ICASA licenses satellite sound broadcasting services the regulator must plan and assign terrestrial frequencies for complementary terrestrial repeaters.

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2.3. STANDARDS, FORMATS AND APPLICATIONS RELATED TO DIGITAL BROADCASTING

2.3.1 Image Quality and Digital TV Formats

Standard TV signals are made up of 625 lines of resolution, Digital Versatile Disks (DVDs) are digitally made movies, which means are of a better visual quality than movies broadcast on standard TV. HDTV allows for even better resolution.

RESOLUTION COMPARISON13

There are 18 "standard" digital television formats. Each one provides a different picture quality. The 18 standards fall into 4 broad categories:

480i - (square-screen only) digital version of the best current television signals; 480p - (square or widescreen) also known as "standard definition"- has the same

detail as today's television signal but looks sharper;. 720p - (widescreen only) this HDTV format provides an image just about as good

as 1080i, while allowing other 480p signals to be broadcast at the same time; and

1080i - (widescreen only) the HDTV format that allows the most detailed image available from broadcast TV.

The number refers to the number of lines of vertical resolution. The letter refers to the way the TV makes the picture, either Progressive (p) or Interlaced (i). Because a "p" image looks sharper than an "i" image, the number of lines of resolution can be reduced and still result in a good-looking image. So a 720p image looks just as good as a 1080i image. At these resolutions, image clarity is more a result of the quality of the film the program was shot on, and the quality of the transfer to video, rather than the resolution it is transmitted in.

The standards falling under the 480i and 480p format categories are referred to as SDTV. The WG would suggest the use of the 480p for SDTV as it allows for sharper image quality and can accommodate both 4:3 and 16:9 ratios. The main HDTV standards, as mentioned above, are 720p, 1080i and 1080p.

Another aspect to standards that needs to be considered is the compression standard used. Obviously, the higher the definition or resolution, the higher the data rate required

13 These images are not actual TV images, since you can't truly demonstrate different resolutions on paper. They are accurately rendered approximations designed to

demonstrate the real difference between the video formats. Source: http://www.wnep.com/Global/story.asp?S=709431 (Used in this document with the permission of

webmaster)

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to transmit the picture for real time video. Therefore, the higher the efficiency of the compression system, the lower the bandwidth required for transmission of the signal. For this reason, only MPEG4 Part 10 should be considered for HDTV transmission (emission).

The 1080p standard will deliver the highest quality video, but is not yet a viable option for broadcasting. Most HDTV displays (plasma displays) require progressive scanning and convert interlaced formats to progressive prior to display. Progressive scanning is therefore the preferred standard. The choice is therefore between 720p/50 and 1080i/25. The 1080i system offers more than twice (1920X1080 = 2.07 million pixels) the number of pixels of the 720p system (1280X720=0,92 million pixels). The WG holds the view that South Africa should therefore adopt the 720p standard now, with a view of moving to 1080p as the technology improves (See Annexure D – Technical Report for a more detailed analysis).

Based on current compression standards it would not be advisable to implement HDTV terrestrially during the digital switchover, as one HDTV channel would significantly reduce the number of channels that could be accommodated on a single frequency. It would therefore not be wise to roll out HDTV terrestrially initially, but to first wait for spectrum to become free with the switch-off of analogue services. Any spectrum planning exercise should keep in mind the spectrum requirements of future terrestrial HDTV. In the mean time, HDTV could be rolled out on DTH or IPTV.

In Europe, an HD ready label scheme has been put in place to enable consumers to identify equipment capable of providing an HD picture. The HD Ready label for TV sets requires:

the 16:9 “wide” screen format; a minimum resolution of 720 lines (and 1280 dots per line); compatibility with the two HD production and reception formats (1080i and 720p); dual analogue input (YUV, DVI and HDMI), to ensure compatibility with other

audio-visual equipment in the household (decoder, camcorder, player and recorder).

In South Africa, the benefit of a labelling scheme would be to allow consumers to make an informed choice when purchasing a TV set, with a view to being ready for when HDTV broadcasts commence on digital broadcasting platforms.

RECOMMENDATION:

The WG makes the following technical recommendation, namely that South Africa consider implementing a HD Certified labelling scheme and adopt the following minimum standards for High Definition TV (HDTV): MPEG4 Part 10 with AAC and Dolby AC3 support; 720p standard now, with a view of moving to 1080p; and HDMI interface.

2.3.2 Aspect Ratios

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The 16:9 aspect ratio has been adopted by the ITU (ITU-R BT.709) as part of the specification for HDTV. This may be part of the reason why the two are often confused. There are different ways of achieving widescreen content from actual filming to various post-production processes; full capture in a widescreen format, squeezing wide frames onto traditional film so the process can simply be reversed for display (anamorphic widescreen), cropping and re-packaging video (pan and scan) etc. Display devices usually have an algorithm for filling up a screen when the content is of a different aspect ratio, e.g. letterboxing, pillar boxing, or a zoom function to crop the top and bottom or sides. DTT in Standard Definition can be broadcast in both 16:9 and 4:3 as used in analogue.

RECOMMENDATION:

The WG makes the following technical recommendation, namely that South Africa consider including a 16:9 aspect ratio into any specification set for HDTV in South Africa.

2.3.3 Interactive Broadcasting and Return Path Channels

Interactive services are services that have no association typically to the video and audio. These services are also streamed to the STB and stored in the STB memory also using data channels within the DVB stream. The user can call up these services and interact with them at an STB level. In contrast, advanced return path interactive services are services downloaded to the STB, but interaction is via a return path from the STB back to the host service provider, via imbedded GSM cards within the STB or internal / external dial up modems or wireless broadband access connections.

There is the ability on digital platforms, assuming bandwidth availability, to provide non-traditional broadcast services like interactive advertisements, national and regional information, live web pages, games, quizzes etc that are not associated with any service or programme. These services typically are already operating on existing digital broadcasting platforms in SA and around the world with varying degrees of success. More advanced interactive services allow viewers to switch camera angles, video feeds, etc. but require massive additional bandwidth.

It is increasingly being recognised that broadcasting will not be a one-way communication service in future. ITU-R Study Group 6, which deals with broadcasting services, describes broadcasting as follows:

“Broadcasting makes use of point-to-everywhere information delivery to widely available consumer receivers. When return channel capacity is required (e.g. for access control, interactivity, etc.), broadcasting typically uses an asymmetrical distribution infrastructure that allows high capacity information delivery to the public with lower capacity return link to the service provider. The production and distribution of programs (vision, sound, multimedia, data, etc.) may employ contribution circuits among studios, information gathering circuits (ENG, SNG, etc.), primary distribution to delivery nodes, and secondary distribution to consumers.”

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There are numerous alternatives that can be deployed for the broadcasting return channel, including:

Telephone dial up Wireless broadband access connections Mobile cellular telephony Traditional terrestrial broadcast spectrum Satellite

In 2002 ETSI developed a standard (EN 301958) for an interaction channel (return channel) for DVB-T. The standard specifies the channel coding/modulation and the medium access control protocol. However, it only provides guidelines on spectrum. Nevertheless, in the DVB-RCT system, the Forward Interaction path and the Return Interactive path are implemented in the same radio frequency bands - i.e. VHF/UHF Bands III, IV and V.

The DVB-T and DVB-RCT systems form a two-way system, which share the same frequency bands. Thus it is possible to benefit from common features in regard to the RF devices and parameters (antenna, combiner, propagation conditions, etc.) Nevertheless, the Return Channel- Terrestrial (RCT) system is suited to work in other frequency bands preferably adjacent to broadcasting.

The Return Interaction Channel can be located in any free segment of an RF channel, taking in account existing national and regional analogue television assignments, interference risks and future allocations for DVB-T without causing interference to existing and planned broadcast services. The non-uniform distribution of energy in analogue TV RF channels lends itself ideally to this approach.

In developing the standard, ETSI envisaged that specific spectrum allocations and sharing rules would be agreed for DVB-RCT transmissions in the spectrum currently assigned to broadcasting, during the ITU RRC process. However, at RRC-04 there was opposition to the Conference addressing the issue of interactive broadcasting and a statement was included in Chapter 5 of the RRC-04 Report, which states:

“5.1.3.3 Possible future developmentsThe new plans, to be adopted at the second session, will need to provide a framework in which each country can continue to satisfy its own individual requirements on an equitable access basis. The new plans must be sufficiently forward-looking and sufficiently flexible to cover developments in digital technology in future years.In addition to video and audio signal distribution, digital terrestrial broadcasting may serve as a data platform for innovative telecommunication applications (e.g. e-health, e-government, e-learning) to effectively help to bridge the digital divide, in particular in the developing world.”

No further debates were held regarding interactive broadcasting at RRC-04.

STB-related interactive services can be provided with digital broadcasting, provided that the STB has sufficient memory and an operating system to support such services. Interactive services using return paths such as telephone, GSM modem, broadband connections could be implemented where feasible. However, inclusion of advanced interactivity features in the basic STB, is not recommended.

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RECOMMENDATION:

The WG recommends that interactive services that do not require a return path can be implemented from the inception of digital terrestrial television, but interactive Broadcasting Services using a return path requiring the use of broadcast frequency spectrum are not recommended during the digital switchover phase. After analogue switch-off when sufficient broadcast spectrum becomes available this type of return path can be considered.

2.3.4 Electronic Programming Guide (EPG)

Enhanced services are services running in parallel to the video and audio streams. They use data paths embedded in the DVB stream. The services may be onscreen or user initiated via the STB to display the information, but the information pertains to, and is associated with the video and or audio. The information is downloaded on the STB and the interaction with the user is with the STB.

Typical examples of enhanced services include: Electronic programme information (EPI) is a basic user initiated call to the STB to

display a banner over the video with the current and possibly next up programme title only. This requires integration of the head end supplier with the automation systems of the channel service providers to keep this EPI current and accurate.

Electronic programme guide (EPG) is a more advanced service enabling the viewer to call up information of the current programme and a number of programmes to follow, with additional information and synopsis of each of the programmes. This requires more advanced integration with head end service providers and channel service providers at automation payout level and business enterprise scheduling and programme information systems.

This EPG service can be further enhanced with look ahead of all programmes on channels up to 7 days with more detailed synopsis of programmes and possible search functions. Further, this requires more transport stream capacity.

Partially sighted services provide additional audio, enhancing the impaired viewing experience. This requires additional audio streams and complex production facilities to produce these services.

2.3.5 Set-top Box (STB)

This section addresses the following additional technical decoder-related matters which need to be considered, as these will have significant impact on the decisions on DTT roll-out.

Horizontal vs Vertical Model Choice of Operating System Conditional Access Options & Implications Compression Technology Minimum Decoder Specifications

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(a) Horizontal versus Vertical Market

The DTH decoder market in South Africa is vertically integrated. That is, each operator controls the models of decoder which may be used on their platform. This is not expected to be the case for DTT. Most of the successful DTT roll-outs have been based on Free to Air (FTA) services. For this reason the decoder market could not be controlled. The ability for a decoder to receive services from different platforms and service providers is known as a horizontally integrated market. In an attempt to facilitate a horizontally integrated market, DVB developed a specification for a standard decoder middleware known as MHP (Multi-media Home Platform). It is also envisaged that different levels of DTT decoders will be available in the market, from entry-level “minimum” decoder to perhaps Personal Video Recorders (PVRs). ().

(b) Operating System

There is no clear distinction between operating system (OS), API (Application Programme Interface) and middleware. Here the term middleware is taken to mean OS and API. The middleware provides a high level interface to the low level decoder functions such as display drivers and remote control functions. The middleware also takes care of the low level decoder management such as menu navigation and programme guide. The middleware provides a standard interface for application development, which allows an application to run on different hardware platforms using the same middleware. Through applications, the middleware allows decoder interactivity (see Figure 1).

FIGURE 1: STB SOFTWARE ARCHITECTURE

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RTOS and drivers

Open TV

Java

Navigation, User Interface, EPG.

Decoder Software Architecture

Run Time EnginesAnd

Virtual Machines

Operating System

Application Layer

Middleware

Low Level Driver APIs

Downloaded Applications

MHEG5 Flash

MediaHighway MHP

CA Kernel

API

API

A number of different middleware systems are available. Some decoder manufacturers develop their own middleware. This is generally low cost as no royalties or licensing is required. This middleware is generally not intended for application development. It merely provides basic decoder functionality. There are two main proprietary middleware systems commonly in use. These are Open TV and MediaHighway. These are proprietary and attract high royalties and licensing fees. There are two non-proprietary systems available. These are MHEG5 and MHP. MHEG5 (Multimedia and Hypermedia Experts Group) is an internationally standardised language for multimedia and hypermedia objects. This is more like a virtual machine than an operating system. It is used for support of multimedia in the UK on DTT (Digital Terrestrial TV). MHP (Multimedia Home Platform) is a standardised middleware defined by DVB (Digital Video Broadcasting – a European Standards Group). MHP was defined by DVB to be an open solution to allow multiple service providers to operate through a single compatible receiver at the home. This was an attempt to facilitate a cost effective horizontal market. The large memory footprint required to support MHP on a decoder resulted in a relatively high cost decoder. This has less of an impact today due to the lower cost of memory. Many European countries are now mandating the adoption of MHP for decoder middleware.

A middleware system is required if enhanced programming is to be provided. Currently in South Africa for DTH, both platforms use OpenTV. This has stringent licensing conditions. MHP standardises the operating system, allowing any operator to “plug in” its own applications to any STB that is MHP compliant. This, in turn, offers the end-user the flexibility to receive content offerings from one or more content publishers without the need to acquire a new STB. It also gives end-users the flexibility to change content publishers at minimal cost.

(c) Conditional Access

Conditional access systems could be considered to be “plug-in software” applications sitting on top of the operating system. Satellite and cable services traditionally have mainly been used for commercial services and hence one would typically find various advanced conditional access systems supporting various TV channels. Until now it has not been critical that the encryption systems used for satellite DTH (Direct to Home) services, be of a common standard or offering common interface. In fact commercial companies regarded this as a strategic edge to be able to run its own encryption system.

Conditional access is considered to be a commercially competitive issue and, consequently it is the view of the WG that this should remain an unregulated activity. There are currently 2 proprietary CA systems in use in South Africa for digital satellite broadcasting. Sentech uses the NagraVision system whilst MultiChoice uses IRDETO. In the short to medium term, both these systems should be allowed to continue in South Africa in the satellite DTH environment.

Digital broadcasting systems can be operated in three basic modes viz. FTAFTA, free-access and fully encrypted:

FTA services do not cater for any encryption system and typically any STB that complies with the DVB-T standard should be able to receive the signal. The advantage of such a system is that STB’s are extremely cheap and it will reduce the barrier to entry when STB’s are to be funded or subsidised. The disadvantage is that one has no control over the viewer base, will not know exactly how many viewers are watching off the DTT platform and it only offers limited value added services. No software

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control or managing of the decoder will be possible. No value-add applications can be provided on the decoder, and no over the air upgrades will be possible. . In order to ensure that the market is not flooded with low quality equipment, it is proposed that STB’s should be subject to some form of quality control to ensure that a reasonable quality of STB is ensured. A minimum standard for the equipment will have to be set. It is suggested that this could be done through Standards South Africa, the standards-generating arm of the South African Bureau of Standards (SABS).14 This would make sense as SABS already publishes national standards which it prepares through a consensus process in technical committees (made up of a variety of stakeholders).

Free-access systems use more advanced STB’s which provide the option of implementing conditional access. The basis of this option is that viewers will have to acquire a STB as well as a smart card (or decoders with embedded CA) to be able to watch the programmes. Apart from a normal TV licence fee, no additional monthly cost will be required. Although more expensive initially, this option offers broadcasters full control over their viewers as well as the introduction of advanced value added services. It will be possible for example to control TV license fees paid or institute pay-per-view services, with the necessary supporting infrastructure. The activation of embedded CA in order to deliver a free access system would necessitate that that there be call centre established for all the STBs in the market and that consideration be given to who will cover the cost of regularly updating the CA for the purposes of ensuring that security is not compromised. In addition, this step would require that royalties be paid for the use of the proprietary CA, and if the principle that no additional cost is imposed on the consumer is applied, then it would have to be covered in the operating budget of broadcasters on an annual basis.

Fully encrypted services can be used to ensure monthly payments for programmes viewed etc. This model is based purely on commercial principles and full control of subscribers is essential. Once one provides full encryption services on a DTT platform, the same platform can be used for free-access as well as FTA services. Activation of CA for fully encrypted services would require the same support infrastructure as in free access systems with the addition of subscriber management systems.

The cost of the STB poses the most critical barrier to entry in terms of getting the viewers to accept a digital switchover process. The entry level STB has to be as cheap as possible, However, it is also necessary to ensure that more sophisticated STBs are available which are flexible enough to provide value added services.

14 SABS is a statutory body that was established in terms of the Standards Act, 1945 (Act No. 24 of 1945) and continues to operate in terms of the latest edition of the

Standards Act, 1993 (Act No. 29 of 1993) as the national institution for the promotion and maintenance of standardization and quality in connection with commodities

and the rendering of services

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POSITION:

The WG did not reach agreement on whether CA should be embedded on the basic STB which would be subsidised by government. It was decided that each WG member could indicate what the minimum specification for the subsidised STB should be in an Appendix to the Report (please refer to individual WG members views which have been attached in Appendix C).

RECOMMENDATION:

The WG did agree, to recommend that broadcasting service licensees should be allowed to roll out the CA system of their choice in more advanced STBs that can be offered in the market.

(d) Compression Standard

New large-scale DTT (DVB-T) installations world-wide will in future support MPEG-4. Starting a new roll-out on MPEG-2, will immediately result in a legacy system, requiring a costly upgrade to MPEG-4, sooner rather than later. MPEG-4 decoders are becoming rapidly available, and although there will initially be a price penalty for MPEG-2 vs MPEG-4, the large anticipated world-wide roll-out of MPEG-4 will soon see prices below that of the current MPEG-2.

(e) Minimum STB specifications

If South Africa is to follow the route of a horizontal decoder market then it will be necessary to define some form of minimum decoder specification for the entry level STB to ensure technical compatibility. Presumably some process for conformance testing and certification will also be required. This function is best performed by some independent industry body. In the UK this function is performed by the “Digital TV Group”. In particular DTG Testing Ltd., performs the following functions:

Over the Air Upgrades Test Materials Application Testing Product Conformance testing

A question that faced the WG was whether the minimum STB specification needed to make provision for e-government. Electronic government or e-Government refers to government’s use of information and communication technology (ICT) to exchange information and services with citizens, businesses and other arms of government.

In South Africa, the e-government policy concluded that it must address at least three major issues: e-governance – application of IT to intra-governmental operations; e-services – application of IT to transform the delivery of public services. The

services affected include general information and regulations, education and culture, health consulting and tele-medicien, benefits, taxation etc.; and

e-business – the application if IT to operations performed by government in the manner of business-to-business transactions and other contractual relations.

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Linking digital broadcasting and e-services will result in improved service delivery and the achievement of Batho Pele objectives for offering equal access to government services and more and better information. The information society has much untapped potential as identified in NEPAD objectives to improve productivity and the quality of life of citizens. The ability of digital television to offer interactive services or pseudo-interactivity would benefit e-government and allow for new services, applications and content that will create new markets and provide the means to increase productivity and hence growth and employment throughout the economy. It will also provide citizens who do not have access to computers and the internet with a convenient access point to information and communication tools in the household that may substitute or complement services available on other platforms.

In order to achieve this and not promote a further digital divide in the arena of digital broadcasting when it is introduced, interactive television would require adding to the basic requirements for the reception of DTT a minimum requirement for open middleware standard. Where governments have mandated interactivity the standard selected has been the Multimedia Home Platform (DVB-MHP) which is an open middleware system standard designed by the DVB Project for interactive digital television. The MHP standard enables the reception and execution of interactive Java-based applications on a TV set. Applications can be delivered over the broadcast channels, together with audio and video streams.15

The inclusion of MHP in the selection of the basic STB or idTV (digital tuner) standard would significantly increase the cost of the digital switchover, however unlike the inclusion of embedded CAS which has been opposed by a FTA broadcaster, the subsidy of STBs with MHP capability can be justified on the grounds of e-government and enabling access to government information by the public on other platforms.16 The inclusion of MHP as a middleware standard for STBs will raise the cost by a much as $16-20 for a once-off licensing fee. There are other alternatives to achieve the same result, Altech UEC, which is a South African manufacturer of STBs, for example bundles their basic MPEG 4 STB with Cheetah, a proprietary middleware solution, currently for free.

POSITION:

The WG are of the view that the decision to mandate an interoperable open middleware standard for the basic STB to promote e-governance and interactive television for all, is a government decision and the WG has not taken a specific stance or recommendation on this. Table 1 below, provides illustrative costs for a range of STBs that can be considered when setting a minimum specification.

15 This would not negatively impact on the introduction of Digital Television sets with integrated digital tuners, as MHP has been mandated in some markets resulting in

MHP Integrated Digital TV sets being available that support interactive services such as text information services, weather maps, games, e-mail, etc.

16 It is also worth noting that conditional access (CA) is not required for interactivity or e-government services as it related primarily to the provision/security of

exclusive audio or video content.

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Table 1: STB Options(Predicted pricing for 1st Quarter 2008)

Terrestrial STBsType of STB Operating

SystemMemory Services Applications Features Platform Cost CA CA Options No of

Services/8 MHz

MPEG-2* Embedded software

2MB Flash4 MB RAM

FTA Basic EPG Remote Control DTT $55 No None 5

Entry levelMPEG-4

Embedded software

4MB Flash32 MB RAM

FTA Basic EPG Remote Control DTT $70 No None 10

Level 1ADTTMPEG-4

MHP capable** 8MB Flash64 MB RAM

FTAFree AccessSubscription

Data servicesE-GovtSports resultsEPGEducationGames Weather Reportsetc.

Remote ControlClosed CaptionsAdditional LanguagesParental Guidance

DTT $74 Capable Dormant 10

Level 2ADTT HDMPEG-4

MHPenabled**

8MB Flash128 MB RAM

FTAFree AccessSubscription

Data servicesE-GovtSports resultsEPGEducationGames Weather Reportsetc.

Remote ControlClosed CaptionsAdditional LanguagesParental Guidance

DTT $90 Capable Dormant 10

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Satellite STB’sLevel 1BSatelliteMPEG-4

MHP capable** 8MB Flash64 MB RAM

FTAFree AccessSubscription

Data servicesE-GovtSports resultsEPGEducationGames Weather Reportsetc.

Remote ControlClosed CaptionsAdditional LanguagesParental Guidance

Satellite $74 Yes Enabled (due to content rights protection)

10

Level 2BSatelliteMPEG-4

MHPenabled**

8MB Flash128 MB RAM

FTAFree AccessSubscription

Data servicesE-GovtSports resultsEPGEducationGames Weather Reportsetc.

Remote ControlClosed CaptionsAdditional LanguagesParental Guidance

Satellite $90 Yes Enabled (due to content rights protection)

10

All prices quoted are “ex-factory”Retail prices are expected to be approximately 50% higher

*The Technical Committee does not recommend the adoption of MPEG-2 technology: MPEG-2 is reaching the end of its technological life and will soon be obsolete MPEG-2 is not capable of supporting high definition services (HDTV) In future the cost of MPEG-4 chipsets will be less than MPEG-2 chipsets

**Operating system royalties not included in pricing

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2.4 POLICY APPROACH TO TELEVISION AND RADIO

There are some critical differences between digital radio and digital television, which leads the WG to advocate that government follow two different policy approaches for the introduction of these digital broadcasting services in South Africa.

Digital television requires the same frequency bands used by the analogue television broadcasting services for the introduction of digital television broadcasting services, necessitating an eventual switch-off of the existing analogue television broadcasting services in the UHF/VHF Frequency Bands. This switchover from analogue to digital television broadcasting has been the subject of an International Telecommunications Union (ITU) Regional Radiocommunications Conference (RRC-06) which resulted in a Digital Plan for the UHF/VHF Frequency Bands for Europe and Africa (GE-06).

The main benefit to government of implementing the digital switchover for television as planned at RRC-06 is that after analogue switch-off there should be sufficient spectrum to accommodate not only the planned digital terrestrial television transmission networks and digital radio transmission networks in Band III, but also the freeing-up a significant amount of radio frequency spectrum (the so-called “Digital Dividend”) for new broadcasting services and potentially electronic communication services. It is apparent from this digital switchover approach adopted at the ITU that digital television is intended to be a replacement for analogue television. A timeframe has also been put in place by ITU RRC-06, in that protection against harmful interference for analogue transmission caused by digital broadcasting transmissions in the UHF/VHF frequency bands will end on 17 June 2015, compelling government to put in place a digital switchover plan for existing terrestrial television broadcasting services in South Africa.

Digital Radio, in contrast to Digital Television can co-exist with traditional analogue radio transmissions as Eureka 147-DAB, the standard adopted at ITU RRC-06, uses a different Band, namely Band III and not the frequencies traditionally associated with AM and FM. Digital Radio implemented in Band III in South Africa is therefore dependent on either the shifting of or the switch-off of existing analogue television broadcasting services occupying frequencies in that band before it can be introduced. This highlights the urgent need for government and the regulator to hold an inquiry to investigate policy options for either moving or initiating a faster switchover path for public and commercial television broadcasting services utilising analogue frequencies in Band III, in order to make frequency spectrum available for the introduction of T-DAB services to meet the needs of the sound broadcasting industry before 2015.

Although the introduction of digital radio in Band III would not require a switch-off of existing analogue sound broadcasting services in the AM/FM frequency bands, the risk of sound broadcasting services being marginalised in a converged broadcast environment is exceedingly high and the digitisation of sound broadcasting services should not be delayed while the switchover of television broadcasting services takes place. Existing sound broadcasting licensees are of the view that any approach that delays the introduction of Digital Radio until the switch-off of existing analogue television broadcasting services in 2015, would severely discriminate against the further development of the sound broadcasting sector in South Africa.

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In the licence conversion process that will take place in terms of the ECA, ICASA should convert existing sound broadcasting services on the basis of technological neutrality (there should be no reference to analogue in the licence) and facilitate an enabling regulatory environment that would allow new and existing sound broadcasting services to apply for radio frequency spectrum licences as frequencies become available in Band III.

The WG proposes that without derogating from the rights of existing radio frequency spectrum licensees in 174-230 MHz (VHF – band III) that this band should be used primarily for the introduction and development of multimedia services based on the Eureka 147 DAB and DMB platforms. The reasons are that the Eureka 147 technology is a proven technology and comprises standards for traffic and safety information (TPEG), mobile television broadcasting and data transmissions (DMB) and digital radio (DAB), devices and receivers are available commercially, the technology is spectrum efficient and a range of cultural, social and democratic benefits associated with FTA or low cost sound broadcasting would be translated into the digital broadcasting and information society/economy environment.

The WG notes that RRC-06 only considered DAB in the context of Band III, but it is possible for Eureka 147 technology to also make use of L-Band (1452-1492). L-Band already forms part of the national plans of a number of European countries for the introduction of T-DAB. In some cases L-Band is the primary band for the digitisation of sound broadcasting services, in others it is planned together with Band III in order to avail sufficient spectrum for use by digital sound broadcasting services. The availability of technology suitable for the economic use of L-Band for T-DAB services has only recently become available. Once again the WG would like to propose that without derogating from the rights of existing radio frequency spectrum licensees in L-Band that the future use of L-Band for multimedia services based on the Eureka 147 family of DAB and/or DMB standards be prioritised by government in South Africa.

Based on the above policy considerations, it is the view of the WG that a process involving the switchover of existing broadcasters from analogue transmission networks to digital transmission networks as contemplated for television is not required for digital radio in South Africa. Ideally, digital radio should augment and not replace AM and FM, which is possible as Eureka 147-DAB would be introduced in Band III and/or L-Band. Instead there should be a commitment, accompanied by clearly defined policy processes, by government to prioritise the introduction, development and licensing of digital radio in South Africa.

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RECOMMENDATIONS:

Noting the fact that after 17 June 2015 there will be no more protection against interference for analogue transmission caused by digital broadcasting transmissions in the UHF/VHF frequency bands, the WG therefore makes the following recommendations, namely that:

1. in respect of digital radio, there should be no switch-off date for existing sound broadcasting services as FM/AM broadcasting can continue indefinitely, but rather a commitment to grant fair access to frequency spectrum in Band III and/or L-Band for the purposes of licensing digital sound broadcasting services;

2. as the timeframes for the introduction of Digital Television and Digital Radio are different, government should plan the digital switchover of existing analogue television broadcasting services according to ITU timeframes and as a matter of urgency address, without derogating from the rights of existing analogue television broadcasting services, the need for the allocation of Band III and/or L-Band spectrum to allow sound broadcasting services to roll-out Digital Radio transmission networks; .

3. ICASA consider applications for DRM broadcasts in the MF band and closely monitor developments with regard to DRM+ technology standardisation; and

4. the Minister must instruct ICASA in terms of section 3 of the ECA to consider as part of any inquiry into Digital Broadcasting, public access issues relating to the carriage of community sound broadcasting services on digital broadcasting platforms.

2.5 POLICY CONSIDERATIONS IN PLATFORM SELECTION

In the switchover to digital television in the European Union and other parts of the world terrestrial commercial television broadcasting services have been allowed to choose to be on a terrestrial, satellite or cable digital transmission network based on their own economic considerations. However, when it comes to the migration of public television broadcasting services that choice because of universal service obligations and the public interest has been to a large extent determined by the national government, leading to a continued policy emphasis on a terrestrial transmission network.

Internationally, in countries where the population was not dependent on a single analogue transmission platform, a multi-platform approach has been adopted with various platforms (terrestrial, satellite, cable, IPTV) collectively providing full digital coverage. However, where the contrast has been true and a large proportion of the population has been dependent on a given transmission platform, policymakers have taken the view that a shift towards alternative platforms would be politically difficult to sell to the public. A rapid analogue migration may also be hampered by a shift to alternative platforms.

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In a large country, such as South Africa, widespread digital television coverage can more easily and cost effectively (from the broadcaster and network operators perspective) be achieved by means of satellite direct to home (DTH) than by terrestrial (DTT) platforms. A satellite platform (DTH) also offers the advantage of being able to broadcast more content than terrestrial platforms (DTT), which is constrained by spectrum availability and freeing-up terrestrial spectrum for alternative usage. There was some support for a DTH platform in the WG, but it was conceded that from a public policy perspective cost is only one factor that needs to be considered. Factors in favour of DTT are that:

it enables a higher level of local content broadcasts; it provides greater robustness than DTH, where there is a risk of catastrophic

satellite failure; delivery of FTAcontent via DTH may result in content rights issues, although DTH

operators have addressed this in South Africa and abroad by using encryption; DTH reception is likely to be less than 100%, as steep cliffs and high buildings

create shadow areas. The DTT modulation system is designed to take advantage of reflected signals. Furthermore, in the case of DTT, gap-fillers may be easily installed;

portable and indoor television reception can be enabled by DTT, which is not easily possible via DTH;

although the STB costs may be broadly similar for the different platforms, the need for satellite dishes and specialist installation implies a higher end-user cost for DTH; and

there is continuity in the minds of users as DTT is the closest to analogue television in terms of its strengths and weaknesses.

It is the view of the WG that: Digital cable and IPTV are economically unsuitable as systems in South Africa to

replace FTA analogue terrestrial broadcasting systems for the lower LSM groups, although such fixed wire and wireless systems may contribute to digital migration by serving subscribers that are willing to pay towards the high costs of rolling out such services to benefit from high transmission capacities and advanced interactive services;

Digital mobile television and radio is a new evolving type of broadcasting service which is, based on field trials globally, seen as being complementary to traditional broadcasting services rather than being intended to replicate or replace existing terrestrial broadcasting services in households;

from a network cost perspective, satellite is the only alternative to terrestrial networks for television, but network economics should not be the only factor considered by government when selecting the platform for FTA broadcasting services to be offered to South Africa; and

the needs of South Africa may best be achieved through a hybrid platform approach where the roll-out of DTT should be based on economic as well as legacy infrastructure, with the remaining universal obligations being met through the implementation of DTH solutions in some areas.

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RECOMMENDATIONS:

In light of the above views, the following recommendations are made by the WG, namely that the:1. existing terrestrial coverage of analogue television broadcasting services should

be duplicated by DTT to the extent that it is economically feasible to do so, and that the meeting of universal access and service obligations in respect of non-urban areas where DTT is not economically feasible may be achieved by means of satellite (DTH);

2. any existing analogue terrestrial broadcasting service should be allowed to choose the digital transmission network (terrestrial, satellite, cable) they wish to migrate too based on their own commercial strategy and economic considerations; and

3. ICASA must conduct an inquiry to determine a policy on FTA satellite broadcasting services, other than those licensed terrestrial broadcasting services being provided by means of DTH in order to meet universal access obligations.

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3. PUBLIC POLICY OBJECTIVES FOR DIGITAL BROADCASTING SWITCHOVER

Over the last two decades in South Africa the field of communications has grown from one where telephone, television, and radio defined the field to one where radio, television, fixed line, cellular, and satellite are only an introduction to modern digital telecommunications. The next two decades will see a further transformation of the industry that not only has the potential to make it the centre of a knowledge intensive manufacturing national economy, but also the lives of all South Africans. These changes, driven by technological innovations that are promoting a convergence of telecommunications, broadcasting and data, will bring enormous competition and public interest impacts to the business of communications that require a modernisation of the policy and regulatory framework under which the entire communications sector operates.

Broadcasting in particular will see an extraordinary change as the oncoming multi-channel, multi-service communications paradigm-shift creates a dynamic new environment that will require a comprehensive review of communications regulation by the government and the regulator. A new policy and regulatory approach must be explored in the current climate of multi-channel digital broadcasting and converging technologies.

The major industries affected by the development of a multi-channel, multimedia environment and by the convergence of broadcast and information technologies are television and sound broadcasting. The most important public policy objective in this area has been, and continues to be, the preservation of free over-the-air broadcasting for all the public. Notwithstanding the proliferation of cellular phones and computers and the day not too far in the future when radio, television, computers, and telephones may be one and the same (one conduit into the home), broadcasting in South Africa remains the principal means whereby South Africans receive the information and entertainment that constitutes such a vital part of their daily lives. More than any other medium, broadcasting not only reflects, but also helps shape our culture and values.

The vital role broadcasting plays in defining our South African identity sets up an important set of issues for public policymakers who must establish ground rules for the coming of the new Information Age and economy. As the most important component of the current information infrastructure, which includes broadband, satellite, and wired and wireless communications, broadcasting must still be viewed as an industry whose operations are guided by a strong public interest requirement. Because of the unique place broadcasting holds and the importance of the service it provides, broadcasters have a special obligation to serve the needs and interests of their communities, one that has historically distinguished them from traditional telecommunications service providers. Scarcity of frequency spectrum has prevented the broadcasting sector expanding in terms of ownership, diversity and the ability to address the needs of all 11 official languages, in the digital era all opportunities should be provided for television and radio to grow in relevance and diversity of services in order to promote social, cultural and national economic goals in a converged environment.

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Digital broadcasting offers consumers improved reception and new services. The switchover to digital television broadcasting is also particularly significant because it has the potential to free large amounts of spectrum currently allocated to analogue television channels, providing opportunities for new entrants into the market, more competition, and additional services. It is important to conceptualise this major development in terms of the Global Information Society, Africa and national government objectives.

3.1 GLOBALISATION AND NEPAD

One of the most important policy challenges facing South Africa today is to respond to the globalisation, which is changing the way in which the world economy operates. Globalisation refers to the fact that international flows of trade, finance and information are being integrated into a single global market. This is happening in a context where there are major advances in technology, particularly in the information and communication industries. Globalisation has been facilitated by the introduction of new information and communication technologies. These technologies have made capital, financial and commodity flows much quicker, and are the main driver of globalisation. There are of course other factors also at work, such as the spread of consumer knowledge about what is available that comes from travel and from advertising, itself encouraged by the communications revolution and global information broadcasting channels available over satellite broadcasting networks.17

Africa has recognized that its potential has been untapped because of marginalisation from the global economy. One of the focus points of the Abuja Treaty was how Africa could be a value partner in the struggle to interact with the process of globalisation in a manner that benefits the African continent and its people. This has led to the New Partnership for Africa’s Development (NEPAD), which is a vision and strategic framework for Arica’s renewal. NEPAD acknowledges that the one of the critical drivers of globalisation, namely the development of technology is a priority. This is articulated as the need for policy reforms and increased investment in human development with a focus on health, education, science and technology and skills development and building and improving infrastructure, including Information and Communication Technology (ICT).

The roll-out of digital broadcasting networks will support the principles and priorities of NEPAD in integrating Africa into the global economy and building infrastructure that supports the provision of information critical for human development and knowledge development, as well as the provision of new electronic communication services. In response to the NEPAD initiative and the focus on the integration of Africa into the processes of globalization there will be a need to investigate options for the opening of South African markets to the Southern African Development Community (SADC) and African Union member countries based on a principle of reciprocity.

RECOMMENDATION:

17 Williamson, J. 1998. Globalization: The Concept, Causes and Consequences. Keynote Address to the Congress of the Sri Lankan Association for the Advancement of

Science held in Colombo on 15 December 1998.

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The WG recommends that the Minister review section 64 of the ECA with a view to investigating options for an African Union exemption based on a principle of reciprocity. , .

3.2 GLOBAL INFORMATION ECONOMY

The development of technology is more than just a driver of globalisation, communication networks and interactive multimedia applications are providing the foundation for the transformation of existing social and economic relationships into an “information economy”. The development of an information society is expected to stimulate economic growth and productivity, create new economic activities and jobs. A number of social benefits are also expected to develop through an information economy, including improved education opportunities, improved health care delivery and other social services, and improved access to cultural and leisure opportunities.

A key aspect is that these technologies facilitating the information economy are digital, interactive multimedia applications and content require digital networks. In South Africa broadcasting networks are lagging behind in offering new services and content that will facilitate the information economy and access to new services by the public as they are still analogue. It is clear that in the South African context the switchover to digital broadcasting cannot wait for market demand to drive it as this will result in South Africa falling even further behind in integrating into the global information economy. Instead the transition from analogue to digital broadcasting and the roll-out of digital transmission networks will need to be supply side driven and this will require government to engage in pro-active strategies together with the commercial sector.

The information economy will also benefit from the introduction of digital sound broadcasting and the switchover to digital television broadcasting because there will be new interactive services and freed-up spectrum that potentially could be used for introducing wireless broadband to rural and even urban areas in South Africa. Of course the non-broadcasting use of the spectrum will have to accord with International Telecommunication Union treaties and regulations and would have to be carefully introduced to prevent interference to broadcasting services already operating in the UHF/VHF bands.

RECOMMENDATION:

The WG recommends that the introduction of digital radio and the switchover to digital broadcasting should be prioritised at a national government level, as it will assist South Africa to integrate into the global information society by enabling new electronic communication services on digital broadcast networks and freeing-up frequency spectrum for new broadcasting services and other services in the knowledge economy.

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3.3 NATIONAL GOVERNMENT POLICIES

The transition from analogue to digital broadcasting can contribute to the National Policy Priorities of Government by:

encouraging investment in the electronic communications sector; introducing competition through a managed programme of licensing new players

thereby creating new jobs, while ensuring the sustainability of existing players; addressing constraints in the area of signal distribution by moving to digital

transmission infrastructure; address the developmental needs of the second economy though proactive

licensing of digital broadcasting licensees in the nodal points identified by the Urban Renewal and Integrated and Sustainable Rural Development Programme;

encouraging broad based black empowerment when licensing new entrants; and re-engineering of systems to address convergence of telecommunication, data

and broadcasting services.

In the Communications Sector the objectives of government have been articulated in the White Paper on Broadcasting Policy, 1998. The objectives set out in this policy document for multi-channel distribution systems which require digital and not analogue transmission are stated as follows:

“Multi-channel delivery systems should be introduced in a manner that will serve social goals cost effectively and efficiently. In particular, these systems should play a significant role in meeting the following goals: Universal access by all South Africans to broadcasting and multi-media services. Provision of a diversity of types of programme content. Delivery of relevant services to all official language groups. Efficient rollout of regionally relevant services. Delivery of public and educational services. The introduction of multi-channel systems should bring economic advantages to

South Africa by: Providing employment and training for South Africans both in the roll out of the

services and in their operation. Creating opportunities for South African entrepreneurs to manufacture hardware

for such systems. Creating opportunities for South African content providers to introduce new

services. Providing services to marginalised groups that will allow them greater

participation in the economy. The introduction of multi-channel distribution should not favour one technology

over another. Multi-channel distribution services have the potential to allow the delivery of

multiple local services as well as international services. The introduction of the multi-channel delivery systems should be in line with policy and strategy of prioritising South African content and ownership

Multi-channel distribution services should play a role in the financing of the production of local content. They can do this in two ways:

o By the payment of license fees. o By contributing to production funds.

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Multi-channel distribution services can provide competition in the delivery of voice and data to businesses, educational institutions and homes.”18

In approaching the introduction of digital broadcasting the following regulatory principles were identified at the 3rd General Assembly of the Southern African Broadcasting Association in 1995, amongst others:

The need to broaden access and choice for the majority of South Africans in broadcasting and information service through the most cost effective means, which offer the lowest reception, costs to the consumer.

The need to test new technologies and services against their impact upon the dominant policy goal of universal access to broadcasting, telecommunications and information services.

The need to counterbalance international broadcasting services distributed from satellite, which South Africa cannot regulate, by a range of readily accessible domestic broadcasting services which have a high degree of local content and which reflect the cultural diversity of South Africans.

The need to cooperate with Southern African countries in the development or adoption of uniform standards for broadcasting and telecommunications hardware so that the market and the public are protected against dumping of multiple standards, redundant or obsolete technologies, and to take advantage of economies of scale.19

RECOMMENDATION:

The WG recommends that the roll-out of digital electronic communication networks to replace analogue signal distribution should be viewed as supporting the principles of NEPAD in integrating Africa into the global economy and implementing the national policy objectives set out in the White Paper on Broadcasting Policy, 1998.

3.4 GOVERNMENT INTERVENTION

Government intervention in the market can only be justified on two counts, firstly that public interests are at stake and secondly where there is market failure. In this case intervention is justified as there are public interests at stake as the potential benefits and problems relating to digital broadcasting affect South Africa as whole rather than just certain groups. Broadcasting is not comparable to any other sector, its widespread penetration provides almost complete coverage of the population across different broadcasting networks; provision of news, current affairs and cultural programming means that it influences and reflects public opinions and values. It is therefore critical to ensure the continuing availability of broadcasting services to all parts of the population where it is technically feasible to do so.

It is too early to tell whether there will be market failure in the provisions of digital broadcasting in South Africa. Undoubtedly, as shown in the report of the economics committee, there will be a negative impact on the profitability of those broadcasters who rely on advertising revenue. However digital broadcasting is critical to stimulating an

18 Extract from the South African White Paper on Broadcasting Policy, 1998

19 Southern African Broadcasting Association (SABA), 1995. 3rd General Assembly held in Johannesburg on 6-7 July 1995.

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information society and accessing the benefits of the global economy, digital television and radio also has the potential to overcome in a limited way the digital divide in South Africa through the provision of certain electronic communications services on the digital broadcasting transmission networks. This highlights the concern that if the roll-out of digital broadcasting is left to the market alone a new digital divide could be created in broadcasting, between those who have access to digital broadcasting and the additional electronic communication services provided by this technology and those who only have access to analogue broadcasting. On these grounds proactive intervention may be justified as in South Africa there has been no collective action or agreement on implementation of digital broadcasting by the industry or market, rather a ‘wait and see’ approach has been adopted. This is the result of structural failures mostly free-riding20

behaviours and ‘chicken and egg’ deadlocks21. Also those who stand to benefit the most from a migration to digital broadcasting (equipment manufacturers, beneficiaries of freed spectrum) are different from those who will bear the costs (consumers and current broadcasters/signal distributors). So there has been little incentive for the costs of migration to be internalised by these parties, especially as in the short term the provision of the digital broadcasting services will have to be supply side driven rather than demand driven. To overcome this there will be the need for co-ordination mechanisms on how to share the benefits and costs while still ensuring that there is proper market competition and government is best suited to play this facilitative role.

RECOMMENDATION:

The WG recommends that the government intervene to accelerate the introduction of digital radio and the consumer acceptance of the digital switchover of existing television broadcasting services by developing a national digital switchover strategy to facilitate the licensing of digital sound broadcasting services and setting firm dates for analogue television switch-off, as well as playing the role of neutral facilitator in assisting market players to work together to fast-track the introduction of services, STBs and the roll-out of digital electronic communications networks.

3.5 PUBLIC POLICY ADVANTAGES OF DIGITAL BROADCASTING

Often when it comes to digital broadcasting in South Africa the wrong policy question is asked. Policy makers ask “What is the cost of migrating to digital broadcasting?” whereas the correct macro-policy question probably is “What is the cost to South Africa, in terms of competitive advantage, of not migrating to digital broadcasting networks?”

At a macro level digital electronic communication networks and broadband infrastructure development are an important component of South Africa becoming more competitive internationally and linking into the forces of globalisation and the global information economy. A key driver of the global information economy is digitalisation and digital content. In the context of the national government priorities the digital switchover of

20 Individual market player avoid contributing to the migration costs as they will share in the collective benefits associated with the process anyway.

21 Signal distributors will only roll-out digital broadcasting networks if there are services that will pay to be on them, content providers will only develop services for

digital broadcasting networks if there is an audience that will receive them and consumers will only buy new digital reception devices if there are new services that are

not available elsewhere. As there is an element of risk no part of the value chain is prepared to invest unless the other part of the value chain does so first, this results in

nothing happening.

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existing broadcasting service and the licensing of new digital broadcasting services can encourage investment, create new jobs and support the goals of black economic empowerment in South Africa.

In the context of the sector digital switchover will promote spectrum efficiency, free-up spectrum that can be used for mobile television, HDTV, wireless broadband in rural areas to broaden access to the information economy, encourage competition, and promote ICT development. Consumers will benefit from more content, improved quality in terms of sound and video and potential access depending upon the selection of the STB standard to electronic communication services that cannot be offered by broadcasters in an analogue environment. A critical public policy objective will be to ensure that in this switchover to digital broadcasting and the freeing-up of frequency spectrum social deprivation does not occur and that South Africa is able to promote the public interest and cultural objectives in a digital environment.

Digital broadcasting brings many advantages compared to analogue broadcasting: a better image (including wide-screen aspect ratio and possibly high definition)

and sound quality; lower transmission costs or the ability to transmit more channels or services for

the same cost; better efficiency in spectrum use (as more data can be transmitted within the

same bandwidth); the ability to transmit associated data allowing for enhanced television or fully

interactive applications when associated with a return-path facility; and a more robust system of transmission against interference.

These can be achieved whatever delivery network is used, though some benefits are more specific to a particular network. Digital television can be offered a number of platforms ranging from cable to satellite and in a converged communications environment it is not limited to traditional broadcasting networks. However, wireless indoor reception and mobile reception can be best implemented through digital terrestrial broadcasting. The better spectrum efficiency expected from digitisation has much wider consequences in the case of a scarce public resource like the UHF and VHF spectrum bands used for terrestrial broadcasting, than in the case of radio-electric frequencies used in ‘closed’ systems like those used by cable operators, or the high frequency bands used by satellite transmission operators. Some of the expected benefits from the digital migration come at the very start of the introduction and adoption of digital broadcasting (i.e. the turn-on and switchover period), while other benefits, like the release of spectrum and more efficient spectrum management, would specifically derive from the turn-off. The termination of analogue broadcasting can therefore be considered as the future consequence of the introduction of digital broadcasting.

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The specific benefits for South Africa and the economy are that digitisation of broadcasting will create the necessary conditions for the further development of broadcasting and for information, communications and radio technologies to converge. In this way, it will open up markets for new digital uses and diverse innovative processes. Furthermore, it will reduce existing frequency shortages. In concrete terms, the digitisation of broadcasting will create the infrastructural basis for the market introduction of new, digital products and services for conventional broadcasting as well as new, multimedia services.

The faster digitisation of broadcasting is completed, the greater will be the market opportunities, which open up for radio and new multimedia services. The digitisation of broadcasting will therefore help to ensure that South Africa remains attractive as a business location and that South African companies and service providers are not left behind in terms of competition. It will moreover contribute to the consolidation and expansion of South Africa’s leading edge in this field. Digital broadcasting and multimedia services will therefore enable new markets to be opened up and will promote growth and employment in this dynamically developing sector.

RECOMMENDATION:

The WG recommends that the preservation of access to FTA broadcasting for all members of the public should remain a central public policy objective of government in the introduction of digital sound broadcasting and the switchover of existing television broadcasting services to digital electronic communication networks

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4. PUBLIC INTEREST ISSUES IN SWITCHOVER FROM ANALOGUE TO DIGITAL BROADCASTING

At the rate at which new technologies are being developed, it is not possible to predict the future of the industry with any real certainty. However, the advent of new digital technology that frees up broadcasting spectrum does require the government to act. There will be policy changes and there will be de-regulation, but some aspects of broadcasting regulation will continue into the digital broadcasting era that is dawning in South Africa. This will be especially true for the public interest regulation and rules governing ethical behaviour. Just because programming is now being broadcast in digital does not mean that the principles governing journalistic behaviour no longer apply, or that the development of South African content is no longer important. At the very least government will need to put in place a policy framework for the licensing of digital sound broadcasting services and a legal framework to enable existing television broadcasting services and broadcasting signal distributors to migrate to the new spectrum with appropriate legal protection to ensure that there is certainty in the market and that there is no deprivation of rights, but what else should government be doing?

Essentially, governments have three policy options available to them to make impacts on the market. First they can attempt to control the conduct of those in the market, second they can attempt to change the structure of the market and thirdly, they can provide public participation in the market itself for some regulation to be effective. The ultimate question is of course why should government act at all? The answer of course is the public benefit of undertaking such actions. Assessment of the public benefit will always look at the perceived desirable economic outcomes, such as investment in the sector, job creation, or increasing the country’s competitiveness in a global economy. Then there are the desirable social and cultural outcomes, such as policies to promote basic rights, consumer protection and the advancement of the country’s culture.

The present laws, regulations and policies may no longer be appropriate and could hinder competition in a converged media environment, by creating obstacles to the introduction of new services, raising the cost of business to the point that investment in the sector is not forthcoming. For example, cross-media rules or local content rules need to be reviewed in a digital era. Government, therefore needs to decide what it wants to achieve economically, socially and culturally and this means that public interest principles need to be reviewed to determine if they should continue, notwithstanding the way in which content is being delivered to the public.

South Africa was slow to introduce television, mostly due to politics, and a nationwide television broadcasting service was only rolled out in 1976. Despite this fact, the public interest and broadcasting does have a long history in South Africa. The first experimental radio broadcast was undertaken in Johannesburg on 18 December 1923 by the Western Electric Company. By 1926 radio broadcasts had grown to the extent that legislation was necessary and the Radio Act of 1926 was promulgated. The Radio Act saw the role of broadcasting as being to educate, inform and entertain and this was the first time these public interest broadcasting principles were articulated in South African legislation. The high importance of public interest broadcasting principles to the

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government and the people of South Africa led to the “public interest” being specifically mentioned in section 192 of the Constitution of the Republic of South Africa, which provides that:

“National legislation must establish an independent authority to regulate broadcasting in the public interest, and to ensure fairness and a diversity of views broadly representing South African society.”

This emphasis on the “public interest” was highlighted in the primary objects of the Independent Broadcasting Authority Act of 1993 and the Broadcasting Act of 1999, and this trend has continued in the recently promulgated ECA of 2005 which repeals and/or amends these pieces of legislation.

4.1 PUBLIC TRUSTEE MODEL

The public trustee model originated in the United States of America and Europe and was adopted in South Africa’s regulatory approach to broadcasting.

In an analogue broadcasting environment one justification for the regulation of broadcasting media by government is that frequency spectrum is a scarce national resource. As it is a scarce resource not everybody can have access, also un-coordinated use of the frequency spectrum leads to interference levels that result in nobody benefiting from the spectrum. So despite constitutional guarantees of freedom of expression, broadcasting is a form of media that is treated differently to other forms of media, such as newspaper and magazines. This led, in broadcasting, to governments granting freedom of expression rights to licensees, while denying such freedom to non-licensees. In order to justify this privileged treatment government imposed public interest obligations on licensees so that to a certain extent licensees can be viewed as public trustees of the airwaves. In a nutshell therefore, the “public trustee” model is one where the commercial exploitation of the potential of the frequency spectrum is allowed, but this exclusionary licence arrangement comes at the cost of imposed public interest obligations. For example, the requirement to present those views and voices which are representative of the licensee’s community and which would otherwise, by necessity (i.e. frequency scarcity), be barred from the airwaves could be imposed in the licence conditions of a licensee by a regulator to meet the public interest obligation.

In South Africa, The Constitution of the Republic of South African provides for freedom of expression as one of the important rights to be protected. Of significance within this provision on freedom of speech is s16(1)(b): freedom to receive and impart information or ideas. The exclusionary broadcasting licensing framework limits this right and the South African government, in line with other jurisdictions, has therefore adopted the public trustee model. In particular, the White Paper on Broadcasting Policy 1998 indicates national government’s support for a public trustee policy approach to the regulation of broadcasting.

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It states that:

“The frequency spectrum is a valuable natural resource, which is an asset that belongs to society at large. The use of the spectrum is, therefore, a privilege and it is in the public interest that the frequencies are allotted such that broadcasting is available, universally, to all of the people and that it caters for the diverse needs of the total population.

Broadcasting Media uses airwaves, which are a limited public resource and to which there cannot be unlimited access by individuals. Airwaves should be utilised for maximisation of the public good. In case of any conflict between public interest and private commercial interest, public interest should prevail. The public also legitimately expects returns for the use of its property.”

The White Paper also clearly indicated government’s view that the advent of the digital age did not undermine the public nature of radio frequencies and that the right of public institutions to determine policy on the allocation of frequencies in the digital age based on public interest would remain a feature of the broadcasting policy landscape. The White Paper also indicated that regulating the use of radio frequencies in the public interest also stems from other considerations, including:

The need to define broadcasting parameters to avoid interference with consumer services;

The need for radio frequencies for other socially important activities such as the defence of the country, emergency and other communication services;

The need to affirm the role of the previously disadvantaged in the broadcasting system;

The international responsibilities of the South African government; That in its social, cultural and economic dimensions, the public interest is served

through the provision of broadcasting services to the entire range of diverse interests in the South African community. And that broadcasting plays an integral role in developing and reflecting a South African identity, its character and cultural diversity within the framework of national unity.

Broadcasting policy formulation functions in the context of the identified national goals of democracy, development and nation building. The national goals provide the framework for the development of regulatory policy which recognises the role of broadcasting in society; and

The need to ensure that the public is adequately compensated for the use of the broadcasting spectrum. Operators must, therefore, pay license fees for the use of the spectrum. This excludes the cost of administering the regulators processes.

The WG is aware that there has internationally been some opposition to the continued use of the “public trustee model” in a digital era. Opponents have argued that a digital environment delivers a multitude of media outlets promoting access and expression. In such a competitive environment, it is argued that the marketplace alone is the best guarantor of diversity of expression as it is responsive to the needs of consumers. These same opponents also point out that as the world enters an era of digital broadcasting the scarcity of frequency spectrum argument falls away as rationale for government imposing public interest obligations on commercial broadcasters.

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The WG acknowledges that in a digital broadcasting environment multi-channel broadcasting on a single frequency will result in a freeing up of spectrum in the broadcasting service frequency bands (the so-called ‘Digital Dividend’). However, not all of the radio frequency spectrum that will become available through multi-channel digital broadcasting will be used for broadcasting traditional content, some may be used for wireless communication services or data services. There is also the consideration that interactive broadcasting services will require return path channels and if broadcasters decide to offer high definition broadcasting services the number of channels on a single frequency will be significantly reduced.

The WG holds the view that there will always be substantially more individuals who want to broadcast than there are channels or frequencies available to be allocated, therefore there will continue to be a situation in broadcasting where individuals will continue not to have the same constitutional guarantee comparable to their right to speak, write or publish (freedom of speech). The WG is in agreement with the White Paper on Broadcasting Policy that the “public trustee model” still applies in the digital broadcasting environment; however that agreement is balanced by the view that government will have to review how public interest obligations are applied to licensees in a multi-channel digital broadcasting environment and the extent to which these obligations in a converged digital environment should be applied to “substitute services” or “like services” offered on new or non-traditional broadcasting networks. It is acknowledged that although there is still scarcity, it has been alleviated somewhat and accordingly there should be some reduction in public interest obligations to reflect that improvement in access to the radio frequency spectrum.

RECOMMENDATION:

The WG recommends that the public trustee model continue to inform the development of broadcasting policy in South Africa, subject to the fact that the alleviation of frequency spectrum scarcity should be balanced by a reduction of public interest obligations. ICASA must, therefore, conduct an Inquiry into Digital Broadcasting to address the issue of the public interest in a digital era.

4.2 PUBLIC INTEREST OBLIGATIONS

Internationally, the public interest standard has most often been applied to six major arenas, diversity of programming, political debate, localism (serving local communities need for expression) children’s educational programming, access to persons with disabilities, and equal employment opportunity (in the workplaces of licensees).

The Independent Broadcasting Authority’s (IBA) Triple Inquiry Report, 1995, was the first time in South Africa that the broadcasting regulatory approach to public interest obligations were set out. The IBA identified a number of public interest values:

Universal Access – the availability of broadcasting services to all citizens, which related not only to simple access to information, but extended the notion to include the quality of the information received.

Diversity – diversity of media functions, diversity of content within these, of representation of different groups and people in society, and geography or locale.

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Equality – media should reflect different groups in society equally or equitably, ie. Fair treatment.

Independence – independence of the regulator from state and commercial interests and editorial freedom of broadcasters.

Unity – nurturing a sense of nationhood within a wider context of globalization.22

These values were supported in the White Paper on Broadcasting Policy, which elaborated at a macro-policy level, how the public interest could be supported by:

Universal access; Diversity; Democratisation of the airwaves; Nation building; Education; and Strengthening the spiritual and moral fibre of society.23

The White Paper in relation to the public interest in broadcasting stated that:

“This brings into focus the need for a strong and committed Public Broadcasting Service. Such a service should cater for the needs and aspirations of all sections of our society, particularly the underprivileged and historically disadvantaged. It should ensure universal availability and access and should meet the education, information and entertainment needs of all of the people of South Africa. It should also meet the needs for children's programming and human resource development. Above all it should contribute to nation building.”

The White Paper identified that the public interest was a collective responsibility of public, commercial and community broadcasters, but also acknowledged that in meeting the public interest different levels of public interest obligations and responsibilities would be imposed on such broadcasters. The WG agrees with the principle that it is broadcasting services as a collective that have to meet the public interest standard and that different levels of public interest obligations should be applied to public, commercial and community broadcasting services.

The public interest values have recently been re-affirmed and captured in section 2 of the ECA.

RECOMMENDATIONS:

The WG makes the following recommendations, namely that:1. the achievement of public interest standards continue to be approached by

viewing broadcasting service licensees collectively; and2. when imposing public interest obligations, different levels should be considered

for different categories of licence, i.e. a higher level would be appropriate for public broadcasting and community broadcasting and lower levels for FTA commercial broadcasting and subscription broadcasting.

22 Independent Broadcasting Authority, Triple Inquiry Report (Johannesburg: IBA, 1995)

23 Department of Communications, Broadcasting Policy White Paper (Pretoria: DoC, June 1998)

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4.3 PUBLIC INTEREST IN A DIGITAL BROADCASTING ENVIRONMENT

Government is faced with two competing goals in broadcasting. Firstly, the need in line with national government economic priorities to foster the commercial development of the industry and secondly, to ensure that broadcasting serves the public interest needs of the South African people. These goals are not always competing; at times they can be complementary. It is also important to remember that the public interest can also be achieved through other regulatory tools and not just by the imposition of public interest obligations on commercial broadcasting licensees. In South Africa, the public interest and human rights to freedom of expression have also been supported by the:

establishment of a non-profit, community broadcasting sector; establishment and maintenance of a public broadcasting system; and regulation of competition, ownership and control to ensure that there are

competitive markets.

Analogue broadcasting services send one signal for 24 hours a day. Digital broadcasting services may send one or multiple signals, at many different periods of the day. Some of these signals may be programmes, others may involve data transmissions or other electronic communication services. It is clear, from this example, that the public interest standard as applied in an analogue broadcasting environment cannot be simply translated to the digital broadcasting environment. The WG has considered whether the traditional public interest standard obligations are still appropriate and also, given the enhanced broadcasting opportunities in a digital environment, what additional public interest obligations may be appropriate.

4.3.1 Fostering Democracy and Democratic Values (Diversity)

The media, including broadcasting media, are the principal source of political information and access to public debate, and the key to an informed, participating, citizenry. Democracy, therefore, requires a media system that provides people with a wide range of opinion and analysis and debate on important issues, reflects the diversity of citizens, and promotes public accountability. It is therefore in the public interest that a broadcasting regulatory system ensure pluralism in the provision of news, views and information.

In South Africa, the following regulatory tools have been used to achieve this public interest standard:

limitations on ownership and control; programming requirements to encourage diversity of content and specific types

of content; rules relating to the political parties and broadcasting; and establishing a licensing framework for public and community broadcasting.

The WG hold the view that this public interest standard is still applicable in a digital broadcasting environment and support the continued use of public and community broadcasting to support the objectives of this public interest standard. However, the WG have noted that in respect of the other regulatory tools used some amendments will be required in terms of their implementation in a digital environment.

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(a) Limitations on control and cross-media control of commercial broadcasting services

Ownership, Control and Cross Media Ownership of broadcasting properties has always been subjected to a strict set of limitations. This is an international phenomenon and by no means unique to South Africa. An analysis of both local and international jurisdictions indicates that historically the purpose to impose horizontal and cross media limitations on ownership and control of broadcasting licences related to:

an economic objective, namely to address the concerns about market concentration and the risk of abuse associated with market power;

a diversity objective, namely to ensure a plurality of voices and diversity of programming with a particular emphasis on news and current affairs programming; and

a equal access objective, related to the scarcity of the frequency spectrum and the need to ensure equitable access to it.

Internationally, governments have recognized that content is being distributed through an increasing range of services and across an increasing number of platforms (digitisation). In an era of convergence, many governments have responded by adopting a more flexible approach to dealing with concerns regarding economic concentration and diversity. Specifically, government have refrained from extending limitations on ownership and control to digital services which do not use scarce terrestrial frequencies. There appears to be consensus that with the digitisation of production and distribution facilities, media organisations around the world are under pressure to invest in new technologies and to recoup that investment through efficiency and savings. Most of these governments, in removing or lessening these limitations, have indicated that they consider other means more appropriate to address concerns about economic concentration and diversity. Regulatory tools being adopted by such governments include competition law to address concerns about economic concentration and abuse of dominance and content regulation / licence conditions to ensure plurality of voice and diversity of programming.

The limitations on the control and cross-media control of commercial broadcasting services as set out in sections 65 and 66 of the ECA, 2005, are not only 12 years out of date as they were taken “as is” from the Independent Broadcasting Authority Act, 1993, they also reflect an analogue environment where a broadcasting service equalled a single service and a single frequency, they do not reflect a multi-channel digital environment.

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The Independent Communications Authority of South Africa (ICASA) conducted an inquiry into ownership and control and made recommendations to the Minister of Communications in 2004. These recommendations have not yet been tabled to the National Assembly.24 ICASA was also required, in terms of section 31(3) of the Broadcasting Act, to make a recommendation to the Minister as to whether sections 49 and 50 of the IBA Act, relating to limitations on ownership and control are applicable to broadcasting services carrying more than one channel. This inquiry was held under the umbrella of the inquiry into subscription broadcasting. In this inquiry process ICASA concluded that these limitations are more justifiable when imposed on terrestrial FTA broadcasting services. On the basis that the distinction between FTA broadcasting and subscription broadcasting services is an important distinction, ICASA recommended to the Minister that sections 49 and 50 of the IBA Act should not apply to subscription broadcasting services.25

The WG, in line with international developments, have formed the view that ICASA is able to deal with market abuse and market concentration through the implementation of the provisions relating to Competition Matters set out in Chapter 10 of the ECA, and that diversity and plurality can be achieved by ICASA, as empowered by the ECA, through content regulation and the imposition of appropriate licence conditions. The objective of equitable access to frequency spectrum remains a concern only for broadcasting services using terrestrial frequencies, as other digital broadcasting services would not be faced with this constraint. It should also be kept in mind that this particular concern about terrestrial frequencies is now far less in a digital environment than an analogue environment because of the ability to broadcast multiple channels on a single frequency. In a digital environment, scarcity of radio frequency spectrum may no longer be the factor limiting market entrants; instead the limiting factor may now become economic viability and how many broadcasting services the market can support.

The WG are therefore of the view that the recommendations made by ICASA in 2004 to amend sections 49 and 50 of the IBA Act (which has now been repealed) for the purposes of analogue terrestrial FTA broadcasting services have been overtaken by the promulgation of the ECA and that the proposed amendments should now be implemented, by amending sections 65 and 66 of the ECA for this purpose. In regard to the later recommendations made by ICASA in 2005 that these ownership and control limitations not apply to subscription broadcasting services, the WG concurs that these recommendations should continue to form part of any amendments to sections 65 and 66 of the ECA. The principle applied was that subscription broadcasting, although adding to diversity in broadcasting, does not broadcast to the general public and as such should not be limited by a tool, which is essentially aimed at protecting the broader public interest not a smaller subscriber base.

24 Independent Communications Authority of South Africa. Review of Ownership and Control of Broadcasting Services and Existing Commercial Sound Broadcasting

Licences: Position Paper (Johannesburg: ICASA, 2004) p.37.

25 Independent Communications Authority of South Africa. Subscription Broadcasting Services: Position Paper (Johannesburg: ICASA, 2005) p.69-71

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RECOMMENDATIONS:

The WG makes the following recommendations, namely that:

1. sections 65 and 66 of the ECA dealing with limitations on ownership and control of commercial broadcasting services need to be amended to reflect the recommendations made by ICASA to the Minister in 2004 and 2005 on ownership and control issues; and

2. Notwithstanding, the inquiry into ownership and control already conducted by ICASA, there is a need for a further inquiry into media ownership with a view to initiating the lowering of limitations against the backdrop of a diverse multi-channel and multi-platform broadcasting environment.

(b) Programming Requirements

The legislature has given the regulator a broad discretion to formulate public interest obligations with regards to programming requirements in the licences of broadcasting services. This power while extensive is limited by the freedom of expression provisions in the Constitution. The government and the regulator may not censor broadcasters for example, nor may they regulate content except in the most general fashion such as requiring broad categories of programming such as news or public affairs. The regulator is thus empowered to deal with public interest programming shortfalls, but not to interfere with the editorial discretion of the licensee.

In the ECA we therefore find that the section 2 objectives, that require, broadcasting services collectively to provide regular news services, actuality programmes on matters of public interest, programmes on political issues of public interest; and programmes on matters of international, national, regional and local significance; as well as the programming needs of children, the youth and the disabled are balanced by contrasting requirements to refrain from undue interference in the commercial activities of licensees.

The WG supports the notion articulated in the ECA of these public interest programming requirements being met collectively by the industry when viewed as a whole. ICASA when considering the imposition of these programming requirements should take into consideration the nature of the broadcasting service being provided, as it would make no sense trying to impose such obligations on a shopping channel or other type of niche broadcasting service which are likely to exist in a multi-channel environment. The WG hold the view that ICASA needs to take a flexible regulatory approach where the nature of a commercial broadcasting service offering is ill suited for the imposition of public interest programming requirements such as news, public affairs or drama.

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RECOMMENDATION:

The WG recommends that the approach outlined in the ECA for the imposition of programming requirements as a condition of licence is adequate and submits that there is no need to amend the ECA in this regard.

(c) Rules relating to Party Politics and Broadcasting

The ECA has a number of rules pertaining to party politics and broadcasting, the objective being to ensure that in the public interest fair treatment and equitable opportunities are offered to all political parties. Section 52 of the ECA prohibits the granting of broadcasting service licences to party political entities. Section 56 of the ECA prohibits the broadcasting of party election broadcasts and political advertisement except during an election period. Section 57 of the ECA sets out the rules for ensuring equitable treatment for the broadcasting of party election broadcasts on public broadcasting services. Commercial and community broadcasting services do not fall within the ambit of this provision unless they elect to carry broadcasting party election broadcasts of their own accord. Section 58 of the ECA sets out the rules for political advertising on broadcasting services, with the intention of ensuring equal treatment of political parties by broadcasting services.

The WG supports the continued application of this public interest principle to ensure fair and equitable treatment of political parties during elections, but notes that ICASA in implementing these provisions of the ECA will need to give proper consideration to the drafting of regulations that take into account the multi-channel nature of digital broadcasting.

RECOMMENDATION:

The WG recommends that the rules pertaining to party politics and broadcasting as outlined in the ECA are sufficient and submit that there is no need to amend the ECA in this regard.

4.3.2 Reflection of National Identity, Culture and Character

Globalisation does present a challenge for developing countries in that when building the Information Society the domination by certain languages and cultures is not perpetuated. Two policy tools to prevent this occurring is limiting foreign ownership and introducing local content requirements..

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(a) Local content and language

In essence, the public interest standard in broadcasting has attempted to invigorate the diversity, languages and democratic culture of South Africa.

Public and Commercial broadcasting has often delivered in this area to a high level, but when it has fallen short, the legislature and ICASA have developed regulatory tools aimed at achieving those goals. For example, specific policies trying to foster diversity of programming, ensure political parties have equitable access to the airwaves, provide diverse views on public issues, encourage news and public affairs programming, promote localism, develop quality programming for children, minorities and persons with disabilites, etc.

The challenge has been how to use public policy to integrate public goals into the commercial terrain. This challenge has been increased in recent years by rapid and far-reaching changes in technology and market structures. Digital television once again raises the question of whether it is appropriate to use public policy to pursue public goals in commercial broadcasting, especially when the technology involved may result in the market delivering diversity without the need for government involvement.

i. Language and Cultural Rights

The Constitution of the Republic of South Africa has declared eleven official languages at national level. The Constitution advocates the promotion and development of languages that were not official in the past. But, one of the major challenges to the promotion of multilingualism in South Africa is the overwhelming dominance of English as a consequence of the discriminatory policies of the past and the power of English internationally. South Africa’s discriminatory policies of the past have ensured that the majority of South Africans continue to see proficiency in English as the key to social mobility and economic advancement. There is a general agreement that such perceptions have to be corrected and new policies have to be put in practice to ensure the development, promotion and appreciation of African languages.

In our quest to develop and promote multilingualism the following issues must be dealt with:

How to forge a society that is truly pluralistic yet possess a shared sense of belonging;

What are the policies that can better serve and respond to the needs of diverse linguistic and cultural communities?

Whose history is being remembered and whose is being forgotten? What voices are being heard and which are being silenced? Who is representing whom and on what basis? How can marginalised language, cultural and religious groups be

empowered to change their social position? How can linguistic and cultural democracy be achieved?

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The declaration of eleven official languages by the South African Constitution is a realisation that the plurality of South African languages is a fact that cannot be wished away without provoking deep resentment and arousing the suspicions of one language group wanting to establish some hegemony or condemning others to cultural and linguistic extinction. However, constitutional provisions do not in themselves define a policy on language in areas such as broadcasting, education, telecommunications, commerce, etc, but they provide entrenched language and cultural rights and state explicit language policy principles which bind national and provincial governments.

Other pieces of legislation, like the ECA and the Pan South African Language Board Act (“the PANSALB Act”), are there to spearhead the promotion and development of South Africa’s various languages in broadcasting26, education, and other spheres of public life.

ii. South African Content Regulation

Section 61(3) of the ECA, provides for the imposition of specific broadcasting licence conditions regarding local television content in respect of the television broadcasting service licence. ICASA’s 2002 position paper on South African content set out that the primary aims of South African content regulation are:

the development, protection and promotion of a national and provincial identity, culture and character; and

the creation of a vibrant, dynamic, creative and economically productive local industries.

The Position Paper on SA Content on Television and Radio noted that South Africa has a rich and diverse cultural heritage protected by the Constitution and promoted by the policy and legislation that has emerged within this sector since 1994. It was ICASA’s stated intention to see this reflected on television screens and emanating from radios in South Africa. ICASA, as the national custodian of South African content regulation, was committed to the ideal espoused in the White Paper on Broadcasting Policy that television and radio should be predominantly South African.

ICASA’s approach to the television sector was that whilst public broadcasting is predominantly responsible for the development of South African content, the responsibility should be shared by the various licensees. The regulations for South African content, therefore, specify minimum requirements across the various categories of programming and time-slot allocations. At its most effective, this approach ensures quality South African programming by requiring competing broadcasters to schedule specific programme categories in prime time. The position paper set new quotas, which became effective in August 2003. The quotas for individual programme types on public, commercial and subscription broadcasting services are set out in the tables below.

26 Section 2(u) of the ECA.

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The policy document clearly indicated that ;

“South African television and radio need to reflect and engage with the life experiences, cultures, languages, aspirations and artistic expressions that are distinctly South African. Through South African music and television programming, radio and television can make a vital contribution to democracy, nation building and development in South Africa. South African content quotas seek to protect and develop our country’s national cultures and identities and to extend choice for the public. South African music and television programmes need to be produced by a wide range of South Africans, for South African audiences, in languages of their choice.

South African content regulations also aim at redressing historical imbalances in the cultural and broadcast industries. Broadcasters are encouraged to commission independent production companies which are controlled by previously disadvantaged individuals.“

While ICASA was committed to keeping the regulation of South African content as simple as possible, it has become clear that some differentiation is required within categories of programming for the specific objectives of regulating South African content to be met. South African content regulation results in the production of quality programming that best showcases South African talent and creativity and ultimately creates exportable products. The filling of airtime with South African content of low quality would be counterproductive. ICASA, therefore, decided to introduce, in addition to the quotas for categories of broadcasting, a weighting system that favoured the most neglected genres like drama and promoted indigenous languages.

The current policy framework for South African content as located in the ECA does not provide ICASA with the mandate to enforce the airing of African music or television content, or to recognize the airing of such content by broadcasters. The current statutory definitions for local content do not include recognition of African content, the monitoring of compliance would also be difficult. The fact that subscription broadcasting and the future of television in Africa are not necessarily being bound by frontiers raises the need for African countries to develop a framework for the reciprocal recognition of each others content.

ICASA’s position paper on South African content states that the Authority understands the concerns of locating South Africa in Africa and of acknowledging the broadcasting of African television programming by South African broadcasters. ICASA also appreciates initiatives taken by broadcasters to air programming from the rest of Africa. ICASA is, however, not in a position to enforce the flighting of African television programming or to recognise such programming in terms of content regulations. The ECA and the White Paper on Broadcasting Policy specifically mandate ICASA to promote South African content.

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RECOMMENDATIONS:

The WG makes the following recommendations:1. when the SA Content Regulations are reviewed in 2007/08, ICASA should

consider promulgating regulations for FTA DTT services as well. The provisions for terrestrial and cable television multi-channel subscription television services already in the regulations could serve as a guide for DTT FTA services and DTT pay services; and

2. it may be necessary to amend the ECA to allow for the promotion of African content in addition to the existing regime for promoting SA Content.

iii. Approach to regulation of programming in a digital environment

Broadcasting exists against the background of constitutional principles. The South African constitution guarantees a number of fundamental rights, which should be taken into account in determining broadcasting policy and its regulation. Amongst these are:

freedom of expression for all South Africans;

the right to equality;

the equality of all languages;

the multi-cultural nature of South African and the right of all South Africans to the promotion of their cultures; and

choice and diversity.

The South African broadcasting system in contributing to unity should serve to safeguard enrich and strengthen the cultural, political, social and economic fabric of South Africa. It does so by encouraging the development of South African expression and displaying South African talent.

Consequent upon this role, it is appropriate that all broadcasters contribute to meeting the public interest.

The technological evolution has ushered in a diversity of channels that can be received from throughout the world. While this technological change has increased the choice of programmes that can be received and enjoyed by South Africans, it has thrown up challenges which must be addressed relating to the cultural and economic aspects of the broadcasting system.

At a cultural level, the reflection of the cultural realities of South Africa decreases at a rate that is proportional to the increase of foreign programmes in the South African broadcasting system. Simply stated, the

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more our broadcasting system is defined by programmes about other cultures and from the creative output of others, the less it is defined by programmes about the South African way of life, values and context.

At an economic level the production capacity and therefore the employment opportunities for South African cultural producers and creative artists, is influenced by the level of South African programming in the broadcasting system. The development of the cultural sector is therefore influenced by policy considerations that determine the extent to which the South African broadcast content is prioritised.

The South African broadcasting system should reflect the identity and the multi-cultural nature of South Africa by promoting the entire spectrum of cultural backgrounds in South Africa. To ensure this, it is necessary that broadcasting entities in South Africa are owned and controlled by South Africans and that ownership patterns of the past are reformed.

The requirement that South Africans must own broadcasting services goes a long way to securing the tools for South African cultural determination. Yet on its own, it does not and can never ensure appropriate South African content. Local content should also be addressed and broad policy principles for its development included in law to inform the regulatory framework. This is a policy function and not a regulatory function. The policy ends must define the regulatory and other strategies that may be adopted.

The choice of programming should entail a choice of South African programming. This calls for a deliberate policy to ensure that the South African broadcasting system offers South African programmes about the conditions, life styles, behaviour and cultural heritage of all South Africans. This policy should encourage the presentation of entertainment, educational and informational programming from the South African perspective in whatever format and distribution mechanism

(b) Foreign control

The principle of limiting foreign ownership was captured as follows in the White Paper on Broadcasting Policy:

“The South African broadcasting system should reflect the identity and the multi-cultural nature of South Africa by promoting the entire spectrum of cultural backgrounds in South Africa. To ensure this, it is necessary that broadcasting entities in South Africa are owned and controlled by South Africans and that ownership patterns of the past are reformed. “

These policy principles have been implemented in legislation. In the ECA, section 64 places a 20% limitation on foreign control of commercial broadcasting services. The Independent Communications Authority of South Africa (ICASA) conducted an inquiry into ownership and control and made recommendations to the Minister of

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Communications in 2004.27 ICASA proposed a marginal increase in the limitation, but also recommended that they be empowered to exempt persons from this limitation. Various industry representations at the time suggested that the limitation should remain in place in line with the policy articulated in the White Paper on Broadcasting Policy and that any exemption would be a deviation from the public interest standard. The WG continue to hold such a view, but suggest that in line with the principles embedded in NEPAD, that the Minister should investigate mechanisms for allowing persons or companies in SADC and African Union member countries access to the South African market based on a principle of reciprocity by that country.

RECOMMENDATION:

The WG makes the recommendation that section 64 of the ECA dealing with limitations on foreign control of commercial broadcasting services needs to be amended to reflect the recommendations made by ICASA to the Minister in 2004 and 2005 on ownership and control issues.

4.3.3 Universal Access and Redress

The ECA objectives require amongst others: the promotion of the universal provision of electronic communications networks,

electronic communications services and connectivity for all; the promotion of an environment of open, fair and non-discriminatory access to

broadcasting services, electronic communication networks and to electronic communication services;

promote the empowerment of historically disadvantaged persons, including Black people, with particular attention to the needs of women, opportunities for youth and challenges for people with disabilities

In relation to licence conditions, ICASA is empowered in terms of section 8(2)(g) of the ECA to impose universal access and universal service obligations. Section 62(1)(b) requires electronic communications network service licensees providing broadcasting signal distribution to provide universal access for all South Africans to broadcasting services, subject to the terms and conditions of its licence. The ECA requires all licensees, including, Broadcasting Services, to contribute to the Universal Service and Access Fund. Provision is made for contributions made by Broadcasting Services to the Media Development and Diversity Agency (MDDA) to be offset against the annual contribution to the Universal Service and Access Fund.

The legislation ensures that the empowerment of historically disadvantaged groups takes place by requiring in section 9(1)(b) of the ECA that applications for individual licences include the percentage of equity ownership to be held by historically disadvantaged groups which may not be less than 30%.

RECOMMENDATION:27 Independent Communications Authority of South Africa. Review of Ownership and Control of Broadcasting Services and Existing Commercial Sound Broadcasting

Licences: Position Paper (Johannesburg: ICASA, 2004) p.37.

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The WG hold the view that ECA adequately deals with Universal Access and Redress in a manner that is technology neutral and therefore it is recommended that no amendments are required in this regard for the digital switchover process..

4.3.4 Consumer Protection

Chapter 12 of the ECA puts in place a consumer protection regime for codes of conducts and service charters. This chapter applies to all licensees, with the exception that in respect of codes of conduct broadcasting services are able in terms of section 54 to put in place their own codes of conduct and self-regulatory mechanisms.

The WG hold the view that Chapter 12 of the ECA read together with sections 54 and 55 are adequate to provide consumer protection. It is recommended that no amendments to the ECA in respect of consumer protection are required for the digital migration process.

RECOMMENDATION:

The WG recommends that no amendment of Chapter 12 of the ECA is required for the digital migration process, but if the ECA is reviewed in the future, government should consider adding a definition of the term “service charter” in section 1 of the ECA.

4.3.5 Public Broadcasting

The main rationale for public broadcasting existing stems from the public interest and the provision of a public service. It is generally accepted that a public broadcasting service should be neither state controlled nor commercial. Public broadcasting has been defined:

“as a meeting place where all citizens are welcome and considered equals. It is an information and education tool, accessible to all and meant for all, whatever their social or economic status. Its mandate is not restricted to information and cultural development-public broadcasting must also appeal to the imagination, and entertain. But it does so with a concern for quality that distinguishes it from commercial broadcasting.”28

The public-service model is based on the idea that neither the market nor the State can adequately meet the public-service objectives of broadcasting and act in the public interest, this view therefore holds the inherent opinion that the public interest does not coincide either with commercial interests or the interests of incumbent political parties forming the government of the day.

28 UNESCO. Public Broadcasting Why? How? (Paris: UNESCO, 2001) p.7

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The guiding principles for public broadcasting in the public interest are universality, diversity, independence and distinctiveness. These principles can be summarized as follows:

universality means it must be accessible to every citizen in the country and that it should attempt to be used by the largest possible number. This does not involve only technical accessibility, but also ensuring that people can understand and follow the programming made available;

diversity means that the service offered by public broadcasting should be diversified, in terms of the genres of programmes offered, the audiences targeted, and the subjects discussed. At the end of the day, public broadcasting should reach everyone, not in respect of each programme broadcast, but through all programmes and their diversity viewed as a whole;

Independence means that public broadcasting is a forum where ideas should be expressed freely, where information, opinions and criticisms disseminated. This is possible only if independence is maintained against commercial pressures or political influence. Where government influences information, the broadcaster is viewed as being a state broadcaster and the information provided becomes tainted in the minds of the public as being propaganda. Similarly, if all the programming of the public broadcaster was designed for commercial outcomes, the public would begin to question why they need to fund a service whose programming is not appreciably different from the services provided by commercial broadcasting; and

Distinctiveness means that the service offered by public broadcasting needs to distinguish itself from that of other broadcasting services. The public must be able to identify what distinguishes a public broadcasting service from other services, in terms of the quality and character of its programming. This does not simply mean addressing audiences ignored by other broadcasting services or providing programming other services are not interested in as that would lead to the “ghettoisation” of public broadcasting which would undermine the principle of universality. It simply means doing things differently without excluding any genre, so that the public can appreciate the difference between this public-service and commercial offerings.29

These principles lead to specific missions, a specific model of public funding, distinct programming in the public interest and public accountability. This model of general interest programming has survived competition with commercial broadcasters, but in a digital era characterised by media and audience fragmentation and special interest programming, questions are raised about the viability of the public broadcasting model to continue to support the public interest.

It is clear that digital broadcasting requires a different approach not only for public broadcasting, but of all broadcasting. The technical limits imposed on broadcasting in terms of the scarcity of frequencies for FTA broadcasting in an analogue environment are of lesser concern in a multi-channel digital environment. Government intervention in programming in the public interest therefore becomes harder to justify in a digital environment and it will become more difficult in the future to oblige commercial

29 UNESCO. Public Broadcasting Why? How? (Paris: UNESCO, 2001) pp.11-13

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broadcasters to carry-out public-service obligations. The convergence of broadcasting, telecommunications and the information technology sector brought about by digitisation will not ease the situation either as we are seeing a move to deregulate the telecommunications sector and a reluctance to regulate the internet. If this extends to a reluctance to regulate broadcasting services offered on converged networks, the best means to ensure that public interest and service obligations are met is to ensure the continued existence of a public body responsible for carrying out these objectives, namely the public broadcaster.

The relevance of public broadcasting in the digital era is summed up by Werner Rumphorst’s statement:

“[...I the future of public service broadcasting follows on from its mission, from its role within and for civil society. The more diversification and individualization of information sources there is, the more audiences become fragmented, the more important it will be to maintain at least one strong service which performs the function of a national point of reference and of national identification, and the role of the market place for opinion.”30

Public broadcasting will have to evolve and adapt to the new digital environment, but the principles underlying the existence of public broadcasting remain and public broadcasters will have to use these new technologies to improve and complement their public service vision and mission. In Germany, for example, public stations have created two theme channels to complement their basic offering: a news and documentary channel and a children’s channel. These channels are fully consistent with a public-service mission.31 It is the view of the WG that there is still a role for public broadcasting as a primary vehicle or policy tool to support the public interest objectives of universality, diversity, access, South African content development and preserving a national identity.

The WG has dealt with public broadcasting in general as a tool for supporting the public interest, but is also necessary to deal specifically with the public broadcaster in the South African context. The South African Broadcasting Corporation (SABC) is South Africa’s public broadcaster. The SABC’s functions and duties are laid out, firstly, in a Charter, which forms part of the Broadcasting Act of 1999. The SABC is required to achieve the objects specified in this Charter while the Independent Communications Authority of South Africa (ICASA) has the responsibility to monitor and enforce the SABC’s compliance with the Charter. In addition, ICASA is given the responsibility to set licence conditions for the SABC’s various stations and channels. These licence conditions which may relate to local content, programming, coverage and language service provision amongst others, specify a second layer of functions and duties for the SABC.

30 UNESCO. Public Broadcasting Why? How? (Paris: UNESCO, 2001) p.28

31 UNESCO. Public Broadcasting Why? How? (Paris: UNESCO, 2001) p.28

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Public broadcasters around the world share many similar features relating to independence, accountability and diversity. Generally public broadcasting services have three essential features. Firstly, they have purposes different from those of the market. Secondly, these purposes apply across genres rather than being restricted to a particular genre. Thirdly, they are free at the point of use to everyone.32

The SABC’s functions and duties are based upon a policy for public broadcasting, which was first developed in the Independent Broadcasting Authority’s (IBA) Triple Inquiry Report published in 1995. The report, which was the outcome of South Africa’s first public discussion on the transformation of the SABC from state to public broadcaster, highlights the following aspects of the SABC’s public broadcasting role:33

Universality – the need to provide national coverage; Accessibility – provision of programming which audiences find interesting,

relevant and enjoyable in languages that they choose; National and provincial identity – promotion of national culture and sense of

identity that reflects our nation’s common experience; Diversity and choice – provision of a wide range of programming which meets the

needs of the public as a whole; Quality – in all services, through new and innovative programming; Independence – autonomy from vested interests, political or financial, and Accountability and efficiency – the need to operate effectively and give value in

what it provides.

The core role for the SABC that the Triple Inquiry Report identifies is to strengthen South Africa’s democracy. The report states that:

“For South Africa’s new democracy to take root and flourish, people will need the information to participate in the processes and decisions that affect their daily lives…For the mass of the population, the only way this will be achieved is through the mobilisation of the public broadcasting services…It is only through a massive programme of public provision that the majority of South Africans will gain access to the broad range of programming and information necessary for effective citizenship”34.

While the Triple Inquiry Report prepared the groundwork for the SABC’s transition, rapid developments in the broadcasting market resulted in the South African government undertaking a broadcasting policy review in 1998. This took the form of a Green Paper / White Paper process. The White Paper concluded that the SABC required a statutory Charter with many of the features that were identified in the Triple Inquiry Report:35

To be comprehensive and to offer services to the whole country; To be innovative and to offer programming of a high standard; To enrich South Africa’s cultural heritage through support for the Arts; To contribute to a sense of national identity;

32 Graham, A – The future of communications – Public Service Broadcasting

33 Independent Broadcasting Authority, op.cit. p34-35

34 Independent Broadcasting Authority, op.cit. p33

35 Department of Communications (SA) “White Paper on Broadcasting Policy”, 1998, p19

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To inform, educate and entertain; To reflect South Africa’s cultural diversity within the framework of national unity,

and To report news and current affairs fairly and impartially.

It should be noted that there are unique aspects to the SABC’s context which must also inform its positioning. These relate to South Africa’s challenges as a young democracy and a society in transition, with many aspects of that transition still being contested. These challenges are captured neatly in the preamble to the Constitution36, which states the following objectives:

To heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights;

To lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by the law;

To improve the quality of life of all citizens and free the potential of each person; and

To build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations.

There is much within these objectives that is relevant to the SABC’s role as a public broadcaster in South Africa; to play a role in healing divisions of the past; to promote respect for democratic values and human rights; to provide information which allows citizens to exercise their rights, and, to reflect the rich diversity of a united South Africa.

(a) SABC and Digital Broadcasting

When considering the impact of digitisation on the public broadcaster, it is clear that a number of public interest benefits may flow from digitisation if the policy and regulatory environment is sufficiently enabling. In other territories the benefits arising from digitisation have included efficiency gains in spectrum use, the prospect of lower transmission costs in the long-term, additional choice for the public and new opportunities for broadcasters and content providers.

In the South African environment, the benefits could extend to facilitating the national objective of integration into the information society. There are for instance potential synergies with digital broadcasting and the introduction of e-government, which could be explored. Other benefits could include increased public interest programming, increased multi-lingual programming and greater regional representation on-air. Digitisation could also spur skills development and job creation and drive employment equity programmes in the industry as well as Black Economic Empowerment (BEE) initiatives.

36 Act 108 of 1996

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While there are a range of potential social and economic benefits arising from digitisation, digital migration is not without risks. The difficult experience of some territories in the introduction of digital terrestrial broadcasting has been witnessed, and the approach of policy makers should be to carefully lay the foundations for migration and to ensure that through the successful introduction of digital broadcasting the stability of the broadcasting industry, and the public broadcaster in particular, is maintained.

Digitisation will undoubtedly have an impact on many facets of the public broadcaster’s operations including funding, programming, human capital and technology. Given the crucial role that the public broadcaster plays in the provision of news and information, local content and African language programming, the public service mandate must without question continue to be delivered in the digital context. This means that during digital switchover and beyond the role, functions and viability of the public broadcaster should be secured in the regulatory and licensing arrangements.

International experience demonstrates that in many territories the public broadcaster has been the leader in undertaking digital broadcasts. However, in many of these cases, in contrast to the SABC, these public broadcasters are entirely funded by public sources of revenue.

Digital broadcasting will potentially give the SABC the opportunity to offer a number of new and complementary services although many of these will require additional expenditure. For instance, digital technologies will allow for multiple audio tracks to accompany visual content. This will allow the SABC, provided audiences have the appropriate reception equipment, to more effectively fulfil its language mandate. Cognisance however must be paid to the complexity of operation of remotes and menu driven systems and the language used in remotes and menus, as this could potentially prove a barrier to consumer operation.

The SABC is also likely to look to digital broadcasting to offer innovative solutions for educational content across the spectrum of its audiences from early school through to adult literacy programmes. Digital broadcasting would allow for educational content to be delivered in a truly interactive manner and this dimension could bring significant changes to the delivery of educational content and aid distance learning. Similarly the SABC is likely to take advantage of the text services and interactivity features available through digital broadcasting technologies.

Digital production and broadcast facilities will eventually be required in order for the full benefits of digitisation, such as enhanced quality, multiple language tracks and text services etc to be realised. The SABC television and radio services broadcast today could be broadcast “as is” on platforms such as digital terrestrial television and radio. In addition to this, the SABC also believes that there are many data applications that could be carried on new digital terrestrial transmission platforms. Applications such as video and/or radio streamed to a handheld device, t-commerce, and interactive services are services that could typically be implemented on the PBS platforms of the SABC.

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The viability of such services would have to be addressed in the business planning phase of development. Worldwide there is presently great interest in DVB-H and, in the case of Korea in particular, DMB technologies, received by handheld devices such as cell-phones, PDA’s etc.

The SABC has been granted regional television licences and frequencies to roll-out SABC 4 and SABC5, but these licences have not been issued by ICASA as the SABC still needs to prove funding for these services. The WG holds the view that it would encourage consumer adoption of digital broadcasting if SABC 4 and SABC 5 were not made available on an analogue platform, but instead were introduced as part of the SABC digital offering, it would also in the public interest reduce the costs of funding the roll-out of analogue terrestrial networks for regional television which would be switched-off before the costs of the analogue network roll-out could be recouped. Another benefit to SABC 4 and SABC 5 being introduced as digital only broadcasting offerings is that it would allow the radio frequencies set aside for these services to be used to create an additional national digital broadcasting transmission network or networks.

RECOMMENDATION:

The WG recommends that SABC 4 and 5 be introduced on a digital broadcasting platform only, and that the SABC, in conjunction with Sentech, instead use the spectrum to create an additional national digital broadcasting transmission networks.

(b) Public Broadcasting Considerations in the transition to digital broadcasting

The WG has identified the following public policy considerations, in relation to the transition of public broadcasting (SABC) from analogue to digital transmission networks:

the role, functions and viability of the public broadcaster should be secured in the regulatory and licensing arrangements;

that an enabling policy and regulatory environment could facilitate the national objective of integration into the information society;

that public service programming which should remain the focus of the public broadcaster and that interactive multimedia programming should serve to augment existing services;

that multi-channel broadcasting will provide the public broadcaster with the opportunity to offer a number of new and complementary services;

that digital production and broadcast facilities required in order for the full benefits of digitisation, such as enhanced quality, multiple language tracks and text services, etc to be realised will result in the need for more funding initially;

that international experience demonstrates that in many territories the public broadcaster has been the leader in undertaking digital broadcasts;

that the approach to content rights in the digital environment is set to change, creating a new and potentially more difficult situation for

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broadcasters, which could hamper the PBS ability to operate and compete effectively in the broadcasting market;37 and

that advertising revenue may fragment even further in a multi-channel environment creating a challenge for the public broadcaster in terms of funding quality public service programming.

RECOMMENDATION:

The WG recommends that the public broadcaster take the lead in undertaking digital broadcasts and that the SABC and government jointly formulate strategies for promoting and securing the viability of the public broadcaster in a digital environment”.

DISSENTING VIEW:

M-net agrees that the public broadcasting service should take the lead in driving digital broadcasting consumer take-up, but would suggest that on the basis of international examples, the lead is limited to FTA digital broadcasting.

4.3.6 Community Broadcasting

Community broadcasting provides news, information, cultural content and entertainment to communities defined by geographical location or common interest. The emphasis is on the provision of access to the airwaves to groups that are inadequately served by mainstream media. In South Africa, with regards to Community Sound Broadcasting, ICASA has stated that:

“The model of community broadcasting challenges the traditional division between broadcasters on one side and listeners on the other side. In community sound broadcasting the listener becomes the broadcaster. Listeners get access to the airwaves. Community participation means mechanisms to ensure the participation in the running of the operations, policy making, and programming of the licensee, and representation of the different sectors of the community in influencing the direction the licensee should take.” 38

Section 1 of the ECA, 2005, defines a community broadcasting service as a service which-

is fully controlled by a non-profit entity and carried on or to be carried on for non-profit purposes;

serves a particular community; encourages members of the community served by it or persons associated with

or promoting interests of such community to participate in the selection and provision of programmes to be broadcast in the course of such broadcasting service; and

may be funded by donations, grants, sponsorships or advertising or membership fees, or by any combination of the aforementioned.

37 Goldsmith, B; Thomas, J; O’Regan, T; Cunningham, S – Cultural and Social Policy Objectives for Broadcasting in Converging Media Systems. Australia Key Centre

for Cultural and Media Policy. May 2001, 5

38 Independent Communications Authority of South Africa. Community Sound Broadcasting Policy- Position Paper (Johannesburg: ICASA, June 2006) p. 25

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The ECA also provides for two types of community broadcasting services. These include broadcasting services catering for a geographic community and broadcasting services catering for a community of interest. These characteristics apply to both community television and community radio.

The WG has already made recommendations in this report that access by community sound broadcasting services to digital broadcasting networks form part of an inquiry to be conducted by ICASA. The WG notes that Trinity Broadcasting Network (TBN) is the only existing licensed community television broadcasting service in South Africa and that it will need to be accommodated in the digital switchover process envisaged for existing television broadcasting services in South Africa.

In terms of the switchover from analogue to digital transmission networks it is also important to note that the ICASA Position Paper on Community Television noted that frequencies are available for allocation to community television in the following towns:

Eastern Cape: Aliwal North, Bedford, Despatch, Kareedouw, and Queenstown; Free State: Bethlehem, Senekal, and Ladybrand; Limpopo: Blouberg, Mokopane, and Punda Maria; Kwazulu-Natal: Vryheid; Western Cape: Grabouw; Hexrivier, Knysna, Ladismith, and Matjiesfontein; Northern Cape: Calvinia, Fraserburg, and Williston; North-West: Christiana; and Mpumalanga: Davel, and Dullstroom.39

The position paper indicated that there are no community television frequencies in metropolitan areas such as Johannesburg, Pretoria, Cape Town, Durban, and Port Elizabeth, though it mentioned that once South Africa migrated to a digital platform frequencies would be freed up in these areas for use by community television broadcasting services.

The Authority in the position paper also proposed the re-categorisation of spare commercial television frequencies in Johannesburg, Durban and Port Elizabeth, and the spare public television frequency in Durban North for community television use. This proposed re-categorisation has not taken place as yet. There were no spare public or commercial television frequencies in Cape Town. There was, however, one spare frequency available for digital terrestrial television service use. The Authority therefore, amended the regulations on special events licences to allow community television broadcasting licensees, in cases where there are unallocated frequencies and demand can be shown to exceed 30 days, to apply for a non-renewable temporary community television broadcasting licence for a period not exceeding 12 months.

39 Independent Communications Authority of South Africa. Community Television Broadcasting – Position Paper (Johannesburg: ICASA, 2004) p.12-13

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It was anticipated that such broadcasting licensees would be allowed to broadcast on the frequencies reserved for use during the switchover from analogue to digital broadcasting until there was need to clear such spectrum for usage in the dual illumination40 period of the switchover to digital transmission networks.41

The WG holds the opinion that it would be better not to licence any new analogue television broadcasting services as such a licensing process may compromise the digital switchover. The WG suggested that instead of licensing, ICASA should continue to issue temporary community television licences to the extent that frequencies reserved for the digital switchover at RRC-06 are not compromised.

ICASA in contrast to this view argued that aspirant community television (CTV) broadcasting operators have been waiting for more than 12 years to start operating, and that any further delays would be perceived as negatively impacting on CTV operators and also result in public protest.

The WG, therefore, suggested a compromise, namely that the licensing of community television broadcasting services can take place as long as it does not have any impact on the digital switchover process, and that community television broadcasting licensees surrender their broadcasting service licences and frequencies to ICASA on 17 June 2015 in return for guaranteed carriage as authorised channels on digital broadcasting transmission networks. Technical experts, however, indicated that there may not be frequencies available in any event as RRC-06 may have used them when planning for digital switchover.

RECOMMENDATION:

The WG recommends that ICASA should not be licensing any new television broadcasting services on analogue, but can continue to issue temporary community television licences to the extent that it does not compromise frequencies reserved for the digital switchover process at ITU RRC-06.

The WG when making the above recommendation is aware that ICASA holds a different view, namely that where spectrum is available without impacting on the switchover, they can issue 4 year analogue community television licences. The WG has no objection to this view, so long as it is made clear to prospective applicants that analogue licenses will have to be surrendered when analogue switch-off occurs in South Africa.42

40 Dual illumination refers to the existing broadcasting service being available both on analogue and digital transmission networks during the switchover period

41 Independent Communications Authority of South Africa. Community Television Broadcasting – Position Paper (Johannesburg: ICASA, 2004) p.12-13

42 There is a recommendation later in this report that capacity be set aside for Community TV broadcasting services be carried on the commercial national digital

transmission networks identified at RRC-06, with their signal being distributed in the specific geographic area for which they are licensed.

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4.3.7 Minimum public interest requirements

The WG are of the view that any set of minimum standards for digital television and radio should be drafted by ICASA in consultation with broadcasters and representatives of the public, and phased in over a period five to seven years. The following aspects were identified as being relevant and falling with the powers of the regulator to determine in terms of section 8(3) of the ECA:

a) Public Interest Disclosures

ICASA requires Broadcasters to make reports on a range of public interest issues contained in regulations and the licence conditions of individual broadcasters.

RECOMMENDATION:

The WG recommend that ICASA needs to investigate the possibility of establishing an online/electronic reporting mechanism for broadcasters as a move to paperless/electronic reporting on licence obligations will facilitate compliance and reduce the regulatory costs associated with compliance.

b) Closed Captioning

Closed captioning is embedded in the television signal and becomes visible when a special decoder is used, either as a separate appliance or built into a television set. The decoder lets viewers see captions, usually at the bottom of the screen that will tell them what is being said or heard on the programme they are watching. The captions are hidden in the line 21 data area found in the vertical blanking interval of the television signal.

Closed captioning can be extremely helpful in at least three different situations: It can be used to assist hearing-impaired television viewers. It can also be helpful in noisy environments. For example, a TV in a noisy

airport terminal can display closed captioning and still be usable Some people use captions to learn English or learn to read.

In a digital environment the closed captioning or subtitling of a number of languages may be transported via DVB to the STB and stored and displayed from the STB. The user has the ability to display subtitles and to select different language subtitles. Due to DVB bandwidth, subtitles can be enhanced with new fonts, different colours for the different characters portaged on the video and new types of symbols etc.

This possibly is a more cost effective way to get language options to SA other than the costly time consuming language dubbing. Many facilities world wide provide real-time subtitling services for live programs like news and sports events.

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Hard of hearing subtitles is quite different from language subtitles. Presently this service is offered on current digital platforms. These subtitles are more advanced and require new skills to generate these hard of hearing subtitles; however the country lacks these skills.

According to the Deaf Federation of SA, 10% of the population is deaf (4.4 million). However deaf is made up of 65% hard of hearing, 25% deaf needing a hearing aid and 10% profound deaf. This possibly constitutes less that 1 million of the TV households (7.8m) suffer form some degree of hard of hearing.

RECOMMENDATION:

The WG recommends that television broadcasting services should also explore the possibility of using digital technologies to cater for people who are hard of hearing (deaf) by introducing close captioning/sub titling for all current affairs and news programming.

(c) Multi-language transmissions

Digital technology now allows numerous audio services to be provided with the video services to provide different language options. However this requires very costly language dubbing skills and facilities.

The DVB-T and DVB-S standards make provision for associated multi-language transmissions. Additional audio language channels also require additional capacity on the digital broadcasting transmission network – stereo, Dolby, etc. The number of audio channel per video channel should not be limited and it is up to the broadcaster to decide how it wants to make use of this facility.

RECOMMENDATION:

In light of this, the WG recommend that broadcasters should be left the choice of how many language channels they wish to carry, if any. In addition, SABC television should explore international best practice in fulfilling the SABC’s language mandate by making use of digital technologies to offer content in all eleven official languages.

(d) Access for Persons with Disabilities

The objectives of the ECA provide that “an environment of open, fair and non-discriminatory access to broadcasting services…” be promoted and that broadcasting services collectively “cater for a broad range of services and specifically for the programming needs of children, woman, the youth and the disabled”.

ICASA in consultation with industry developed a Code of Good Practice for the Broadcasting Industry on meeting the needs of people with disabilities. This is a voluntary code, which was signed by the licensed broadcasters on 27 March 2006. In terms of section 70 of the ECA ICASA must prescribe regulation setting

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out a code on people with disabilities that will be applicable to all categories of licences. It is envisaged that this code of practice will for the basis of such regulations now that the ECA has come into effect.

The ICASA Code of Good Practice indicated that technology solutions to be considered should include the following.1. Uniformity of access to subtitling via analogue teletext pages.2. Use of non-schedule services such as access via PVRs and TV Anytim.3. The practicality of single multimodal devices bridging across all platforms and

media connectivity to and between devices.4. Consider navigational controls particularly relating to people with sensory

impairments. These include but are not limited to;٭ means of identifying services especially those provided by the broadcaster;٭ receiver controls - their ease of use and labelling;٭ receiver displays - the clarity and logical positioning;٭ remote controls - the size of buttons and functionality;٭ the possibility of combining controls within a single wireless device;٭ the possibility of voice driven commands;٭ on-screen menus - visibility and simplicity of use;

5. EPGs and other forms of listings – their identification, ease of access to relevant services and their ease of access to relevant services determine best practice in service presentation techniques for both audio and visual means. 43

The WG are satisfied that there is sufficient legislative provision in the ECA to provide for minimum public interest obligations for persons with disabilities. The WG hold the view that broadcasters should take full advantage of new digital technologies to provide maximum choice and quality for South Africans with disabilities, where doing so would not impose an undue burden on the broadcasters. These steps should include the gradual expansion of closed captioning on programming; the allocation of sufficient audio bandwidth for the transmission and delivery of video description; disability access to ancillary and supplementary services; and collaboration between regulatory authorities and set manufacturers to ensure the most efficient, inexpensive, and innovative capabilities for disability access. Video description as a form of providing access has been hindered in an analogue environment, in contrast digital technology can easily accommodate video descriptions (e.g. sign language by a an interpreter) on the multiple audio channels available which have sufficient bandwidth for opening services with moving pictures that fill only a part of the screen (a quarter screen or less).

RECOMMENDATION:

The WG recommends that where it would not impose an undue burden, broadcasters take advantage of digital technologies to offer a text option for material that is presented orally and an audio option for material otherwise presented visually.

43 Independent Communications Authority of South Africa. Meeting the needs of people with disabilities – A Code of Good Practice for the Broadcasting Industry.

(Johannesburg: ICASA, March 2006) pp.11-12

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d) Education

'We, in South Africa, strive to nurture and consolidate the tenets of a people- centred-society, creating, while using the means of information and communication a Learning Nation where innovation and knowledge are promoted, protected and rewarded' -  Deputy President Thabo Mbeki addressing ISAD Conference in May 1996.

DTT can contribute to the objective of Learning Nation stated above by the President. The opportunity for DTV to improve student achievement and provide access to educational information has very high value for South Africa. The acquisition and use of knowledge as captured in the quotation above indicate its value as a major resource for South Africa in the next few decades. South Africa’s success as an economically competitive nation on the world stage depends upon how effectively all members of our society are prepared to use information technologies, which in turn means that the proficiency of our citizens depends upon the quality of our educational offerings and the capacity of students to utilise information technologies for educational ends.

South Africa would place its people at a competitive disadvantage in the global economy if we do not invest wisely in educational resources. The capacity of digital television to expand the flow of information and communication to and within our school systems, and to the population as a whole will require new and imaginative decisions on the dedication of entire channels or sub-channels, and the interaction between programming and datacasting in the digital form.

The WG is aware that internationally there is a trend that once digital broadcasting services are functional, the existing analogue frequencies are returned to government, converted to digital and then auctioned off. This process tends to be at the detriment of broadcasting initiatives benefiting the public interest, especially those that emerge from the non-profit broadcasting sector. The WG proposes that when analogue frequencies are returned to government after the switch-off of analogue that frequencies be reserved specifically for broadcasting use (for example, HDTV) and that an orderly process be created to allocate such channels in a manner that would also suit non-commercial educational purposes such as preschool, elementary, secondary, and post secondary education, lifelong learning, distance learning, literacy, vocational education, public affairs, multicultural, arts and civic education, and other programming directed to the educational needs of the underserved communities. In fact a very high priority should be accorded to ensuring that these educational channels serve the underprivileged and minority communities that generally have fewer opportunities present in the information age.

Potentially, non-commercial educational channels should also benefit from access to television licence fees if this continues to be the preferred manner of funding public broadcasting programming. The Department of Education should also be encouraged to work with educational institutions to suggest programming and datacasting ideas to support the educational needs of the underprivileged and other underserved communities in South Africa.

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As in many cases educational channels will only require two or three channels on multi-channel broadcasting services capable of hosting 10 to 12 television channels (where MPEG 4 compression is used), opportunities for public-private partnerships could also be investigated for sharing of the channels on digital frequency networks.

RECOMMENDATIONS:

The WG make the following recommendations, namely that:1. when analogue frequencies are surrendered to government after the switch-off of

analogue that frequencies be reserved specifically for broadcasting use (for example, HDTV) and that an orderly process be created to allocate such channels in a manner that would also suit non-commercial health and educational purposes such as preschool, elementary, secondary, and post secondary education, lifelong learning, distance learning, literacy, vocational education, public affairs, multicultural, arts and civic education, and other programming directed to the educational needs of the underserved communities; and

2. ICASA should conduct an inquiry into advertising and whether such educational services are limited in terms of the advertising or advertising revenue they can generate.

e) Must Carry

The “must carry” concept is based on the idea of making public interest programming available to citizens on all platforms and not just FTA terrestrial. The advantage in the USA and the European Union is that these rules extend the reach of the public broadcaster and other FTA broadcasting services to areas where there may be no coverage, and therefore serve the public interest by ensuring that viewers who use cable or satellites as a means of access to broadcasting services continue to have access to public service programming on these commercial platforms. It benefits subscribers in the sense that they do not have to have a satellite dish and a VHF/UHF aerial on their roof and at the same time allows terrestrial FTA broadcasters access to a lucrative market segment.44

In South Africa the ECA provides in section 60(3) that ICASA must prescribe [our own emphasis] regulations regarding the extent to which subscription broadcast services must carry, subject to commercially negotiable terms the television programmes provided by a public broadcast service licensee. In the Position Paper which pre-dated the commencement of the ECA, ICASA indicated that it would prescribe in licence conditions [our own emphasis] the extent to which satellite/cable subscription television broadcasting services may carry the public service television channels of the SABC. The policy position further indicated that the SABC shall be required to offer its public service channels subject to agreed terms.45 The WG notes that although the policy principle articulated in the Position Paper is in harmony with ECA, the decision taken by ICASA to impose by means of licence conditions, is not in line with the ECA that requires that

44 Independent Communications Authority of South Africa. Inquiry into Subscription Broadcasting – Discussion Paper (Johannesburg: ICASA, 23 April 2004) pp. 49-50

45 Independent Communications Authority of South Africa. Subscription Broadcasting Services: Position Paper (Johannesburg: ICASA, 2005) p.75

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ICASA prescribe by means of regulations. It is recommended that ICASA amend its existing regulations to be in conformity with the ECA on this point.

It is important to point out that “must carry” rules were formulated in an analogue environment where there were limited terrestrial broadcasting services and they could easily be accommodated on a DTH or cable platform without placing excessive compliance burdens on operators. In a digital broadcasting environment where one frequency can accommodate up to 10-12 channels (if MPEG 4 compression is used) it would have a considerable impact on satellite and cable operators to require them to carry the whole range of FTA multi-channel broadcasting services since it would restrict the operators’ ability to use their own capacity freely and in a competitive manner.46

ICASA acknowledged this in regard to digital terrestrial subscription television services when it indicated that such services would not be required to carry the public broadcasting FTA services, but would have to reserve a channel for public access television instead.

RECOMMENDATIONS:

The WG makes the following recommendations, namely that:1. ICASA in implementing the “must carry” provision set out in section 60(3) of the

ECA, should restrict it in application to the existing public broadcasting services provided by SABC 1, 2 and 3 and that it should not apply to any new digital broadcasting services introduced by the SABC; and

2. the decision taken by ICASA to impose “must carry” by means of licence conditions in 2005 predated the commencement of the ECA, and is not in line with the ECA which requires that ICASA prescribe by means of regulations. Accordingly, ICASA must amend its existing regulations to be in conformity with the ECA on this point.

4.4 IMPLEMENTATION POLICY CONSIDERATIONS

There will be a heavy burden on existing broadcasters during the period of dual illumination and in terms of the costs of creating new content for new multi-channel offerings to drive the take-up of digital broadcasting services in South Africa. This being the case the WG proposes that some principles be put in place specifically for the transition process from analogue to digital broadcasting with regards to public interest programming requirements imposed on broadcasters.

46 Independent Communications Authority of South Africa. Inquiry into Subscription Broadcasting – Discussion Paper (Johannesburg: ICASA, 23 April 2004) p.50

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RECOMMENDATIONS:

The WG recommends that government and ICASA consider applying the following principles during the digital switchover process, namely that:1. promises of performance made in an analogue environment and incorporated

into analogue licences should not be converted into a digital broadcasting environment where they may not be appropriate in any event;

2. to compensate existing broadcasters for the enforced shift to digital broadcasting this licence period should be for the maximum period allowed by the ECA for Individual or Class licences i.e. 20 years and 10 years respectively;

3. in the period of dual illumination existing broadcasters should not be expected to comply with any public interest programming requirements and South African content requirements for digital broadcasting, while they are fulfilling similar requirements in an analogue broadcasting environment. Such a moratorium on the application of digital broadcasting public interest programming and SA Content requirements should continue until at least 18 months47 after the cessation of analogue broadcasting in South Africa to allow broadcasting services sufficient time to restructure programming on their previous analogue channels across their bouquet of new offerings; and

4. digital broadcasting public interest requirements and South African content requirements must be applicable to broadcasting services who are not engaged in dual illumination.

DISSENTING VIEW:

Sentech hold a dissenting view on recommendation 4 above, namely that the moratorium on doing digital public interest programming and SA content requirements until switch-off recommended for existing broadcasters engaged in dual illumination, should not be limited to existing broadcasters.

47 This 18 month period is suggested as it reflects ICASA’s usual period for requiring a broadcaster to commence compliance with SA content regulations and public

interest. This was in line with section 53(6) of the IBA Act (subsequently repealed by the ECA) which stated that “a condition imposed…in respect of any television

broadcasting licence shall become binding on and enforceable against the licensee concerned on the expiration of a reasonable period, not shorter than 18 months,…” .

The implication being that a reasonable period is a minimum of 18 months, although scope was created for ICASA to make such period longer if there was sufficient

grounds to do so.

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5. IMPACTS OF TRANSITION ON BROADCASTERS ANDTHE EXISTING LICENSING REGIME

Broadcasting is facing fundamental changes, triggered by the new digital means of production and use of digital broadcasting technology (the so-called “digital revolution”). At the same time electronic communications is becoming an international business no longer operating only within the borders of states. This has advantages as South Africans will become more exposed to programming intended for both a national and international audience and consumer choice will be come enhanced in this digital era. At the other end of the spectrum are the dangers inherent in globalisation of losing national identity. This leads to the needs for carefully considered public interest regulation aimed at promoting diversity, language, culture and national identity. The major impact on regulators and broadcasters is that this evolving environment characterised by technological developments and globalisation of the media industry will require a new approach or paradigm.

The changes in this evolving environment appear to be happening in four inter-connected areas:

Technology Market environment Consumer behaviour Regulatory environment.

Digital technology creates the potential to produce and deliver media in new ways and leads to an increasing use of multimedia, interactivity, multi-channels services, video and audio on-demand services and more picture and sound quality options. Market environment changes relating to globalization also have the effect of requiring organisations to expand and seek larger markets. Media organisations will almost inevitably in a digital environment have to produce content for multiple delivery means. In some cases broadcasters may only have rights in a circumscribed sense as rights owners could directly use some digital outlets themselves without an intermediary between themselves and the market. Consumer behaviour does not change overnight so it is likely that television and radio will still be used in a linear fashion with interactivity experiencing a slow take-up.

Recent developments indicate that viewing patterns are becoming less of a collective experience and more of an individual experience (e.g. PVRs allowing for time shifted viewing and new technologies which allow for a more personalised viewing experience). Regulatory changes are driven by the fact that the broadcasting landscape is changing from one of scarcity to diversity of content and multiple delivery options for consumers. New regulatory frameworks are needed to deal with a multi-channel broadcasting environment and substitute broadcasting services being delivered on non-traditional broadcasting networks.

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5.1 CONTENT DELIVERY AND THE CONTENT VALUE CHAIN

There are two aspects relating to content that have to be considered in terms of policy impacts on the regulatory environment and the business of broadcasters. The first is new ways for delivering digital content (television or radio programmes and channels) and the second is the changes in the broadcasting content value chain.

5.1.1 Content Delivery in a Digital Environment

An analysis of past, current and future delivery options reveals that there are essentially three main content delivery options. The first stage (the A component of Figure 2) is programme choice based on traditional channel flow. This is an analogue environment where the viewer has a small number of channels on individual frequencies where the viewer has to watch the programmes as they flow past. Programme choice is limited to channel selection and flow (time specific viewing). Channels available can be public broadcasting services (PBS), commercial broadcasting services (CBS) and community broadcasting services (CTY). This reflects the traditional model of broadcasting where extensive public interest regulation is imposed because of the scarcity rationale.48

FIGURE 2: CONTENT DELIVERY NOW AND IN THE FUTURE49

Legend: PBS – Public Broadcasting Service; CBS – Commercial Broadcasting Service; CTY – Community Broadcasting Service; VOD – Video on demand

48 Strategy Group. Media with a purpose: Public Service Broadcasting in the Digital Era. Report of the Digital Strategy Group of the European Broadcasting Union.

(Switzerland: European Broadcasting Union, 2002) p.7

49 Adapted from diagram in the Digital Strategy Group. Media with a purpose: Public Service Broadcasting in the Digital Era. Report of the Digital Strategy Group of

the European Broadcasting Union. (Switzerland: European Broadcasting Union, 2002) p.8

PBS

CBS

CTYPBS

PBS

PBS

PBS

PBS

PBS

PBS

PBS

PBSPBS

CBS

CBS

CBS

CBS

CBS

CBS

CBS

CBSCBS

CBS

CTY

CTY

CTY

CTY

CTY CTY

CTY

CTY

Data

Data

Data

Data

Data

VOD

VOD

VOD

VOD

VOD

Internet

Internet

A

B

C

A C

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The second stage is the multi-channel broadcasting environment (the B component of Figure 2), where the viewer has access to a much larger base of channels provided now on a single frequency or on a number of frequencies. This environment was first driven by cable and satellite and now has entered the terrestrial frequency domain through the use of digital compression technologies. This second stage can exist with the first stage, but in practice replaces the first stage as limited channel flow becomes un-necessary once there is universal access to the multi-channel digital flow environment. In essence this is the process of “digital switchover”. As there are so many channels on offer the viewer/listener needs help in navigating the choices available and resorts to using an electronic programming guide (EPG) to assist in finding programmes. The viewer can also combine the EPG and STB with a digital PVRs in order to create the ability to have time shifted viewing, however the aspects that applied in the first stage namely channel selection and flow (time specific viewing) still apply.

The third stage is the on-demand delivery of content to the viewer/listener (the C component in Figure 2). This reflects a personalised content delivery model where the viewer/listener is able to choose from a wide range of media and can watch or listen when he or she wants. This means that the user becomes their own programme scheduler, although in practice pre-determined channel flows will still be there for those who want them. This stage while representing the future, in practice is already available in those parts of the world where high-speed broadband networks have been rolled out (these services are still evolving and reflect the promise rather than the end-product). Broadband is also very expensive so it is highly likely that simpler forms of on-demand programming may become available using digital broadcasting or a hybrid solution of digital broadcasting and the internet.

It is important to realise that these stages are not consecutive and that they do overlap with each other. However the second stage is essentially a more improved substitute for stage 1 and once digital multi-channel broadcasting become universal in a country and analogue is no longer required it can be switched-off. The relationship between stage 2 and stage 3 is likely to be one of co-existence rather than substitution.

The impact of multi-channel viewing and on-demand services on the regulatory environment is vast. Firstly, the sheer number of channel offerings mean that regulators cannot be as specific as they were in the past in terms of setting public interest regulatory requirements at the level of types of programming on a specific channel. Instead the regulatory focus is likely to shift from specific channels to the bouquet (multi-channel) operator in terms of carriage requirements. Secondly, the ability of the user to control the content viewed through features on the STB, or in some cases to request the content viewed will most likely result in a more self-regulation and a ‘light touch’ regulatory approach.50

Similarly, there will be a large impact on broadcasters as in a multi-channel environment they will lose control over the ability to guide the listener or viewer to their favourite programming. Instead viewers/listeners will rely on the EPG to catalogue and find their programming, in this scenario it is the EPG that becomes the anchor for the viewer rather than the individual channels themselves. Lack of visibility on the EPG may have negative impacts on channels and will require some thought being given to how 50 Strategy Group. Media with a purpose: Public Service Broadcasting in the Digital Era. Report of the Digital Strategy Group of the European Broadcasting Union.

(Switzerland: European Broadcasting Union, 2002) pp.8-9

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channels should participate in the development of the EPG. The multi-channel environment is also likely to have impacts on the broadcasters in terms of a fragmentation of advertising revenue, and the need to institute some form of Digital Rights Management (drm).

RECOMMENDATION:

The WG recommends that a national migration strategy and action plan is required in order for the handover from stage 1 (analogue) to stage 2 (digital or multi-channel), as set out in Figure 2, to take place with minimal social deprivation.

The WG considered the state of readiness of broadcasters for digital production. While acknowledging that broadcasters undertake limited production in-house, with most production being undertaken by independent producers, all three terrestrial television broadcasters reported to the WG that their state of readiness for the digital production of content (as opposed to the digital transmission of content) was advanced. No particular interventions in this regard are therefore required in government’s migration strategy.

RECOMMENDATION

The WG recommends that there be no specific intervention in terms of the Digital Switchover strategy to address broadcasters’ digital production capacity.

The two commercial broadcasters, e.tv and M-Net reported that that their production facilities were already largely digitised, with most productions being shot in a digital format and edited digitally, but the final product being delivered in an analogue tape format.

The SABC reported that it had embarked since 2002 on an extensive project to digitise its production facilities. The SABC reported that the digitisation project consisted of 96 sub- projects scheduled over five to six years up to 2009.

In relation to the broadcast value chain, those areas currently being digitised by the SABC are depicted in the Figure 3 below.

FIGURE 3: BROADCAST PRODUCTION VALUE CHAIN

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It was noted by all three broadcasters that they rarely specify a format for production. Broadcasters are primarily concerned with the quality of the completed product and generally leave it to the producer to determine in what technical form that product is best produced.

The WG found that digitised production is not necessarily a requirement for the migration to digital transmission systems and does not need to be a focus of government’s migration strategy.

RECOMMENDATION

The WG recommend that digitised production should not be a focus of government’s digital switchover strategy as broadcasters will be able to migrate to digital transmission even if the production process is not digital.

(a) State of readiness of production industry

Although the WG made numerous attempts to consult with the independent production sector, this consultation was unfortunately only partially successful. Representatives from the sector were unable to consistently attend meetings and the response to the questionnaire was poor. At the time of writing this report, only seven questionnaire responses had been received, although over 800 questionnaires were sent out. In addition to these responses, the BFN made available a written report which reflected the views of 10 of their members.

This report therefore reflects the views expressed by 17 independent production companies. The WG therefore recommends that government consult further with the independent production sector on these matters.

In the consultation undertaken, contrary views were expressed by independent producers as to their state of readiness for digital production. Whereas some responses expressed the view that virtually all content is now produced in digital, the BFN stated that this was not always the case and that there were many emerging members of the production sector without access to digital production facilities. In this regard the BFN expressed the fear that the migration to digital could exacerbate the stark differences in resources among established and emerging members of the production industry. The BFN recommended that government’s migration strategies take this into account.

Producers agreed that the greatest production weaknesses facing the South African industry presently is the lack of adequate investment in content, especially in the areas of script development and audience research. The WG noted that there is a danger that this weakness is exacerbated rather than alleviated in a digital environment, especially given the pressures broadcasters will face to generate additional content to fill additional channels and the possibility that broadcasters will face competition from content providers without the same regulatory constraints. Additional government support mechanisms for content development should form part of government’s migration strategy.

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Notwithstanding concerns about the capacity, the WG noted that for the purposes of migrating broadcasting services, it is not essential that producers produce in a digital format – once transmission is digital, broadcasters would be able to undertake the necessary conversion to a digital format. In this regard, the WG concluded that digitised production is not necessarily a requirement for the migration to digital transmission systems and therefore does not need to be a focus of government’s initial migration strategy

While the WG acknowledges the need for greater support for the development of South African content, the WG reiterates that any lack of readiness by producers for digitisation is not an obstacle to migration and therefore does not need to be a focus of government’s initial migration strategy.

RECOMMENDATION

A joint task team should be formed between the Department of Arts and Culture, the Department of Communication and with the participation of industry to assess the production industry’s capacity to create content for a digital environment, to evaluate existing structures which support the production industry and to advise regarding additional governmental support which may be required for this sector.

(b) Human resource capacity, training and development

While lack of digital production may not be an obstacle to migration, the WG noted that as the state of readiness of broadcasters is of less concern than the state of readiness of the production industry, it is important that the production industry’s state of readiness for the digital environment is evaluated and that steps are put in place to address any skills gaps. In this regard, the following concerns arise:

Does the production industry have the necessary skills to undertake digital production?

What skills development programmes are in place to address skills gaps in the independent production sector?

Due to the limited involvement of the independent production industry in the WG’s work, it is not possible to provide conclusive answers to the above questions. It is recommended that any further consultation with the independent production sector focus also on these skills issues.The WG also approached the MAPPP-SETA to provide advice on training and development for a digital domain. The SETA reported that apart from an NCRF research project, which is looking at technology plans to meet the digital broadcasting standard, and a Broadcasting Engineering qualification being undertaken in partnership with the NAB, which will prepare the learner for working in the digital environment, the SETA sector skills plans has obvious shortcomings in terms of focusing on digital migration and implications for development. The SETA stated that it would want this to be included in the ‘06/’07 annual sector skills update.

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RECOMMENDATION:

The WG recommend that the joint task team, suggested in a previous recommendation, conduct a full evaluation of the digital skills shortages in the production sector. As the WG identified the need for a comprehensive digital sector skills plan, although such a skills plan would not be required to form part of the current digital switchover strategy.

(c) Technology and standards

In examining issues of technology and standards the WG noted that HDTV production presents an entirely different set of challenges from standard digital production. In this regard, broadcasters agreed that the state of readiness for HDTV production was low and would need to be addressed, especially in light of South Africa’s commitments on 2010. But while HDTV production capacity is required for the 2010 World Cup, it is not recommended that HDTV be prescribed for the digital switchover process as the costs appear to outweigh the potential benefits at this stage.

The SABC reported that it had procured an HDTV outside broadcast vehicle and had also, with Sony, started a training academy for HDTV cameramen with a view to 2010. M-Net also reported that it was considering investment in HDTV but that this would have to be commercially sustainable.

e.tv has established an HD documentary unit and is investigating further HD programming opportunities.

It was noted that in respect of HDTV there were likely to be significant cost implications for both broadcasters and the independent production sector.

In addition to transmission standards, representatives from the production sector raised concerns regarding the proliferation of delivery standards put in place by various broadcasters. As a number of channels increases, so to could the number of formats specified by broadcasters for delivery of content.

RECOMMENDATIONS:

The WG make the following recommendations:1. HDTV should not be prescribed for the digital migration process, but should be a

commercial decision made by individual operators subject to the availability of capacity on the digital transmission networks; and

2. In anticipation of a multi-channel environment, broadcasters and the production sector should form a group, which will consider and agree on a limited number of digital delivery formats.

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(d) Support for content development

As far as cost implications of digitisation are concerned, the WG noted that in order for digitisation to be successful, the advertising revenue “cake” must grow to balance the significant investment from broadcasters, which will be required in content. International experience suggests that instead of growth, digitisation may in fact precipitate fragmentation in the advertising market, leaving broadcasters to find new revenue streams. It was noted that in light of the above issues, the business case for broadcasters to make the investment in digitisation is unclear and this should be taken into account by government and the regulator when the policy and regulatory environment is established. This environment should attempt to create a positive investment climate for broadcasters.

RECOMMENDATION

The WG recommends that additional government support mechanisms for content development should form part of government’s digital switchover strategy.

(e) Multi-media distribution platforms and interactivity

While a lack of digital production may not necessarily be an obstacle to digital switchover, the WG noted that for the full benefits of digitised content to be realised from a creative point of view (interactivity, additional options for viewers, additional revenue opportunities and potentially increased mandate delivery by the public broadcaster), ideally production should be digitised. To realise these benefits, the whole broadcast value chain would therefore need to be digitised.

Government’s migration strategy should therefore take into account the eventual need for digitisation of the full value chain, although, as noted earlier, digital switchover is not dependent on this happening.

RECOMMENDATION

The WG recommend that the digital switchover strategy should take into account the eventual need for digitisation of the full value chain and long term strategies should be put in place to ensure our content producers are equipped to create content for a converged, digital environment.

(f) Compatibility with export markets

The WG was not able to look in any detail at the issue of compatibility with export markets, aside from noting that broadcasters had experienced very limited success to date in breaking into export markets. Broadcasters noted that western markets did not currently exhibit any active interest in South African content and in cases where developing markets were interested in this content, they were only willing to pay a nominal fee, making it uneconomical to sell in those markets. The WG concluded that there was little evidence to suggest that this situation would improve in a digital environment.

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(g) Intellectual property issues

The WG was of the view that specialized legal expertise was required to make meaningful recommendations on intellectual property issues. Consultants were briefed to advise the WG in relation to various matters arising from the migration of broadcasting services from analogue to a digital.

The terms of reference provided to the consultants required a consideration of the following issues:

Rights acquisition and disposal in the digital environment;

Research into the extent to which issues of acquisition and disposal of rights are dealt with in current legislation;

An analysis of relevant international legislation;

The adequacy of current legislation and common-law in the digital environment;

The period of dual illumination and the rights regime in relation to dual illumination, particularly whether copyright holders will be entitled to receive an additional royalty for copying content to digital platforms;

An analysis of copyright as it relates to films, literary works, musical works and underlying applications such as scripts, broadcasts, public performances and so on;

An analysis of whether legislation deals adequately with piracy and unauthorised copying and whether anything needs to change to deal with this element in a new environment.

The process involved research into legislative changes dealing with the digital era in other territories and an analysis of current legislation in South Africa and its shortcomings. The full report prepared by the consultants is attached as Appendix E. The report informs the recommendations made by the WG, which are set out below.

In order to understand the intellectual property issues that may arise in respect of digital migration, it is critical to understand how content is acquired in the television industry.

In relation to television, content is usually acquired in one of two ways. It is either commissioned or it is licensed by virtue of agreements with independent producers or studios, which make films, series and other types of programming available.

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In the South African environment, the sector is dominated by the commissioning of the independent production sector to fulfil the local programming requirements. Broadcasters generally undertake the commissioning of news and current affairs programming internally. Finally, programming is acquired via licensing arrangements in relation to international content. This programming is either acquired as part of a package or on a programme-by-programme basis.

The role of broadcasters and their interaction with the independent production sector is crucial. This relationship is governed by copyright law and the law of contract. Copyright law is concerned not only with works and content, but with matters in relation to policy. Contract law is concerned with commercial issues. As a result, it is necessary to understand that issues related to the way in which broadcaster acquire rights to content can only be dealt with partly by law and partly by contract and that neither provides a complete answer.

RECOMMENDATION

The WG recommend that the digital switchover strategy should not regulate the relationship between the broadcasting and independent production sectors in relation to the production of content. The reason primarily is that in migrating services from analogue to digital, the nature of the copyright generally, does not change. Therefore, the nature of the relationship between broadcasters and the independent production sector should be developed in other environments.

Copyright Act

The consultants were required to advise regarding the adequacy of the provisions of the Copyright Act, 98 of 1978 (“the Act” or “the Copyright Act”) to address the challenges of a digital environment. The consultants advised that there is nothing in our Copyright Act, which causes concern for the acquisition or disposal of the rights of copyright. However, the report raised the following concerns in relation to the Copyright Act:

the Act does not deal adequately with all forms of digital broadcasting;

in a converged environment, the Act should contemplate the inclusion of a right of “making available” or “communicating” a work of copyright;

The Act does not make allowance for digital rights management.

There are various different kinds of digital broadcasting: terrestrial; satellite; cable; mobile

The WG is concerned that the definitions contained in the Copyright Act may not be adequate for a digital environment.

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RECOMMENDATION

The WG recommends that the Department of Communications and the Department of Trade and Industry initiate a review of the Copyright Act to determine whether the current provisions of the Copyright Act adequately protect copyright owners in a digital environment. In particular, such a review would need to consider the appropriateness of the definitions contained in the Act, like the definition of “broadcast”.

Right of “making available”

In various international jurisdictions, legislators and policy makers have recognized the need for technology neutral definitions to protect copyright owners on a range of platforms and distribution mechanisms, which may not have been adequately provided for in legislation dealing with copyright. This resulted in the inclusion of a general, technology neutral right of “communication” or “making available”.

In broad terms, the right of “making available” is a technology neutral right granted to copyright owners which allows them to make their work available on any platform. The Consultants have described the right of making available as a right which “entitles the author to make available the content on wire or wireless means” In short, the “making available” principle provides that authors or owners should have a right to choose where, when and on what platform their media is consumed. The right is therefore platform neutral.

RECOMMENDATION

In order to achieve technology neutrality in the Copyright Act, the WG recommends that the review of the Copyright Act proposed above also consider the possible inclusion of a general right of “making available”.

Digital Rights Management

The Copyright Act has, up until the advent of digital technology, been able to deal with infringement in a comprehensive manner. Now, as we move towards a digital environment, infringements will grow in sophistication and type. The law needs to adapt to take into account the control of infringing copies and infringement generally.

Digital rights management or as it is sometimes called ECM (electronic copyright management) are terms for technology components to protect content. The benefit of digital rights management is that it allows, in a digital age, where files are distributed to third parties, the capacity to enforce limitations on the distribution of such files, no matter where the third party or the work is located.

DTV and DSB will allow for easy copying and distribution of content. The WG holds the view that South Africa cannot be focused solely on the digital

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switchover strategy without having proper regard for the requirement of mechanisms to control proper distribution of content.

Digital rights management is not currently dealt with in the Copyright Act other than to the extent that reliance can be placed on current control mechanisms to protect owners.

It is important to note that in countries, which have made changes to their Copyright legislation to accommodate digital rights management, this change was not driven by digital switchover. Rather, the changes were necessitated by the economic impact of the capacity of new mechanisms to distribute unauthorised content. In other words, the rapid process of the digitisation of content and the simple processes, which made its distribution possible, caused other jurisdictions to consider legislative amendments to deal with this unauthorised distribution. In certain instances, this dovetailed with the process of digital switchover. In the South African case, it appears as if this process will be conducted to some extent, in parallel.

RECOMMENDATIONS

In order to the ensure protection of the rights of copyright owners, the WG recommends a review of the Copyright Act to include mechanisms for digital rights management. The WG further recommends that since the implementation of digital rights management systems may have implications for privacy rights of consumers, the Department of Communications should conduct a specific study on digital rights management.

Royalties

The report by the Consultants revealed that there is no international support for the contention that a second or further royalty should be paid by broadcasters during the period of dual illumination.

This digital environment will ultimately provide greater frequency availability, the opportunity for more content to be distributed, new opportunities for revenue creation for content holders and therefore, government should be advised to be cautious when imposing new royalties in the short term.

In all likelihood it will be a combination of government, broadcasters and signal distributors that will bear the brunt of the cost of digital migration. In that regard, broadcasters are already burdened with obligations to pay levies, fees for blanket licences and civil society obligations. These include ICASA licence levies for the right to broadcast, blanket music rights fees to SAMRO, RISA, SARRAL and NORM, Media Development and Diversity Agency Levies and Skills levies.

RECOMMENDATION

The WG recommends that analogue broadcasters should not be required to pay royalties twice for the dual illumination of their existing analogue services either on DTT and/or digital radio. The Copyright Act should not, during dual illumination, create further obligations upon an already stretched industry.

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5.1.2 Digital Content Value Chain

The impact of digitalisation and changes in delivery also lead to progressive changes in the media value chain between the broadcaster and the consumer in a multi-channel and on-demand environment. Traditionally the chain involved the broadcaster, a transmission network owner and the consumer. The transmission network was merely a technical service, which did not interfere with the content, the rights or the financing of the broadcasted programmes (see Figure 4).51

FIGURE 4: TRADITIONAL BROADCASTING VALUE CHAIN

In a multi-channel environment however new functions such as multiplexing, EPG), CA and SMS control access to programmes (for audiences) and audience (for broadcasters). This control also determines the flow of funding, and thereby changes the way broadcasting may be financed. Of course some of these functions are dependent upon whether a FTA, free access or conditional access regime are adopted by the digital broadcasting service. Even in a non-subscription broadcasting environment, conditional access and electronic payment are an important feature of digital broadcasting as they allow FTA broadcasters to access alternative revenue streams from additional services, such as datacasting, video and audio downloads and e-shopping.

Navigation aids become essential devices to enable the viewer to locate desired content. Navigation aids therefore have the potential to influence viewing and listening patterns, and “any bias in the listing will have serious implications for content providers” and for viewers/listeners. Another facet of the digital era is the introduction of a multitude of new digital outlets that allow viewers and/or listeners to access content via non-traditional consumer access devices such as mobile telephones, personal digital assistants (PDAs) and the internet.52 The two critical elements added to the value chain are therefore a

51 Strategy Group. Media with a purpose: Public Service Broadcasting in the Digital Era. Report of the Digital Strategy Group of the European Broadcasting Union.

(Switzerland: European Broadcasting Union, 2002) p.10

52 Goldsmith B, Thomas J, O’Regan T, Cunningham S . Cultural and Social Policy Objectives for Broadcasting in Converging Media Systems. Australia Key Centre for

Cultural and Media Policy. May 2001, 62.

Content Production

Broadcasting Service

Viewer / Listener

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technology based multiplexing53 service and the number of new delivery networks (see Figure 5 below). The broadcasting service can also be further sub-divided if needed into a separate multi-channel content packager and the technical function (multiplexing) of managing channel combination, EPG, CA and SMS.

FIGURE 5: NEW DIGITAL BROADCASTING CONTENT VALUE CHAIN54

It is obvious that where the FTA broadcasting services are spread across a number of digital radio frequency networks, interoperability between such frequency networks becomes critical to ensure that the viewer/listener is not disadvantaged in terms of product support or interoperability. In the context of the DTT marketplace, interoperability can be defined as the:

“assurance that all the elements of the end-to-end broadcast system will operate and work together as intended. Furthermore, any one element in the system must be able to be replaced by its equivalent, or successor version, without compromising the performance of the system in any way.”55

In order for interoperability to exist there must be agreement between all the industry players, on the setting of:

Common standards, interface protocols and specifications; Minimum acceptable performance requirements for system operation; Profiles and extensions for more advanced features and a future-proofed

operation; Common test procedures, tools and methods, available to all for product

development; Reference test systems to ensure consistency, accessible to all on fair and

equitable terms;

53 Multiplexing has been defined by the ITU-R as being “A reversible process for assembling signals from separate sources into a single composite signal for

transmission over a common transmission channel. This process is equivalent to dividing the common channel into distinct channels for transmitting independent signals

in the same direction”. Recommendation ITU-R V.662-3 (2000) – Ap. 2, 71(3.11)

54 Adapted from diagram in Strategy Group. Media with a purpose: Public Service Broadcasting in the Digital Era. Report of the Digital Strategy Group of the European

Broadcasting Union. (Switzerland: European Broadcasting Union, 2002) p.11

55 Digital Television Group (DTG). Action Plan Task 5.13: Product and Interoperability Testing and Support (DTG, London: August 2003)

Content Production

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CA, SMS)

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Sharing of information on known issues, so others can take steps to circumvent problems for consumers;

Regular communication between the parties to avoid problems before the event wherever possible, and speedily resolve issues once they arise;

Clear strategy setting for future technological and commercial development of the system.56

In a vertical marketplace, such as subscription broadcasting, the performances of all other parties are governed by commercial agreements with the subscription broadcasting service and their signal distributor, who are responsible for specification, testing and operation of the entire system. The subscription broadcaster, who in turn is responsible to the consumer for its performance, and must deal with all consumer issues, markets the system. In the FTA DTT environment the consumer expects to access the services of all the FTA broadcasting services irrespective of the fact that each broadcasting service (consisting of multiple channels) resides on different digital broadcasting transmission networks and frequencies that may even be operated by different broadcasting signal distributors. In such a horizontal market, agreements between the parties are generally non-contractual, and any commitments made are voluntary. In a horizontal market it rapidly becomes clear that some form of central co-ordination is necessary to avoid duplication and expensive mistakes.

In the United Kingdom (UK), the Digital TV Group (DTG) was established as an industry association for digital television that is independent, platform neutral, technology agnostic and operates on a not-for-profit business model. Its main focus is on technology and products to ensure testing and interoperability of products on the market (i.e. established to deal with the technical aspects of the Freeview system in the UK). The Digital Network Group (TDN), is voluntary association made up of all the multiplex operators57, and is responsible for the co-ordination between the services offered to the public. The Freeview consortium’s founding members were the BBC, National Grid Wireless and British Sky Broadcasting, who were joined later by ITV plc and Channel 4. The service broadcasts FTA television channels, radio stations and interactive services. In addition to the Freeview service in the UK, there is a subscription broadcasting service known as Top Up TV which was launched using unused channel space on the existing digital broadcasting transmission networks. It is not part of the Freeview service, it runs alongside it on the DTT platform and can be received only by those freeview STB or digital televisions equipped with a card slot or CI slot, alternatively a conditional access module (CAM) needs to be purchased to plug in to freeview STB or digital televisions not equipped with a card slot.

It should be kept in mind that although the value chain in Figure 5 is intended to apply to both digital television and radio, it was developed primarily for DTT (DVB-T standard). In practice, the implementation of digital radio using the T-DAB standard may be significantly simplified by technology largely focussing on a FTA content delivery rather than subscription based. However, the content value chain for the T-DMB and DVB-H standard is expected to be very similar to Figure 5 depicted above.

56 Digital Television Group (DTG). Action Plan Task 5.13: Product and Interoperability Testing and Support (DTG, London: August 2003).

57 "Multiplex Operators" in this context refers a distinct licence category in the UK which relates to the combining of the channels into a single multiplex data stream

intended for reception by the public. It should not be confused with the legal definition broadcasting signal distrubtion in the South African context.

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RECOMMENDATIONS:

The WG makes the following recommendations, namely that:1. An industry initiative is required to establish industry bodies or broaden the

mandate of existing industry bodies to deal with the DTT STB standard, create industry forums on technical matters and deal with matters relating to interoperability.; and

2. the broadcasting services and electronic communication network services operating on the DTT platform should form a voluntary committee similar to The Digital Network Group (TDN) in the UK to co-ordinate services (e.g. the electronic programming guide, software updates, etc.).

5.3 EVALUATION OF EXISTING POLICY AND LICENSING REGIME

The WG held the view that the starting point is to determine the key issues, from a licensing and regulatory perspective, which will need to be addressed in the introduction of digital radio and the switchover of existing analogue television broadcasting services from analogue to digital terrestrial broadcasting. A brief consideration of the approaches in other jurisdictions was useful in this regard.

5.3.1 Policy and Licensing of Digital Terrestrial Television in Europe

The WG selected Europe on the basis that it falls into Region 1 together with Africa and that in terms of the ITU processes related to the frequency spectrum planning for digital broadcasting in the frequency bands 174-230 MHz and 470-862 MHz resulting in the co-ordination exercise which was done across Region 1 and parts of Region 3.

The WG looked at the development of DTT in Europe against the backdrop of: Business models; Policy approaches; Role of different stakeholders; Incentives provided to broadcasters and signal distributors; and Key factors influencing market take-up.

(a) Business Model

In Europe three business models have emerged in DTT:

A pay-tv platform – a premium content offering in direct competition with cable and DTH. This was the original business model adopted in the UK, Spain and Sweden and an evaluation of those countries shows that it was not successful as a stand-alone business proposition for various reasons, but mostly because of over-regulation that reduced the commercial options available to the operators.

A FTA (FTA) platform – a variety of FTA channels which was the original business model in Italy, Finland and Germany and which has become the business model in the UK since May 2002.

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A Hybrid platform – this is an offering which combines a number of FTA channels together with a limited pay offering. Migration to a hybrid DTT business model has taken place in the UK, Sweden, France and Finland (see Figure 6).58

FIGURE 6: MOVE TOWARDS A HYBRID BUSINESS MODEL59

The hybrid business model appears to be the most successful offering on a DTT platform. The arrival of the hybrid model has also led to some innovation in the pay-TV market, for example the introduction of using pre-paid cards in some countries (pay-per-view in Italy and subscription in Sweden). Similar to mobile telephony the introduction of pre-paid cards appears to assist with take-up by consumers and the operators find that such a revenue collection mechanism is more suitable for customers who only generate low-medium monthly revenues for offerings not containing premium content.

58 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) p.8

59 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) p.26

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RECOMMENDATION:

The WG recommends that any regulatory approach to digital migration in South Africa should be flexible enough to accommodate a DTT Hybrid Business Model that creates scope for a mix of FTA broadcastings and pay service offerings.

(b) Policy Approaches

Policy approaches to platforms, licensing and technical issues in Europe were examined by the WG. In examining approaches to platform selection in Europe, once again it is clear that each country has adopted a platform or hybrid solution based on their own circumstances and policy objectives. It is clear that in a large country DTH is cheaper than DTT even when considering a hybrid or two platform scenario (i.e. broadcasters using DTT to cover part of the population and DTH used to obtain universal coverage). As demonstrated in Figure 7 below DTT costs increase non-linearly with the coverage. Figure 7 considers the full DTT coverage costs, the DTT costs for an increase in coverage from 70% to 100% and the costs of an alternative platform such as DTH.60

FIGURE 7: CHART SHOWING COVERAGE COSTS OF DTT/DTH IN EUROPE 61

In essence various digital television platforms exist with different characteristics that make some more appropriate depending upon policy objectives. A broad statement can be made that where a country is extensively dependent upon analogue terrestrial broadcasting, DTT has been selected as the primary platform. This choice is not based upon economics, but primarily a policy preference for terrestrial networks because of familiarity and the ability to exercise more control over local content. There are other policy reasons, a good

60 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005)

61 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) p.17

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example, is that the UK which already had an extensive analogue terrestrial broadcasting network, selected a full roll-out of DTT to the extent that coverage matches the existing analogue terrestrial coverage and no dependency upon satellite for universal coverage is planned for. This decision was based on the fact that:

Full availability was required - some households would not be able to received DTH (for topographical reasons or legal restrictions on the erection of satellite dishes in some areas);

Consumer costs – DTT premise equipment is cheaper than DTH; Equity – the costs of migration are the same for all consumers

irrespective of geographic area; and Communication – facilitates market communication if all households can

receive DTT.

In contrast where a country has a higher penetration of cable or satellite broadcasting services, DTT has not been selected as the primary platform for digital broadcasting. For example, in Germany where there has historically been a greater penetration of cable and satellite broadcasting services (terrestrial analogue only accounted for 7% of the market) the decision was made that a mix of platforms would collectively contribute to digital television services. At switch-off in Germany, DTT is expected to be available in most urban areas with the remaining areas being dependent upon alternative platforms.

Early DTT ventures in Europe suffered from government policy that specified an unviable pay-tv business model, imposition of high coverage obligations on commercial broadcasters and technical specifications leading to expensive STBs. These issues have been addressed by recent regulatory developments:

in most countries the choice of the business model is either left up to the industry or policymakers have selected a FTA business model;

regulators still expect widespread DTT coverage of the PSB channels, but coverage obligations for commercial broadcasters have either been reduced or lifted altogether; and

despite continued interest in the ICT potential of digital TV and the MHP standard, policymakers no longer impose specific services or standards on the market.

Exceptions to this general regulatory trend do exist. France, for example imposes a hybrid business model combining FTA channels with pay channels and it plans to mandate the use of the Multimedia Home Platform (MHP)62 standard. Also policymakers in that country have selected the MPEG-4 standard for Pay TV services.

The primary policy objective for migrating to digital broadcasting in most countries is spectrum efficiency and pluralism. The move to digital broadcasting will lead to a recovery of frequency spectrum (the so-called “digital dividend”) as digital broadcasting is more spectrum efficient than analogue broadcasting. It is

62 MHP is an open middleware system for interactive digital TV that was originally developed by the DVB Project. Since it has been adopted by a number of countries

all over the world for future interactive TV broadcasts. The MHP standard enables the reception and execution of interactive, Java-based applications on a TV-set.

Applications can be delivered over the broadcast channel, together with audio and video streams. These applications can be for example information services, games,

interactive voting, e-mail, sms or shopping. For all interactive applications an additional return channel is needed.

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more efficient because more channels can be broadcast on a single frequency and there is less interference leading to the frequency planning of single frequency networks (SFNs), rather than multi frequency networks (MFNs). Most countries also see the availability of more channels than in the analogue regime as a way of facilitating TV pluralism. The secondary policy objective is that interactivity and better service quality are considered to be key consumer benefits of DTT.63

Differences do exist between countries on the expectations from interactivity. Countries such as Finland, Italy, Austria and Poland emphasise sophisticated applications, including e-government, based on the MHP standard, whereas other countries such as Denmark and Latvia focus on advanced teletext, EPG, sign language and other similar services.

An analysis of the introduction of DTT in Europe would seem to indicate that interactivity is not a key driver of DTT demand; instead it would appear that the key driver is a FTA multi-channel offering that sparks consumer DTT demand. In fact DTT take-up has accelerated in countries where DTT has offered a bouquet of channels that has significantly increased the number of FTA channels available. This has been the case in the UK and Sweden and particularly in Germany (Berlin) where the original objective of 20 channels has already been exceeded and 27 channels are being offered. In contrast take-up of advanced STBs that enable high-end interactive services or have conditional access facilities has been extremely limited unless driven by specific factors. For example, in Finland the MHP standard has been promoted to assist ICT development objectives; however sale of MHP compatible STBs only accounts for 5% of STBs sold in the market. In Italy where the government selected to subsidise STBs, the majority are MHP compatible.

Various licensing regimes exist in Europe and mostly there is no clear distinction in most regimes between a broadcast license (content related) and the granting of the right to radio frequency use:

In the UK different types of organisations (broadcasters, network operators, etc) are assigned frequencies for digital broadcasting transmission networks. Broadcasters may then obtain separate content licences from Ofcom to operate on the networks. In this case there is a clear separation between a content licence and frequency rights.

In France the regulator selects individual channels via a beauty contest for inclusion on a digital broadcasting transmission network using frequencies. An association of broadcasters on each network then selects the signal distributor. In this case the content licence and frequency rights are intertwined.

In other countries, such as Italy and Spain, the frequencies for digital broadcasting are assigned to individual broadcasters. Once again this means that the content licence and the frequency rights are again intertwined.

63 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) pp.17-21

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Beauty contests have been the most common mechanism for assigning frequencies used for introducing DTT. Some exceptions do exist, such as Italy where all broadcasters that had a national analogue terrestrial broadcast frequency were offered the opportunity to migrate to individual DTT networks enabling them to each offer multi-channel broadcasting services64, this enabled the trading of broadcasting spectrum in order to facilitate the creation of further national TV broadcasting networks. In many countries, although not all, frequencies are assigned to the broadcasters. Criteria used in assigning frequencies are usually financial viability, content offering (pluralism), population coverage and technical capabilities.65

In the United Kingdom, the DTT television licensing value chain (see Figure 8 below) is divided into content (channels), Multiplex Operator and Network operator. The multiplex operator is a new category of licence, which may be awarded to an existing broadcaster, a network operator or even a new entrant. The UK also introduced a per channel licensing regime that was aimed at existing channels of broadcasters and new broadcasters. In South Africa, the definition of broadcasting service appears to be broad enough to capture both the UK multiplex operator and channel licensing categories.

FIGURE 8: DTT VALUE CHAIN IN THE UK66

Berlin, Germany, established itself as being the model for a rapid digital switchover and analogue switch-off. It is therefore interesting to note that the DTT licensing value chain (see Figure 9), in contrast to the approach in the UK, did not create a new licensing category for multiplexing nor did it follow a channel licensing regime, instead it followed an approach of licensing each major broadcaster to provide a multi-channel broadcasting service and created scope

64 It should be noted that to ensure pluralism when assigning DTT networks to existing analogue terrestrial broadcasters, Italy did impose a requirement that 40% of the

capacity of a commercial multi-channel broadcasting service had to be used by third-party broadcasters.

65 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) pp.21-30

66 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) Annexe A.1

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for new entrants as channels on other digital broadcasting transmission networks that were not licensed to any of the major broadcasters.

FIGURE 9: DTT VALUE CHAIN IN BERLIN67

Both multi-channel broadcasting service and per channel licensing regimes are common in Europe, the selection is dependent upon how each country decided to approach the question of ensuring pluralism. Securing pluralism in France and Sweden has been done by per channel licensing enabling the regulator to have control over the content offered on each channel. In other countries per channel licensing was seen as being over-regulation, which could inhibit the successful introduction of DTT and increase the regulatory costs of monitoring compliance. In those jurisdictions other regulatory instruments were used to secure pluralism, namely:

Licence commitments – in the UK multi-channel broadcasting licence applications made commitments in terms of the content to be offered and Ofcom refers back to these as part of the license conditions;

Reserving DTT capacity for the public service broadcaster (PSB) – in some countries, such as the Netherlands, the reservation of spectrum for the PSB which has specific content obligations was seen as a way to ensure pluralism; and

Specific rules to ensure a number of broadcasters – ownership and control rules (e.g. UK and Italy) limiting the number of television licenses a broadcaster can hold and rules specific to multi-channel broadcasting services such as Italy where 40% of a commercial DTT network of frequencies must be reserved for third-party broadcasters.

A common feature of most of the licensing regimes was the imposition of restrictions on the use of the capacity of the digital broadcasting transmission network. These restrictions were primarily aimed at ensuring that a minimum amount of television content is broadcast with the remaining capacity used by EPGs, radio, teletext, etc. An analysis of jurisdictions showed that the minimum

67 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) Annexe A.5

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restriction for non-television broadcast was 10% of the capacity and the maximum was 20% of the capacity.68

RECOMMENDATIONS:

The WG makes the following recommendations, namely that:1. if South Africa adopts a hybrid (DTT/DTH) platform approach in South Africa it

must ensure that from the perspective of urban and rural consumers the costs of migrating must be the same, irrespective if the consumer is on a DTT or DTH platform. Essentially, this means that if a broadcaster elects to meet the existing coverage obligations in its licence by means of DTH for economic reasons, the broadcaster must then subsidise the difference between the DTT and DTH consumer premise equipment (receiving antenna/dish), so that from the consumer’s perspective they have incurred no additional cost by being on the DTH platform as opposed to the DTT platform;

2. the existing analogue services must be transitioned across to a digital in accordance with the licence currently held (i.e. FTA, subscription), but the ability to include a pay-tv or pay-per-view offering should be left open to the individual broadcaster when introducing new programming services; and

3. the licensing regime should exchange the basket of existing frequency rights being surrendered by an incumbent analogue national television broadcaster for at least sufficient frequencies to create a single national digital broadcasting transmission network, subject to the requirement that a percentage of the channels on such a commercial broadcasting service must be reserved for third-party channels (e.g. government information or e-government services or community TV) to ensure pluralism69.

DISSENTING VIEWS:

Sentech oppose recommendation 2 and propose that instead normal licensing processes should be followed where a broadcaster intends offering services not falling within in its current broadcasting licence.

M-Net and Orbicom, in relation to recommendation 2, support the view that the existing analogue services must be transitioned across to a digital in accordance with the licence currently held (i.e. FTA, subscription), and that the ability to include a pay-tv, pay-per-view and/or FTA offering should be left open to the individual broadcaster when introducing new programming services. Based on fair competition it should not only be the preserve of FTA broadcasters to decide whether or not to introduce pay services, subscription broadcasters should also be able to decide whether to introduce FTA services.

Sentech has placed on record its dissenting view to recommendation 3, namely that in a digital environment, frequencies must be assigned to the Electronic Communication Network Service licensee instead of the broadcaster. The assignment of frequencies to

68 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) p.54-57

69 A requirement that a percentage of the capacity of the multi-channel broadcasting service and digital broadcasting transmission networks be reserved for government

or community TV channels will promote pluralism and encourage the independent production of South African content.

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broadcasters in a digital environment will inhibit the process of migration and the freeing up of spectrum, which is a scarce resource.

Orbicom shares the Sentech view on recommendation 3, namely that frequencies should be assigned to the Electronic Communication Network Service licensee instead of the broadcaster in a digital environment.

c) Roles of different stakeholders

In most jurisdictions in Europe, the PSB has been singled out to be the champion of DTT and drive take-up of DTT through content promotion. Similarly, commercial broadcasting has a role to play in content promotion on the DTT platform. All successful implementations of DTT have required an extensive communication campaign as consumers are unaware of the value of DTT and need information benefits of technology, technical issues (coverage, STBs, etc), presence of digital offerings and precise switch-on and switch-off dates. DTT requires that a range of stakeholders need to be brought together. This includes policy makers, regulators, content providers, network owners, etc. A study of DTT roll-out in Europe shows that market education and co-operation between a varied group of stakeholders requires an enabling organisation to direct the roll-out of DTT. In some cases government together with stakeholders have formed independent organisations to co-ordinate the switchover to digital TV, such as Digital UK. These bodies generally have three main tasks:

To communicate with the public about digital switchover and switch-off to ensure that everybody knows what is happening, what they need to do and when;

To liaise with TV equipment manufacturers, retailers, digital platform operators and consumer groups to ensure understanding of and support for the digital migration programme and standards;

To co-ordinate and monitor the technical roll-out of DTT, region by region, to a timetable determined by government.70

RECOMMENDATION:

The WG recommends that government form an independent, non-profit organisation to co-ordinate and monitor the roll-out of digital broadcasting (radio and television) in South Africa, jointly funded by government and industry. The board of this body should comprise representatives nominated from government, the broadcasting (radio and television stakeholders) sector and consumer bodies.

70 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

Analysys, 2005) pp.44-50

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d) Incentives for broadcasters and broadcasting signal distributors

The switchover of the incumbent analogue broadcasters to digital is not necessarily in their interest as it imposes more competition (risk of lower advertising revenues in face of fragmenting audiences) and potentially higher transmission costs where a period of dual illumination is required. Therefore, incumbent broadcasters just like consumers require incentives to migrate to DTT.

There have been one or two jurisdictions in Europe that experimented with the idea of treating DTT as a new licensing process based on beauty competition without giving preference to incumbents in the broadcasting market. It makes sense that consumers will not migrate from analogue to digital unless there are new channels, but an interesting fact is that the most watched channels on DTT in Europe remain those of the previous analogue terrestrial broadcasters. Those jurisdictions that did not accord preferential treatment to the incumbents have demonstrated that the roll-out of DTT cannot succeed if the content from the incumbent broadcasters is not included in the DTT platform.

In Europe there is a tendency to give the public service broadcasters a significant stake in DTT in order for them to face competition and promote the take-up of DTT by the public. In most of the countries looked at in Europe, with the exception of Spain, public service broadcasters have been awarded at least one digital terrestrial network of frequencies on the DTT platform.

The main resistance to change in Europe tends to be from the commercial broadcasters as they require a viable business plan before they are prepared to migrate. In Europe, member countries have attempted to provide incentives to commercial broadcasters in ways, which are consistent with European Community law. Incentives, which have been given, include the following:

A significant stake in DTT by awarding multiple channels or frequency networks on the DTT platform, example Mediaset in Italy, as it helps commercial broadcasters to retain share of viewers and advertising revenues. Where incumbent commercial broadcasters do not have a significant stake they opposed the development of DTT. Of course the award of frequency networks frequencies must be balanced against policy considerations such as fair access to spectrum by all users and the need for pluralism;

Must carry obligations have been put in place in some countries to ensure that terrestrial broadcasters have to be carried on alternative platforms, however this may place an undue burden on cable and satellite if approached incorrectly. In South Africa, there is already a must carry provision in the ECA and no amendment is required;

Lower transmission costs, as DTT is cheaper per channel than analogue;

Subsidies for broadcasters can facilitate rapid adoption of DTT, as in Berlin where transmission costs were subsidised by government.

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However, such subsidies are controversial and have raised competition concerns in Germany and other countries.

Allowing FTA DTT incumbents an opportunity to compete against alternative platforms such as cable and DTH pay offerings. The UK for example revised its stance that FTA DTT could not offer pay services in addition to FTA broadcasting services.

However, an observation of the European market did make it clear that there is no single answer or approach to incentives, as the appropriate incentive or mix of incentives used depends upon the dynamics of the broadcasting market of each country and the value of the DTT commercial opportunity.71

Broadcasting signal distribution is a key component of a successful switchover to digital transmission and existing signal distributors in South Africa will need to be accommodated and incentivised. In Europe, governments have subsidised the roll-out of infrastructure by signal distributors in order to accelerate in some cases the speed at which switchover (e.g. Berlin) takes place.

RECOMMENDATIONS:

The WG makes the following recommendations, namely that:1. government should consider implementing a mix of incentives (preferential

treatment in terms of access to frequencies for the purposes of initiating digital transmissions, reductions in licence fees, lowering of SA content requirements for additional digital broadcasting services offered by existing broadcasters, signal distribution subsidies or lower tariffs, etc), appropriate to South Africa, to facilitate the switchover to digital broadcasting by television broadcasters and broadcasting signal distributors; and

2. incentives should also be considered to assist existing television broadcasters to retain viewers during the switchover; and

3. consideration should be given to the use of contributions made to the Universal Service and Access Fund to be used to promote roll-out of DTT by subsidising STBs.

e) Key factors influencing market take-up

The following key factors have been identified in Europe as impacting on the successful take-up of DTT:

Attractive offering – the DTT platform must provide viewers with tangible benefits at an affordable cost. This of course differs from country to country, but is dependent upon three things, namely content that is not already available in terms of quality and quantity; technology improvements in sound and picture; and the total cost of the platform (including once-off costs such as the STB).

71 However, while there may be debate on the mix of incentives, there is no debate on the fact that they are needed. In Spain the lack of incentives for commercial

broadcasters has led to a slow-down in the process of digital migration in that country.

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Low-cost and widely available STBs – this is dependent on market conditions, including business model, subsidies and technology developments.

Strong communication – clear market communications are essential for take-up and are only possible where a clear and stable regulatory regime is in place.

Co-operation – the success of DTT requires the co-operation between stakeholders.72

5.3.2 Policy and Licensing of Digital Sound Broadcasting in Europe

The WG considered a benchmark of coverage, technology, services offerings, licensing and regulation of Digital Sound Broadcasting in Europe (table below) Although significant differences exist in the policy and licensing approaches followed in Europe the following commonalities could be established.

(a) License Period

The capital costs of deploying new DAB transmitter networks and the fact that it takes approximately between five and seven to recoup the associated capital means that a longer license period is required to encourage investment and to sustain Digital Sound Broadcasting services. The Southern African Digital Broadcasting Association (SADIBA) drawing on the analysis of the licensing approaches in the EU further recommends incentives such as, long-term term licences, an administrative licensing and renewal process on “beauty contest” basis and limiting license fees to an administration fees.

(b) Programme Content

DAB Digital Radio enables the delivery of exciting new stations, both audio and data. The data services can be either “stand-alone” or related to audio content. All of these provide the potential for a true multimedia listening experience via DAB Digital Radio. While the laws regarding delivery of data services vary substantially across the EU, data and multimedia services are generally accepted as one of the major advances that can be delivered by DAB. Based on an analysis of the licensing approaches followed the SADIBA recommends that existing and new services including audio, video and data services be accommodated. Commercial services be introduced first as stimulus for receiver sales. Public services can subsequently be considered as frequency capacity is released in Band III.

(c) Bit-rate of Audio Services

The technology of DAB packages a finite number of kilobits into audio and data services on a multiplex. It is possible to broadcast 10 or 11 audio stations on one multiplex, but only if legislation permits them to be carried at lower bit-rates.

72 Analysys. Public Policy Treatment of digital terrestrial television (DTT) in communications markets. Final Report for the European Commission (Madrid:

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Across Europe, there are differing views as to how many kilobits per second are required to broadcast music effectively. In some countries, the level is 256 kilobits per second, but if this is applied across the multiplex, then a maximum of only four audio stations can be carried. This may not leave room for new stations, and denies DAB Digital Radio listeners the increased choice they should expect when they invest in new receivers. In other countries, such as the UK, stereo music is broadcast using 128 kilobits per second, with an acceptable result. All that is needed is careful consideration of the content, and degree of audio processing applied. The advent of more advanced audio coding techniques will impact on this matter and significant benefits in terms of capacity utilization would be gained if South Africa adopt an approach were the new coding and compression technologies would be implemented.

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Country Coverage Technology Number and Nature of services Licensing Regulation

UK 85% population coverage DAB and

IP TV

(BT Movio)

٭ 422 national, regional and local Public and

commercial services

٭ Mostly simulating with analogue services,

234 only available on DAB

٭ Multiplex licences awarded on a “beauty contest.

٭ Existing analogue with a DAB licences have their

existing analogue licences extended for an

additional eight years

٭ DAB licences are awarded for 12 years with

automatic renewal for a further 12 years

٭ Commercial and public operators may carry

broadcast data services

٭ The PBS , is governed by a Royal Charter

and Agreement, new stations need

Government approval.

٭ The commercial sector is regulated Ofcom.

٭ Limits on bit-rate data content.

٭ New regulatory framework aim to lift data

limits and self regulation of bit-rate limits

٭ Must carry obligations for the commercial

multiplexes .

٭ The national commercial operator required to

promote DAB

France Approx. 15% population

coverage (2 multiplexes in

Paris and and 1 in Lyon)

DAB. 12 regional public and commercial services.

There are also Motorway Radio services in certain

areas.

DAB licences duration is 10 years ٭ No coverage requirements

٭ Data and audiovisual communication services

allowed

٭ Licences issued free of charge

٭ French music and new artistes Quota

٭ Analogue rules on advertising and

sponsorship will apply to digital radio

Germany 82% DAB coverage DAB and DMB.. ٭ 422 public and commercial services on a

national, regional and local basis

٭ Most are simulcasts of FM stations, but

there are an increasing number of DAB only

channels.

٭ Data services broadcasting news and travel

information are also available in many

areas.

٭ Network operators are granted frequency allocation

for 15 years

٭ State licences run for between four and eight years

٭ 80 % state population coverage is required within

three years of licence issue

٭ The federal government licenses network

operators and regulates frequency and

spectrum

٭ Broadcast programme providers are regulated

by the states.

٭ Analogue switch off is targeted between

2010 and 2015

٭ No defined data limits buy up to 20% of

multiplex capacity is normal

Network operators required to promote DAB Digital

Radio

Policy and Licensing of Digital Sound Broadcasting in Europe Source: http://www.worlddab.org/

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5.3.3 Existing Digital Broadcasting Satellite Model in South Africa

Currently, the only digital broadcasting services (excluding, alternative platforms such as 3G used for digital broadcasting) available commercially in South Africa are those operated on satellite platforms using the DVB-S standard. These digital broadcasting services operated under a deemed permission to continue until ICASA either refused or granted an application for a licence in terms of section 4 of the Broadcasting Act prior to the commencement of the ECA. In terms of the transitional provisions in the ECA this “permission to continue” remains in effect until ICASA has dealt with the licence applications made by these broadcasting services. Section 4(3) of the Broadcasting Act provided that any licensed broadcasting service who provided a service consisting of more than one channel may not include a channel in such a service unless ICASA had authorised the channel. Section 4(4) then required ICASA to prescribe the procedure and the appropriate conditions for the authorisation of channels. These provisions on authorisation of channels were technology, platform and service agnostic, in other words in practice they did not distinguish between analogue or digital, they did not distinguish between terrestrial or satellite and they did not distinguish between FTA and subscription.

ICASA dealt with the requirement to prescribe a procedure for the authorisation of channels in the Subscription Broadcasting Regulations, 2006, but in terms of section 4(4) prior to the commencement of the ECA they could also have made this procedure applicable to FTA channels as provided by on the Vivid satellite platform operated by Sentech. Section 4 has been repealed in its entirety by the ECA, but the Subscription Regulations remain in effect and the ability for ICASA to continue with this regulatory approach is consistent with the ECA.

The satellite digital broadcasting value and licensing chain which commenced in terms of the previous licensing regime set out in the Broadcasting Act and the IBA Act and which is now being continued in terms of the ECA is set out in Figure 10 below. Local and Foreign channels are authorised by ICASA for carriage on the broadcaster’s bouquet offering to audience and/or subscribers and the broadcaster is licensed to package television or radio programme services for reception by the public, sections of the public or subscribers. In some cases the technical activity of multiplexing73 is performed by the broadcaster and in other cases by the broadcasting signal distributor. However as the technical activity in terms of combining channels, EPG and CA does not fall within the legal definition of broadcasting service or broadcasting signal distribution (Electronic Communication Network Service) this can be dealt with as commercial decision to keep in-house, place with the broadcasting signal distributor or even outsource to a third party. Although, it should be kept in mind that inclusion of data services and even the EPG may require an Electronic Communications Service licence unless an exemption is granted by ICASA in terms of section 6 of the ECA. Once the multiplexing activity is completed the content is handed over to the broadcasting signal distributor in its final form for distribution on an electronic communications network. In terms of previous legislation and now the ECA, the Electronic Communications Network Service (broadcasting signal distribution) aspect of the value chain would require a licence. In terms of the ECA both the broadcasting service and the electronic communications

73 Multiplexing has been defined by the ITU-R as being “A reversible process for assembling signals from separate sources into a single composite signal for

transmission over a common transmission channel. This process is equivalent to dividing the common channel into distinct channels for transmitting independent signals

in the same direction”. Recommendation ITU-R V.662-3 (2000) – Ap. 2, 71(3.11)

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network service licensees are required to apply for the radio frequency spectrum licence on which the service is offered/carried.

FIGURE 10: SATELLITE DIGITAL BROADCASTING VALUE CHAIN AND LICENSING

The reason for highlighting this value and licensing chain is that it does provide a working multi-channel model of Digital Broadcasting in South Africa as regulated by ICASA and operated by Sentech, MultiChoice and any new subscription broadcasting services that will be entering the market in response to the Invitation to Apply (ITA) for satellite and cable subscription broadcasting licenses issued by ICASA in 2006. In addition, as the ICASA Subscription Broadcasting Regulations, 2006, were drafted in a technologically neutral fashion it is also the model that would be applied to the licensing and regulation of subscription broadcasting services operating on a digital terrestrial platform.

5.3.4 New Legislative Framework and Digital Broadcasting Licensing

One of the issues which the WG had to consider is whether the ECA74 will be able to cater for the transition from analogue to digital broadcasting. The focus in this regard has mainly been on DTT and DAB-T, as the process for digital broadcasting on satellite and cable has been made clear by ICASA in the position paper and regulations on subscription broadcasting.

The ECA establishes a framework for regulatory intervention to promote South Africa’s national policy objectives for the electronic communications industry and seeks to provide a generic set of regulatory provisions based on generic definitions of market and service activities and services. Critical objectives in this regard touched upon in section 2 of the ECA which have to be kept in mind when ICASA conducts licensing processes are, amongst others:

74 The Act commenced on 19 July 2006.

Local and Foreign

Channels

Broadcasting Service

Set-topbox

( Viewer /Listener)

Digital Satellite

Delivery Network

Authorisation Process followed for adding channels to bouquet offering

Broadcasting Service Licence required for the packaging of television or radio programme services for reception by public, sections of public or subscribers

CA and SMS are not subject to licensing or regulation. EPG/Data, unless exempted, may require electronic communication service licence.

Broadcasting signal distribution (Electronic Communication Network Service licence)

STB not subject to licensing or regulation

Channel 1

Channel 2

Channel n

EPG

CA & SMS

Technical activity of multiplexing

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to promote and facilitate convergence of telecommunications, broadcasting, information technologies;

to promote and facilitate the development of interoperable and interconnected electronic networks, the provision of services contemplated in the Act and to create a technologically neutral licensing framework (own emphasis added);

to encourage investment and innovation in the communications sector; to ensure efficient use of the radio frequency spectrum; and provide access to broadcasting signal distribution for broadcasting and

encourage the development of multi-channel distribution systems in the broadcasting framework;".

The licensing provisions under the ECA were designed to allow flexibility with respect to licensing structures as the licensing requirements vary over time with the evolution of the electronic communications industry. The intention behind this legislation is that as the industry evolves towards convergence, licences under the ECA should be formulated to be both technology and service neutral. The idea was that a licensing regime, similar to the Malaysian model, should allow a licensee to undertake activities that are market specific without being bound to platform as convergence facilitates delivery via multiple delivery platforms (e.g. terrestrial frequencies, satellite, fixed line, broadband cable and wireless broadband). This creates opportunities for expansion into the industry and provides for a more effective utilisation of network infrastructure.

Under the ECA, there are four categories of licensable activities:

Electronic Communication Network Services – this is the making available whether by sale, lease or otherwise of an electronic communications network which would consist of electronic communication network facilities such as satellite earth stations, broadband fibre optic cables, telecommunications lines and exchanges, radio communications transmission equipment, mobile communications base stations and broadcasting transmission towers and equipment. These facilities are the fundamental building block of the convergence model upon which electronic communication services and broadcasting services are provided.

Electronic Communication Services – is any service provided which consists of the conveyance of electronic communications over an electronic communications network, excluding broadcasting services. This would most likely capture services that provide particular functions such as voice services, data services and content-based (excluding broadcasting) services to end-users.

Broadcasting Services – which is any service which consists of broadcasting (unidirectional electronic communications to the public) and which service is conveyed by means of an electronic communications network.

Radio Frequency Spectrum – which is a licence aimed at authorising the user to use radio frequency spectrum. To the extent that any service licence mentioned above entails the use of radio frequency spectrum, a radio frequency spectrum licence is required in addition to the service licence.

Within the licensable activity categories of electronic communication network services, electronic communication services and broadcasting services, there are two key types of licences:– i) individual licences which allows close monitoring and control of activities; and ii) class licence which is a “light-handed’ form of regulation which is designed to promote industry growth and development by removing unnecessary regulatory barriers. Standard licence conditions apply to both individual and class licence and these

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conditions are set out in Chapter 3 of the ECA although ICASA is empowered to add these standard terms through regulations. Special or additional licence conditions may be imposed. Unlike an individual licence, a class licence merely requires registration, which is an administrative process. In terms of section 6 of the ECA, ICASA has the ability to exempt certain electronic communication networks, electronic communication services and radio frequency spectrum from requiring licensing or registration.

In keeping with the spirit and intention of the ECA to create a technologically neutral licensing framework it is proposed that in approaching the licensing of broadcasting services in South Africa, ICASA should issue individual and class broadcasting service licenses that are not bound to a specific delivery platform. Such an approach would preclude the possibility of ICASA having to licence the same operators over and over again in a converged environment each time the operator offers their broadcasting service on a new delivery platform.

In considering the licensing of DTT Broadcasting Services and Digital Audio Broadcasting Services (Terrestrial) in terms of the ECA the following components of the digital broadcasting value chain that may be dealt with have been identified:

Authorisation of channels Broadcasting Services; Multiplexing Broadcasting Signal Distribution; Radio Frequency Spectrum; and STB (see Figure 8 for the ECA compliant Broadcasting Licensing Model and

Value Chain).

(a) Authorisation of Channels75

In respect of channel authorisation, ICASA has already put in place platform neutral regulations for the authorisation of channels (local or foreign) for subscription broadcasters. This was done in part to meet the requirements of section 4(4) of the Broadcasting Act, which has subsequently been repealed by the ECA. These regulations, however, remain in effect in terms of section 95 of the ECA and consequently any subscription broadcasting services offered on DTT (DVB-T/H standard) and / or Digital Terrestrial Radio (T-DAB, T-DMB, DRM standards) would have to follow the channel authorisation process prescribed in the ICASA Subscription Broadcasting Regulations, 2006.76

However, ICASA did not at the time it dealt with subscription broadcasting prescribe the procedure and the appropriate conditions for the authorisation of channels carried by a FTA broadcaster. The WG holds the view that there is no requirement that the authorisation process for FTA broadcasting be the same as for subscription broadcasting. In fact ICASA itself in the Subscription Broadcasting Position Paper, when dealing with the question of Open Windows, stated that it has “…decided that there is the need for a clear regulatory distinction between FTA broadcasting and subscription broadcasting”.77

75 In terms of the ECA a “channel” means a single defined programming service of a broadcasting service licensee. It is clear therefore that a channel is not a

broadcasting service licensee, but a programming service carried by such a licensee.

76 There is no need to amend the ECA to reflect a similar provision to the one which was repealed in the Broadcasting Act, as both Chapter 2 and 3 of the ECA create

sufficient scope for ICASA to prescribe such regulations in terms of the broad regulatory powers given on licensing matters.

77 Independent Communications Authority of South Africa. Subscription Broadcasting Services: Position Paper (Johannesburg: ICASA, 2005) p.66

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This sentiment was repeated in the Position Paper with even more clarity, in regard to limitations on ownership and control, where it was stated that:

“The limitations are, however, more justifiable when imposed on terrestrial FTA broadcasting services. The Authority’s Triple Inquiry Report proposed that subscription broadcasting services should be more lightly regulated than terrestrial FTA broadcasting services. Although the proposals were made in relation to the imposition of South African content quotas, the same argument could be made for the regulation of subscription broadcasting services in general. The distinction between FTA broadcasting services and subscription broadcasting services is an important distinction.”78

This statement clearly indicates that terrestrial FTA broadcasting services should have a higher level of regulation than subscription broadcasting.

RECOMMENDATION:

The WG therefore makes the following recommendations, namely that:1. ICASA conduct an inquiry to determine how many channels the market can

sustain rather than simply introduce channels based on the technical capacity of the terrestrial digital transmission networks.

2. ICASA consider two options, the first being authorising channels in the same manner that it does for subscription broadcasting services and the second being to develop regulations for the authorisation of any terrestrial broadcasting services which attract advertising, in a manner that puts in place a more rigorous procedure than the procedure in place for cable and satellite subscription broadcasting.

DISSENTING VIEW:

M-net and Orbicom expressed a slightly different view on recommendations 1 and 2 above. It was pointed out that section 60(4) of the ECA already articulates a policy on advertising carried by subscription broadcasting services and that ICASA already has conducted an inquiry on subscription broadcasting, which resulted in a technological neutral approach to subscription broadcasting services. It is therefore suggested, that the market study and the regulations contemplated above be limited to FTA broadcasting services on the terrestrial digital broadcasting platform.

78 Id. pp. 70-71

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(b) Broadcasting Services

The following definitions in the ECA and the related legislation are relevant when considering Broadcasting Services.

A broadcaster is defined as follows in the Broadcasting Act:

“broadcaster” means any legal or natural person who composes or packages television or radio programme services for reception by the public or sections of the public or subscribers to such a service irrespective of technology used;”

This definition of a broadcaster is very clear and technology neutral and is very applicable to a digital broadcasting environment where broadcasters either compose or package channels for multi-channel broadcasting. The definition of broadcaster introduces the concept of television and radio programme services, which may be defined by ICASA in more detail in regulations once the process of digital switchover commences. However, it is interesting to note that the ECA defines a channel as follows:

‘‘channel’’ means a single defined programming service of a broadcasting services licensee;”

The implication of this definition is that it appears a broadcasting service licensee may have a number of channels that consist of defined programming services, whether television or radio. Once again this is a definition that appears to be technologically neutral and can be applied to a digital multi-channel broadcasting environment.

It is necessary from the preceding definitions to also consider what constitutes a broadcasting service that will need to be licensed in terms of chapter 3 of the ECA:

‘‘broadcasting service’’ means any service which consists of broadcasting and which service is conveyed by means of an electronic communications network, but does not include—(a) a service which provides no more than data or text, whether with or without associated still images;(b) a service in which the provision of audio-visual material or audio material is incidental to the provision of that service, or (c) a service or a class of service, which the Authority may prescribe as not falling within this definition;”

Once again the definition is technology neutral and will remain applicable in a digital broadcasting environment. It is also interesting to note that a datacasting service, namely data or text, would not fall within the broadcasting service licence and would require either a separate electronic communications service licence or perhaps a blanket exemption for broadcasting services from applying for an electronic communications service licence in terms of section 6 of the ECA based on, perhaps, a specific capacity limit.

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This need for a separate electronic communications service licence is also highlighted when one considers other definitions which are core to the provision of a broadcasting service. The act of broadcasting, for example, is defined as follows in the ECA:

‘‘broadcasting’’ means any form of unidirectional electronic communications intended for reception by—(a) the public;(b) sections of the public; or(c) subscribers to any broadcasting service,whether conveyed by means of radio frequency spectrum or any electronic communications network or any combination thereof, and ‘‘broadcast’’ is construed accordingly;”

Essentially this means that broadcasting is limited to unidirectional electronic communications, this means that bi-directional electronic communications would not be captured by the definition. Electronic communications, in contrast, is defined in the ECA as being:

‘‘electronic communications’’ means the emission, transmission or reception of information, including without limitation, voice, sound, data, text, video, animation, visual images, moving images and pictures, signals or a combination thereof by means of magnetism, radio or other electromagnetic waves, optical, electro-magnetic systems or any agency of a like nature, whether with or without the aid of tangible conduct, but does not include content service;”

So to the extent that a service being provided by a broadcaster to the public, sections of the public or subscribers does not fall within the definitions of broadcasting and broadcasting service, but does fall within the definition of electronic communication it would constitute an electronic communications service, as defined in the ECA:

‘‘electronic communications service’’ means any service provided to the public, sections of the public, the State, or the subscribers to such service, which consists wholly or mainly of the conveyance by any means of electronic communications over an electronic communications network, but excludes broadcasting services;”

The WG has formed the view that no amendment of the ECA is required in respect of the licensing of multi-channel broadcasting services, as the ECA already contemplates a situation where a broadcasting service can consist of multiple programming services known as channels.

In respect of digital television, where unlike digital radio a switchover process is contemplated, it is acknowledged that existing broadcasting licensees have acquired rights to use the analogue frequencies assigned to them in their licences, and that digital switchover will require these television broadcasting services to surrender these analogue frequencies licensed to them by ICASA. A change of this nature and scope will require that the existing television broadcasting service licenses are either amended or converted on no less favourable terms. This essentially means that when the basket of analogue frequencies currently possessed by incumbents is surrendered to ICASA, the individual broadcaster should at very least have enough frequencies assigned to

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it for provision of one national digital network.79 If for example, two existing broadcasters were migrated across as channels on the same digital network it would not be considered to be favourable terms as there would be a loss of brand identity and a lack of frequency rights normally associated with such brand.

RECOMMENDATIONS:

The WG makes the following recommendations, namely that:1. When migrating television broadcasting service licensees from analogue

transmission networks to digital transmission networks, each licensee should be left, after it surrenders its analogue frequencies to ICASA; with at least sufficient frequencies to establish a single digital transmission network with similar coverage to its existing analogue broadcasting service;

2. in terms of practical implementation, ICASA can deal with television broadcasting licensees’ rights and obligations as providers of digital terrestrial broadcasting services when converting their licences in terms of section 93 of the ECA to technology neutral broadcasting service licences and ICASA may also have to amend the individual broadcasting service licences to deal with any transitional arrangements (e.g. surrender of analogue frequency spectrum at switch-off) pertaining to the digital migration; and

3. ICASA should conduct an inquiry into Digital Broadcasting to provide urgent guidance on the licensing of FTA digital radio: - in Band III and L-Band using T-DAB, T-DMB, - in MF bands using DRM, and - on alternative broadcasting platforms, such as satellite.

DISSENTING VIEW:

Sentech has placed on record its dissenting view to recommendations 1 and 2 above, namely that in a digital environment, frequencies must be assigned to the Electronic Communication Network Service licensee instead of the broadcaster. The assignment of frequencies to broadcasters in a digital environment will inhibit the process of migration and the freeing up of spectrum which is a scarce resource. Sentech has reserved its rights in regards to legal interpretations of the ECA made by the WG throughout this report.

Orbicom shares the Sentech view that frequencies should be assigned to the Electronic Communication Network Service licensee instead of the broadcaster in a digital environment. However, Orbicom expressed no views on the interpretation of the ECA in this regard.

79 The ECA provided that when converting licences ICASA could not include monopoly or exclusionary rights, however it was made clear in section 93(8) that radio

frequency spectrum for the purposes of this sub-section was not to be considered a monopoly or exclusionary right. In other words ICASA when converting licences in

terms of the ECA can not deprive any licensee of their existing rights to radio frequency spectrum.

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c) Multiplexing and STBs

The activity of multiplexing in the context of digital broadcasting can be described as the combining of multiple television and/or sound programming services and data streams together with an embedded EPG, CA and SMS into a single complex signal that can be handed over to the network operator for the purposes of transportation to the viewer/listener. It is helpful to examine this activity and the STBs against the background of the South African regulatory environment. ICASA in the Subscription Broadcasting Position Paper stated:

“The Authority has decided to follow international best practice principle of technological neutrality. The Authority has also decided not to regulate API, EPG and SMS. The Authority will also not mandate a CA standard for broadcasting platforms.

The Authority is aware of the need to be flexible and to have policy and regulations that, while protecting the consumer, allow innovation and creativity to flourish and business to grow by, amongst other things, not implementing rules and procedures which may inhibit as yet unforeseen developments. The Authority would, however, like to encourage interoperability of the STBs and also encourage the industry to work together in finding ways to develop standards that permit different CA systems to inter-operate on the same broadcasting platform, without compromising the commercial integrity of broadcasting operations.”80

It is clear from this statement that ICASA would prefer that the industry adopt a self-regulatory approach to developing standards for STBs and multiplexing to encourage the ability to interoperate on the same platform. It is also clear that those aspects of multiplexing that involve the inclusion of embedded data streams would not fall under the broadcasting service licence, but would require an electronic communications service licence.

Datacasting is a transmission mode that allows broadcasters to deliver information in a variety of formats to digital television sets and computers. Broadcasting Services that choose to datacast will be able to send information either alone or in conjunction with audio or video transmissions. The information transmitted could be, amongst others, stock quotations, sports statistics, government information, weather updates, information to accompany video programming, and educational materials to be used with instructional programming, among other possibilities. Datacasting also makes interactive television feasible. Viewers can engage with programming that is pushed at them in the traditional fashion, but also with information content that they can pull out of the digital transmission.

Datacasting can also serve a variety of government and public interest needs as local government often has information that can be delivered by means of datacasting to the benefit of citizens. Datacasting of public interest information should not impose an undue compliance burden on broadcasting services as such information does not consume much bandwidth, it could amount to less than 1% of the frequency spectrum allocated to a broadcasting service for use as a digital broadcasting multiplex.

80 Id, p.71

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In the United Kingdom (UK) the legislative context for data limits are set out in the Broadcasting Act 1996. In the UK, digital terrestrial television (DTT) services, are transmitted on DTT multiplexes. These multiplexes are licensed by Ofcom under the Broadcasting Act 1996 or, in the case of multiplex 1, granted by the Government to the BBC. The multiplexes licensed by Ofcom are subject to a ‘data limit’ - in essence no more than 10% can be used for non-TV services. The policy purpose of data limits are to ensure that DTT multiplexes are used mostly for television, and are not taken over by data distribution or other communications services. Parliament in the UK saw this as an important principle, and one that also applies (though with different limits and definitions) to digital radio multiplexes. In the Radio Review published in October 2005,Ofcom suggested that the data limit applied to radio multiplexes could be relaxed somewhat to encourage innovation and competition in digital broadcasting. In April 2006 the Department for Culture, Media & Sport (DCMS) published a consultation paper which considered raising this limit from +20% to 30%. Ofcom in June 2006 started a similar consultation to provide guidance on data limits currently applied to DTT multiplexes.81

In the UK, the legislation reserves at least 90% of the capacity on each of the multiplexes licensed by Ofcom for specific types of programme services. At present these are defined to include:

qualifying services - Channel 3, Channel 4, Channel 5 and S4C. Note that for the purposes of section 12 of the 1996 Act, qualifying services do not include the digital public teletext service;

digital television programme services - these are services consisting wholly or mainly of images capable of being seen as moving pictures (“normal” TV channels), either licensed by Ofcom under a Digital Television Programme Service (DTPS) licence, or provided by a broadcaster with an equivalent authorisation from another EU Member State, or provided by the BBC under the Charter. They do not include qualifying services or the digital public teletext service. The definition of DTPS also includes subtitling and audio-description services, promotion and listing of the DTPS and other services which are ancillary and directly related to the DTPS. Examples of such services are interactive and explanatory material associated with a programme, for example material accessed through the ‘red button’. Such material can be of all kinds – text, still images and graphics as well as moving pictures and sound - and may be available for a period before and after the broadcast programme service. In this case it may be accessed via a more generic interactive menu rather than the ‘red button’ whilst the programme is broadcast. However, it must still be directly related to the contents of the programme;

digital sound programme services provided by the BBC - The legislation sets out that BBC radio services are included in the 90%, but commercial radio services are not;

programme-related services - are ‘ancillary and directly related to’ a programme service. Promotion and listing of programme services includes the provision of EPG, which are a critical part of the digital television experience. The availability of an EPG is a key benefit which viewers gain from the switch to a digital service. The information needed

81 Office of Communications [UK]. Data limits on Digital Terrestrial Television Multiplexes – Consultation on Draft Guidance (London: Ofcom, June 2006) pp.3-5

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to populate the EPG is thus considered as a programme-related service rather than as “data”;82 and

relevant technical services – these are data streams used for encryption purposes and associated with conditional access services.83

Services that cannot be included in the 90% are:

the public teletext service; interactive services, for example games, which are not directly related to

a licensed programme service or its listing or promotion; any service which is licensed as a Digital Television Additional Service

unless it is a programme-related service; any service which consists exclusively of advertising, even if it is directly

related to the contents of a shopping channel for example; and any technical service that is not a relevant technical service.84

The WG hold the view that the policy principle that frequencies are reserved for television and radio broadcasting services usage is a sound one, as it precludes the frequency network on which a broadcasting service is based from changing from a broadcasting primary focus to a communication service and/or data distribution primary focus to the detriment of the public interest broadcasting objectives government is seeking to achieve. In view of the review on data limits taking place in the UK, the WG proposes that a 20% data limit be imposed on frequencies used for DTT and digital radio transmission networks and that Broadcasting Service licensees be exempted in terms of section 6(1)(a) of the ECA from having to apply for a separate Electronic Communication Service Licence for such services as they are not a primary service on the digital television or radio broadcasting service. It is proposed that in line with the UK case study, broadcasters be responsible for the monitoring of the compliance with data limits and that ICASA conduct random audits from time to time to verify the accuracy of the broadcaster’s reports. It is further proposed that Digital Television Channels and Programmes, Digital Sound Broadcasting Channels and programmes, Programmes related services and Relevant Technical Services should not be included in the calculation of the data limit (see Figure 11 for a diagram setting out the proposal visually).

82 In the UK each DTT multiplex carries its own EPG information, but also cross-carries that for the other multiplexes. This is an effective way to ensure that all

viewers, whichever multiplex they are watching, receive EPG information about the whole DTT services. The whole of the cross-carried EPG information should is

considered as programme-related services rather than as “data”.

83 DTT multiplexes carry a number of streams of data to allow the management of the multiplex. These include Service Information (SI), Programme Specific

Information (PSI) and Packet Identifiers (PIDs). All of these are invisible to end-users and perform a purely technical function in allowing the component programme

streams multiplexed together to be unpacked and delivered to the user. The multiplex could not exist without these data streams. Together they represent some hundreds

of kbps on each multiplex. Ofcom proposes to ignore the SI, PSI and PID data streams when determining the basis for the percentage calculation of the data limit.

84 Office of Communications [UK]. Data limits on Digital Terrestrial Television Multiplexes – Consultation on Draft Guidance (London: Ofcom, June 2006) p.6

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FIGURE 11: SERVICES WHICH DO NOT FORM PART OF THE DATA LIMIT

[Adapted from a figure in Office of Communications [UK]. Data limits on Digital Terrestrial Television Multiplexes – Consultation on Draft Guidance (London: Ofcom, June 2006)]

RECOMMENDATIONS:

The WG notes that the current definition of broadcasting in the ECA only contemplates the unidirectional provision of broadcasting services, interactive and data services (e.g. EPG) provided in the content stream of a broadcasting service would therefore constitute an electronic communication service for the purposes of the Act. It is recommended that broadcasters either be required to hold an electronic communication service licence or that ICASA issues an exemption for broadcasting services from the requirement to hold an electronic communication service licence in terms of section 6 of the ECA.

(d) Broadcasting Signal Distribution

In examining broadcasting signal distribution and multi-channel signal distribution, it is important to note that the ECA attempts to be technology neutral, and accordingly provides for the licensing of all platforms. This is particularly evident in Chapter 3, which deals with the licensing framework and provides for the licensing of an electronic communications network service. The ECA defines such as service as follows:

‘‘electronic communications network service’’ means a service whereby a person makes available an electronic communications network, whether by sale, lease or otherwise—(a) for that person’s own use for the provision of an electronic communications service or broadcasting service;

Services not

included in the

data limit

Digital Television Channels

and Programme

s

Digital Sound

Broadcasting Channels

and programmes

TV Programmes

Ancillary Services

Assistance for persons with disabilities, e.g. Subtitling and/or audio-description services

Services ancillary to or directly related to programmes, e.g. interactive and explanatory material (text, images or video) associated with a programme

Sound Programmes

Ancillary Services

Programme related

services

Promotion or list of programme

Electronic Programme Guide and related services

Relevant Technical services

Data streams related to

encryption or decryption of

service

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(b) to another person for that other person’s use in the provision of an electronic communications service or broadcasting service; or(c) for resale to an electronic communications service licensee, broadcasting service licensee or any other service contemplated by this Act, and ‘‘network services’’ is construed accordingly;”

The above definition must of course be examined against the background of the definition of an electronic communications network in the ECA, which states that an:

‘‘electronic communications network’’ means any system of electronic communications facilities (excluding subscriber equipment), including without limitation—(a) satellite systems;(b) fixed systems (circuit- and packet-switched);(c) mobile systems;(d) fibre optic cables (undersea and land-based);(e) electricity cable systems (to the extent used for electronic communications services); and(f) other transmission systems, used for conveyance of electronic communications; (our own emphasis)

.It is clear from the foregoing definitions that an electronic communications network service is no more or less than infrastructure and use of the infrastructure to convey electronic communications and/or broadcasting. However, despite the chapter 3 approach to technological neutral licensing, it is noteworthy that broadcasting signal distribution and multi-channel distribution have been singled out in the ECA as a ring-fenced area of electronic communications networks.

Bearing in mind of course that as ring-fenced area they cannot be broader than the definition of electronic communications network services and must be interpreted within the confines of the broader legal definition of electronic communication network services as set out in the ECA. The ECA defines broadcasting signal distribution as follows:

"the process whereby the output signal of a broadcasting service is taken from the point of origin, being the point where such signal is made available in its final content format, from where it is conveyed, to any broadcast target area, by means of electronic communications and includes multi-channel distribution;".

It is fairly clear from this definition that broadcasting signal distribution commences at the point that the broadcasting service makes available the signal for conveyance in its final content format. Although this definition includes multi-channel distribution, the ECA also provides a definition of a multi-channel distribution service which is defined as

"a broadcasting signal distribution service that provides broadcasting signal distribution for more than one channel at the same time on the same signal, and "multi-channel distributor’’ is construed accordingly" (emphasis added).

It is the view of the WG that there is nothing in the ECA that would preclude electronic communication network service licensees from providing a broadcasting signal distribution service or implementing multi-channel distribution for broadcasting services, and consequently there would be no requirement to amend the ECA in this regard. There may, however, be a need for ICASA to

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amend existing licences with respect to imposing conditions specific to the roll-out of digital broadcasting transmission networks as per a phased strategy set out in a national strategy for digital switchover.

There has been much debate about the terms “multiplexing” and “multiplexes” which are used in Europe and how these concepts fit in with the electronic communication network service licence. There is no definition of these two terms in the ECA and there are no licence categories in the ECA for these terms. However, the following meaning can be assigned to “multiplex” by reference to the Digital Broadcasting Frequency Plan submitted by South Africa to the ITU for RRC-06. In this plan the four multiplexes (2 national and two metropolitan networks) are understood to be the individual networks of frequencies reserved for ensuring the digital broadcasting of television programmes. In other words, in the South African context, a “multiplex” can be considered to be the network of frequencies required for a national digital broadcasting service or metropolitan digital broadcasting service and the relevant licence that would be required for such a network of frequencies would be a radio frequency spectrum licence. In terms of the ECA both the broadcasting service licensee and the electronic communications network service licensee are required to hold this licence. Broadcasters have recognised that there is a dissenting view,85 but are of the view that the current situation in the ECA should be seen as an acceptable compromise.

It is the view of the WG, that a broadcasting service is the organisation who would be responsible for assembling and presenting all the programme services that feed the transmitters of a signal distribution services. In order to feed the transmitters in a digital broadcasting environment the broadcasting service must provide the content, through the activity of multiplexing, either as MPEG_2 or MPEG-4 compressed video and audio in a multi-programme Transport Stream, with sub-titling, text services, application data and SI information data86 for transmission by the network service. The WG hold the view that this activity of multiplexing is part of the practical implementation of broadcasting and does not require specific mention in any licence category. The above principle holds true for digital television and radio, it is interesting to note that in the case of the digital radio standard Digital Radio Mondiale (DRM) there is no multiplexing as only a single channel is carried.

85 Sentech is not in agreement with such view. According to Sentech, a broadcasting service licensee may not provide a broadcasting service utilising any portion of the

radio frequency spectrum without first obtaining a radio frequency spectrum licence in terms of the ECA, only if it is self-providing a broadcasting signal distribution

function under its Electronic Communication Network Service license.

86 Service Information data, as specified by ETSI. Embedded data provided in a transmission to enable the receiver to find and decode all the services.

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RECOMMENDATION:

The WG makes the following recommendations, namely that:1. the decision of either retaining the technical activity of multiplexing in the

broadcasting service or outsourcing it to the electronic communications network service be left to the commercial decision of the individual broadcaster; and

2. competition should be promoted to the extent that it is feasible to do so in the area of DTT and Digital Radio broadcasting signal distribution.

DISSENTING VIEW:

Sentech expressed a dissenting view to recommendation 2, namely that the two national networks of frequencies submitted to the ITU during RRC-06 should both be assigned to Sentech even though Orbicom is an Electronic Communication Network Service licensee (currently providing broadcasting signal distribution). There is a definition of common carrier in the ECA that relates to Electronic Communication Network Services. The ECA does not abolish the common carrier status of Sentech. However, the ECA makes the common carrier status non-exclusive. Sentech’s insistence on maintaining exclusivity on common carrier is only restricted to the smooth migration from analogue to digital, paying particular emphasis to Public Broadcasting Services.

Orbicom has supported Sentech on the dissenting view that frequencies should be assigned to a Electronic Communication Network Service licensee, rather than a broadcasting service in a digital environment. Orbicom further holds the view that any preferential licensing of frequencies for Sentech as requested above should be restricted to the two national digital broadcasting transmission networks planned for at RRC-06 and that the licensing of frequencies for any other digital broadcasting transmission networks should recognise the fact that Sentech is not the only Electronic Communication Network Service licensee currently providing a broadcasting signal distribution service in South Africa. Orbicom currently transmits signal for M-net, with the exception of High sites, for which only Sentech had the right to transmit signals under the previous legislation.

(e) Radio Frequency Spectrum.

Section 30 of the ECA deals with the control of radio frequency spectrum and it provides that:

"(1) In carrying out its functions under this Act and the related legislation, the Authority controls, plans, administers and manages the use and licensing of the radio frequency spectrum except as provided for in section 34.(2) In controlling, planning, administering, managing and licensing the use of the radio frequency spectrum, the Authority must – (a) comply with the applicable standards and requirements of the ITU and its Radio Regulations, as agreed to or adopted by the Republic;(b) take into account modes of transmission and efficient utilisation of the radio frequency spectrum, including allowing shared use of radio frequency spectrum when interference can be eliminated or reduced to acceptable levels as determined by the Authority;

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(c) give high priority to applications for radio frequency spectrum where the applicant proposes to utilise digital electronic communications facilities for the provision of broadcasting services, electronic communications services, electronic communications network services, and other services licensed in terms of this Act or provided in terms of a licence exemption;(d) plan for the conversion of analogue uses of the radio frequency spectrum to digital, including the migration to digital broadcasting in the Authority’s preparation and modification of the radio frequency spectrum plan; and (e) . . .". (emphasis added)

It is the view of the WG that this section read together with section 34 of the ECA, which deals with the national radio frequency plan, clearly indicates the specific intention of the legislature that ECA should cater in its provisions for the switchover from analogue to digital terrestrial broadcasting. In terms of the powers delegated to ICASA in Chapter 5 of the ECA there is no obstacle to digital switchover.

In regards to the licensing of radio frequency spectrum an interesting situation arises. Section 63(3) of the ECA provides that:

"A broadcasting service licensee may not provide a broadcasting service utilising any portion of the radio frequency spectrum without first obtaining a radio frequency spectrum licence in terms of this Act." This appears to be very clear that the broadcasting service must in addition to its broadcasting service licence also be a holder of a radio frequency spectrum licence. There has been some debate about whether section 63(3) applies only to cases of self-provision based on inclusion of the heading into an interpretation of the provision. However, the first viewpoint is supported by section 31(2) of the ECA, where it states that:

“A radio frequency spectrum licence is required in addition to any service licence contemplated in Chapter 3, where the provision of such service entails the use of radio frequency spectrum.

However, a complication is that in section 31(1) of the ECA it also states:

". . . no person may transmit any signal by radio . . . except under and in accordance with a radio frequency spectrum licence granted by the Authority to such a person in terms of this Act."

This leads to a situation where both the broadcasting service and the broadcasting signal distributor or electronic communications network service licensee will be assigned the rights to the same frequency. Although on first viewing there appears to be a conflict, this is not necessarily the case if one interprets these provisions in conformity with the objects of the Act.

The WG hold the view that what this means in practice is that when a broadcaster makes an application for a broadcasting service licence the application must also include a radio frequency spectrum licence application containing details of the frequencies which are being applied for and an indication of who will be providing the signal distribution. ICASA would then issue the radio frequency spectrum licence to both the broadcasting service and the electronic communications network service.

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RECOMMENDATION:

The WG recommends that:1. when ICASA prepares the radio frequency plan, which must take place within 12

months of the ECA commencing, it incorporates the decisions taken at ITU RRC-06 with regards to the planning of frequencies for digital switchover; and

2. No amendment is required to the ECA in regard to the licensing of radio frequency spectrum.

DISSENTING VIEWS:

Sentech has placed on record its dissenting view to recommendations in this report that are similar to recommendation 2 above, namely that in a digital environment, frequencies must be assigned to the Electronic Communication Network Service licensee instead of the broadcaster. The assignment of frequencies to broadcasters in a digital environment will inhibit the process of migration and the freeing up of spectrum which is a scarce resource. Sentech’s interpretation of section 63(3) of the ECA is different to what is contained and understood by some members of the WG. A broadcasting service licensee can utilise the services of an electronic communication network service for the transmission of its content. ECA enables broadcasting service licensees to self provide an electronic communications network service upon obtaining the relevant licence. A broadcaster which utilises another entity for the provision of broadcasting signal distribution does not need the radio frequency spectrum to be assigned to it as required in section 63(3.). Section 31 (2) is open to different interpretations. Sentech’s interpretation is that in a digital environment frequencies must be assigned to the Electronic Communication Network Service Licensee.

The broadcasters view is that according to the ECA, broadcasters are entitled to broadcasting services and frequency spectrum licences87. Both interpretations might be correct. Clarity should be sought by the Department of Communications and ICASA. Sentech is of the view that the Minister of Communications is empowered to issue policy directions to remedy the situation of two conflicting interpretations. According to Section 3 of ECA the Minister is entitled to make policy direction on matters of National policies applicable to the ICT Sector, in relation to, among others, (3) (a) Radio Frequency Spectrum, (3) (d) application of new technologies pertaining to electronic communication services, broadcasting services and electronic communication network services. Section 3 (1) (a) and (d), empower the Minister to give direction in order to achieve the smooth process of migration from analogue to digital broadcasting television.

Orbicom shares the Sentech view that frequencies should be assigned to the Electronic Communication Network Service licensee instead of the broadcaster in a digital environment. Orbicom has expressed no views on the interpretation of the ECA in this regard.

87 As a point of clarity it should be noted that the view of the WG is that in fact the ECA requires the broadcaster (broadcasting service) and its broadcasting signal

distributor (electronic communication network service) to hold the same radio frequency spectrum licence. This compromise in the legislation results in prejudice to

neither party.

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FIGURE 12: ECA COMPLIANT DTT LICENSING AND VALUE CHAIN MODEL

Legend =

Broadcasting Service

Authorisation Process followed for adding channels to bouquet offering by a broadcasting service. Current ICASA Subscription Broadcasting Regulations 2006 provide an example of approach

Broadcasting Service Licence required for the packaging of television or radio programme services for reception by public, sections of public or subscribers.

Electronic Communication Service Licence required for EPG/Data services, unless exemption granted by ICASA.

Combining of the multiple television or sound programming channels, data streams, together with an embedded EPG, CA and SMS into a single complex signal for the purposes of transportation by a carrier or network. Currently, multiplexing is not a licensable or regulated activity

STB not subject to licensing or regulation

Channel 1

Channel 2

Channel n

Datacasting

EPG

Terrestrial Delivery Network

Set-top Box

(Audience)

Multiplexing Local and Foreign Channels

Electronic Communication Network Service Licence required for broadcasting signal distribution.

Radio Frequency Spectrum Licence

ECA requires both licensees to hold the spectrum licence

Licensable or regulated activities

Current non-regulated areas of value chain

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5.4 APPROACHES TO NEW BROADCASTING SERVICES, ICT ACTIVITY AND BROADCASTING ON NON-TRADITIONAL NETWORKS

The WG endeavoured to define what is meant by: New broadcasting services; ICT Activity; and Broadcasting on non-traditional networks.

New broadcasting services are seen by the WG as being a very broad term that can be used to refer to interactive or data services that have not been offered by broadcasters previously because of the limitations of analogue transmission or it can refer to new broadcasting services, utilising the terrestrial frequency spectrum, to broadcast to mobile or portable consumer devices (enabled cellular phones or PDAs) other than the traditional television set.

ICT activity within the traditional broadcasting spectrum was viewed by the WG as being activities other than broadcasting that utilise broadcasting frequencies for delivery networks, these could be wireless broadband or mobile telecommunication services.

Finally, the WG defined broadcasting on non-traditional networks to be broadcasting content made available primarily on telecommunications networks operating outside of the UHF/VHF Bands.

Services such as those defined above reflect the current technological trend towards convergence of services, devices or networks. The primary legislative vehicle for addressing convergence in South Africa is the ECA and this served as the primary tool used by the WG in approaching this subject matter. The WG also took specific note of the fact that one of the objects of the ECA pertaining specifically to licensing required the creation of a technologically neutral licensing framework.

5.4.1 New Broadcasting Services

There are two aspects to new broadcasting services, firstly those services which will be offered by either existing broadcasters or new service providers based on the degree of interactivity allowed on the digital platform and secondly, new broadcasting services that target mobile audiences not households.

Digital television has the potential to offer the following electronic services88: Interactive content – the ability by pushing the red button on the digital remote to

access interactive content from selected TV programmes; Shopping – digital television shopping sites which will allow electronic purchasing

over the television; Information services (Data) – weather, Johannesburg Stock Exchange, yellow

pages, news, Bus timetables, etc. Banking – online banking; Games – interactive games and quizzes; TV email – ability to send and receive email with personalised email address.

In terms of the ECA these services would not fall within the scope of the Broadcasting Service licence, as the definition of broadcasting service specifically excludes services

88 Please note that some of these services are dependent on the STB standard adopted.

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which provide no more than data or text whether with or without associated still images. These services for the purposes of the ECA fall within the definition of an electronic communications service and would require in terms of the law that the broadcasting service would also have to apply for an electronic communications service licence in addition to the broadcasting service licence they would hold in order to provide these additional services to their viewers.

The WG are of the view that this complicated licensing process is not reasonable and unduly burdensome when the primary purpose of the broadcasting service is to provide television programming services not electronic communication services. A far simpler process would be for ICASA, in terms of section 6 of the ECA, to exempt broadcasting service licensees from applying for an electronic communications service licence for the provision of additional services on digital multiplex (frequencies) that has been reserved for television. Bearing in mind, that the exemption from applying for a licence does not exempt such additional services from regulation it is further proposed that ICASA put in place a regulatory limit on the percentage of the digital multiplex (frequencies) capacity that can be used for non-broadcasting services.

Mobile broadcasting services using the DVB-H standard can broadcast to enabled mobile cellular phones, laptops, PDAs and television sets in moving vehicles (e.g. public transport) using the frequencies in the bands traditionally assigned to broadcasting services. The WG acknowledges that the primary market of mobile broadcasting services are not households, but rather mobile users, and the revenue model is subscription not advertising so the impact on existing broadcasters would not be significant. It was also noted that mobile broadcasting services would contribute to the status of South Africa when hosting the World Cup 2010. The nature of mobile broadcasting using DVB-H would seem to necessitate different regulatory treatment to traditional broadcasters.

It is important to note that Digital Radio (T-DAB according to Eureka 147) and Terrestrial Multimedia Broadcasting (T-DMB based on T-DAB) were designed for mobility and like DVB-H have the ability of delivering services to a variety of enabled devices. Radio has however always been a mobile service delivered to mobile users as opposed to households and the licensing procedure that extends rights to digital spectrum to existing licensees and new players is supported. A limit on the percentage (approximately 20%) of the digital radio multiplex (frequencies) capacity that can be used for non-broadcasting services would be sufficient in ensuring that the licensed services delivers the primary broadcast applications.

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RECOMMENDATIONS:

The WG makes the following recommendations:1. that ICASA exempt broadcasting service licensees from applying for electronic

communications service licences for additional non-broadcasting services offered on the digital transmission networks (television and radio);

2. that ICASA place a 20% limitation on such services in terms of the capacity of the digital broadcasting transmission network used to provide such additional services;

3. that ICASA should promote the licensing of mobile broadcasting services (on DVB-H, T-DMB, or other standards) before World Cup 2010;

4. that ICASA either conduct an inquiry on the appropriate mix of content regulation for mobile broadcasting services (television and radio) or exempt mobile broadcasting services (television and radio) from SA content regulation to promote the growth of these services. The exemption could be for a fixed period, for example for World Cup 2010 , within which ICASA could consider the appropriate mix of content regulation for mobile broadcasting taking into consideration that it is a complementary service to television broadcasting to the household; and

5. in the event that mobile broadcasting services were to attract advertising or be offered FTA they must be subject to the same market feasibility study as for the introduction of channels in DTT (Fixed/Portable).

M-net and Orbicom have suggested a different formulation for recommendation 5, namely “in the event that FTA mobile broadcasting services were to attract advertising, they must be subject to the same market feasibility study as for the introduction of channels on the two national digital transmission networks.” 89

5.4.2 ICT Activities within the traditional broadcasting spectrum The ECA is clear that it is the Minister who makes policy, in terms of section 3(1), on the radio frequency spectrum, the Republic’s obligations and undertakings under bilateral, multilateral or international treaties and conventions including technical standards and frequency matters. This is supported by a reading of section 34(1) and (2) in the ECA where it highlights the Ministers role in representing South Africa in the ITU and approving the national frequency plan developed by ICASA. In contrast ICASA’s role is spelt out as being controlling, planning, administering and managing the use and licensing of the radio frequency spectrum90. It is very clear that the role of developing a national spectrum policy resides with the Minister, despite the use of the word “may” in section 3(1). If the Minister did not exercise his or her right to make a national policy on frequency spectrum, it would result in ICASA determining national policy on frequency spectrum indirectly through the development of the national radio frequency plan and this could have never been the intention of the legislature when it clearly drew this distinction between the role of the Minister and ICASA in regard to radio frequency spectrum.

The WG, against this background, took the view that before the licensing of any “non-broadcasting” ICT activities within the broadcasting frequency bands can take place, a coherent national spectrum policy is required. This will need to set national priorities in respect of the various communication services, and then allocate spectrum to such services based on the ITU allocations for ITU Region 1.

89 ICASA has already done an inquiry on subscription broadcasting and advertising, there is no need therefore to extend the ambit of the market feasibility study in fashion

that captures subscription broadcasting and leads to duplication of effort.

90 See section 30(1) of the ECA.

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For example, the frequency band 470-790 MHz is exclusively allocated to the broadcasting service by the ITU. Therefore, no non-broadcasting services can be allocated in this band. At RRC-06 it was agreed that a plan entry could be used for non-broadcasting services so long as they cause no more interference than the digital broadcasting service plan entry using the same frequency, and that such non-broadcasting service is in accordance with the Table of Allocations contained in Article 5 of the ITU Radio Regulations. In order for ICASA to plan, manage and licence non-broadcasting services in the UHF/VHF Bands the Minister needs to issue a policy direction indicating that this is desirable and in line with national policy.

The frequency band 790-862 MHz is allocated to the fixed and broadcasting services, with equal rights. Therefore national policy must clearly spell out which of these services enjoys priority in this band as it is not possible for the two services to share spectrum in the same geographic area at the same time. In terms of the ITU Table of Allocations, no mobile services could be licensed in this band.

On 31 October 2006, ICASA gazetted its decision on the sharing of the frequency band 822-838 MHz (TV channels 65 & 66). In terms of its decision, ICASA will allocate the band 822 -838 MHz to non-broadcasting services on a secondary basis, and in accordance with the provisions of No 4.4 of the ITU Radio Regulations, which states:

“Administrations of the Member States shall not assign to a station any frequency in derogation of either the Table of Frequency Allocations in this Chapter or the other provisions of these Regulations, except on the express condition that such a station, when using such a frequency assignment, shall not cause harmful interference to, and shall not claim protection from harmful interference caused by, a station operating in accordance with the provisions of the Constitution, the Convention and these Regulations.”

In the South African digital frequency plan adopted at RRC06, there are 18 digital television broadcasting assignments in channel 65 and 20 assignments in channel 66. These include transmitter stations like Johannesburg, Nelspruit, Cape Town, Port Elizabeth, Durban North and many other significant transmitter stations. ICASA’s decision could, therefore, have adverse consequences for the switch-over from analogue to digital broadcasting in South Africa.Broadcasting transmitting stations, in some cases, employ an effective radiated power of 100 kilowatts or more, whilst mobile devices may only operate on a few milliwatts. This could mean that an adjacent or near adjacent broadcast frequency at high power could interfere with the CDMA2000 equipment, even though the out of band interference is in conformance with the prescribed ITU regulations. It is, therefore, important that good co-ordination (and effective policing) takes place between broadcasting and non-broadcasting services during implementation and operation of these services. The ITU World Radiocommunication Conference to be held in 2007 will consider studies on the suitability of the 800 MHz band for IMT-2000 (3G Mobile) systems. This means that in the very near future the following services could all be competing for the same portion of spectrum:

Analogue TV broadcasting (until the end of the transition period) Digital TV broadcasting FWA applications by USAL’s IMT-2000 mobile services

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Clearly, all of these services cannot co-exist in the same frequency band, and a national spectrum policy is therefore urgently required that will give priority to a particular service. The WG would propose that this priority should be for the introduction of DTT. Based on such a national policy ICASA would be in a position to plan for services in such a way that interference is avoided to other services planned in accordance with ITU RRC-06.

A national spectrum policy would have to be forward looking as most non-broadcasting services will not be able to enter the traditional broadcasting bands until the switch-off of existing analogue broadcasting services that will result in the surrender of that spectrum to ICASA and the so-called Digital Dividend. The frequencies planned at RRC-06 for the digital switchover phase in South Africa leading up to 2015 were based on what was available in the television frequency bands, rather than what was optimum for digital broadcasting and potentially non-broadcasting services. This means that after the implementation of the all digital frequency plan in 2015 there will need to be a re-planning exercise that will result in all terrestrial broadcasting services being assigned with new optimum frequencies to replace those that were used for the purposes of the digital switchover. This means that if a policy decision is taken to introduce non-broadcasting services in the traditional broadcasting bands prior to the second frequency migration, it will have financial impacts on such non-broadcasting services and will unduly complicate the planning of this frequency migration of digital broadcasting services.

RECOMMENDATIONS:

The WG makes the following recommendations, namely that:1. that the Minister issue a policy direction on national frequency spectrum policy to

guide ICASA in developing a national radio frequency plan; and2. that non-broadcasting services should not be introduced in the traditional

broadcasting frequency bands until analogue switch-off and the second frequency migration has taken place and ICASA has planned properly for their introduction in a manner that will not cause interference to digital broadcasting.

5.4.3 Broadcasting on non-traditional networks

Digital Broadcasting is broader than digital terrestrial broadcasting and can also be done via cable, satellite and in the converged context via broadband services operating on traditional telecommunications networks. The ECA, which was designed to address convergence of services, networks and devices, changed the definition of broadcasting service in a critical respect, namely the deletion of the concept of point-to-point services being excluded from the definition. The implication of this is that broadcasting on traditional telecommunications networks even where the connection between the subscriber and the service is point-to-point, such as in IPTV on a broadband connection (e.g. ADSL) or mobile television on a 3G connection may now fall within the definition of broadcasting and broadcasting service. Central to this understanding is an analysis of a number of key definitions in the ECA, namely:

broadcasting; electronic communications; broadcasting service; sound broadcasting service; and television broadcasting service.

This is a new situation created by the ECA as in previous broadcasting legislation, point-to-point and on-demand services were excluded from the definition of broadcasting service and such services operating on traditional telecommunications networks were either

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unlicensed or licensed in terms of the Telecommunications Act, which has subsequently been repealed.

What this means, is that from a legal perspective, the elements which are essential for a service to be deemed a broadcasting service in terms of the ECA are that the transmission of the signals is unidirectional (as per definition of term “broadcasting”), that the service is provided by means of an electronic communications network (whether this is done on the broadcasting service radio frequency bands as defined by the ITU is not really relevant for the definition of the term “broadcasting service”) and the nature of the content transmitted (definitions of television broadcasting service and sound broadcasting service and what is excluded from definition of broadcasting service). However, whether the transmission of the signals is on a point-to-multipoint basis or is taking place on-demand does not appear to be an essential requirement for exclusion from broadcasting anymore.

A critical policy question is whether government or ICASA want to license or regulate broadcasting services offered on broadband connections in South Africa. An obstacle that arises if the decision is not to licence or regulate such services is that the exemption powers given to ICASA do not contemplate a situation where the regulator would exempt a broadcasting service. A power is created in the definition of broadcasting service under section 1 of the ECA for ICASA to exclude a service or class of service from falling within the definition, but the exercise of this power should be approached carefully as it would mean that broadcasting regulation pertaining to codes of conduct and South African content would not apply to such services if they are deemed not to be broadcasting services.91 In other jurisdictions where these services are excluded from broadcasting on the basis of the wording of legislation, this matter is being hotly debated on the grounds that it creates regulatory anomalies that the services provide the same broadcast content, to virtually identical devices and compete directly with each other, but are being regulated differently by virtue of technology or frequency used.

RECOMMENDATION:

The WG recommends that ICASA conduct an inquiry before licensing new broadcasting services on non-traditional broadcasting networks or converting the licences of existing telecommunication licenses operating such services to assess whether such services fall within the definition of broadcasting service and if so establish a regulatory framework to inform such licensing or conversion or exclusion from the definition of broadcasting service.

5.5 IMPACT OF TRANSITION ON EXISTING BROADCASTING SERVICES AND PROTECTION OF RIGHTS

The WG was tasked with looking at the impact of transition on existing broadcasting services and the protection of the rights of existing broadcasting services.

5.5.1 Impact of Transition

In its economic model, the economics working group, among other issues, analysed the following:

The financial position of incumbents in the today’s broadcasting market

91 This would not mean that such a service if it is deemed not to be a broadcasting service would not be regulated in terms of content, as once declared not to be a

broadcasting service it would no longer be exempted from the application of the Film and Publications Act.

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the impact of digital terrestrial migration on the current market and its consequent effect on the achievement of national policy objectives as set out in the ECA.

Based on the economics group’s findings, the WG can already make various assumptions about the market:

In the absence of significant new revenue opportunities, there is little or no incentive for incumbents to migrate to digital;

The transitional period will not yield significant additional revenue for incumbent broadcasters. Their business will be adversely affected as costs increase while their revenues are fragmented among competing players in an environment where the total television advertising pool does not grow sufficiently to sustain their profitability;

Channels introduced by new players in the marketplace will enjoy all the benefits of the multi-channel digital environment while not carrying the burden of switchover; and

Incumbent broadcasters and broadcasting signal distributors will shoulder the burden of the digital switchover process and will feel the effect of higher costs. This may be aggravated by the length of the dual illumination period which will depend on the rate of take-up of STBs by the public which may in turn depend on pricing and subsidies. The public interest objectives of the legislation require universal service, connectivity for all and open and non-discriminatory access to communications. Switchover can happen only if the consumer access objectives of the legislation are met.

Under these circumstances, existing broadcasters and broadcasting signal distributors should be incentivised in digital terrestrial broadcasting policy – both during the switchover process and after analogue switch-off. To ensure the stability of the broadcasting industry, it is important that existing players continue to meet public interest objectives and that they remain viable enough to do so. Such incentives will assist existing broadcasters and broadcasting signal distributors in playing a constructive role in the implementation, marketing and rollout of the STBs and in encouraging members of the public to switch to digital. Such incentives could include, for example:

allocating frequencies to incumbent broadcasters and broadcasting signal distributors on a preferential basis for the purposes of providing existing and new channels;

limiting content obligations during dual illumination to the primary service (i.e. the existing analogue service and its digital counterpart); and

financial incentives, such as subsidies, tax breaks, reduced licence, fees, reduced Universal Service Fund contributions.

RECOMMENDATION:

The WG recommends that existing broadcasters and broadcasting signal distributors should be incentivised in digital terrestrial broadcasting policy – both during the switchover process and after analogue switch-off.

5.5.2 Protection of rights in transition

The WG submits that the protection of existing broadcasting and broadcasting signal distribution services during the initial stages of the digital switchover is critical to a smooth transition. When digital broadcasting is introduced in South Africa, it will take some time before we see the significant take up of these services by consumers. The reality of the South African market is that most consumers will not be able to afford the digital receiving

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equipment and will continue to utilise analogue terrestrial broadcasting services. In order to ensure a smooth transition to digital and minimal disruption to consumers, it is critical that all existing analogue broadcasting services and transmissions are maintained up to the date of analogue switch off.

Existing broadcasting and signal distribution licensees currently hold licences, which provide for both services and frequencies. The maintenance of these existing services would therefore extend to both the broadcasting services and the frequencies on which those services are offered. However, it is acknowledged that the maintenance of analogue services cannot continue indefinitely as this would defeat the purpose of migration. In the next phase of migration, existing broadcasters will start to roll out their digital services. This roll out will require broadcasters to offer their existing content offering and additional enhanced digital content. For the purposes of this roll out, broadcasters and broadcasting signal distributors must be granted access to additional digital spectrum to allow for the broadcast of both analogue and digital transmissions during the period, which is referred to as dual illumination. In addition, the WG recommends that existing broadcasters and broadcasting signal distributors are granted preferential rights to frequencies for the purposes of introducing enhanced digital services which are necessary to drive the take-up digital receivers by consumers.

Existing analogue transmissions must be protected from harmful interference by digital transmissions during the switchover period. The migration process will be very costly for broadcasters and it would not be advisable to require broadcasters to change the frequency of their analogue transmissions to accommodate new digital services while at the same time preparing for the switchover of their own services to digital. This would place unnecessary financial burdens on broadcasters and their broadcasting signal distributors.

The period of dual illumination will be very costly for broadcaster and will place severe limitations on the amount of frequency available for new services. For this reason, this period should not be unduly prolonged, taking into account the interests of both broadcasters and viewers. In order to achieve the spectrum efficiencies sought in the migration to digital, the switch off of analogue must be facilitated. However, analogue switch off is only advisable if consumers have adopted digital receivers to an extent sufficient to warrant switch off.

The national digital switchover strategy should also address the transitional provisions applicable to signal distributors. As with broadcasting services, the starting point of any discussion on transition should be the protection of existing rights guaranteed in a licence. The WG proposes that existing broadcasting signal distribution licensees are protected during transition and that their rights to switchover the provision of services in a digital environment are guaranteed.

RECOMMENDATION:The WG makes the following recommendations, namely that:1. the national digital switchover strategy must protect the rights of existing sound

broadcasting licensees to apply for digital radio licences and existing television broadcasters to switchover to digital broadcasting;

2. the protections for analogue frequencies from interference continue until the final phase of the migration process, which is analogue switch off or 2015 whichever comes first; and

3. the broadcasting signal distributors rights are protected during the switchover process.

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6. IMPLEMENTING DIGITAL BROADCASTING IN SOUTH AFRICA

There is worldwide race by countries to be at the cutting edge of digital change, the benefits of this race accrue to the market leaders rather than the followers. Although South Africa was among the last countries in Africa to introduce analogue television broadcasting, it took the first steps towards digital broadcasting in 1994 when Sentech complemented its C-Band analogue satellite broadcast linking network, used for the delivery of broadcast services to its terrestrial transmitter sites, with satellite linking in digital. At that time radio services were already being distributed by satellite and in digital. The first digital subscription broadcasting service in Africa was launched on satellite by MultiChoice with the launch of DStv in 1995. At the same time Sentech also started their satellite Ku-Band DTH service in analogue as Astra. In 1996 Sentech also started a satellite Business TV network, in digital. As digital decoders became cost effective, the Sentech Astra platform was converted to digital during 1998, and branded Vivid. This conversion heralded the first market driven switchover from analogue to digital in South Africa and Africa of a free access broadcasting service on a satellite platform.

Digital broadcasting can be achieved by migration to a variety of platforms and consumers can exercise their choice to migrate to any available licensed digital platform (see Figure 13). However, for the purposes of the digital switchover process, although monitoring of consumer take-up of digital broadcasting will need to include all platforms, the primary focus of transitioning the existing terrestrial television broadcasting households should be to the digital terrestrial television (DTT) platform.

FIGURE 13: DIGITAL BROADCASTING ON MULTIPLE PLATFORMS

Source: EBU Technical Review 2000: p.6

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6.1 OPTIONS FOR DIGITAL SWITCHOVER

Internationally, there are two streams to a digital switchover process. The first stream is a market driven-technological migration where a progressive replacement of analogue technology with the better digital technology is taking place. In the arena of broadcasting this market cable and satellite subscription broadcasters have driven driven technological migration globally. This migration has been facilitated by the fact that consumers of their services already have STB in the home and are used to paying for premium services. Another component of this stream are early adopters of digital FTA broadcasting once it is offered in the market. The second stream is a policy driven migration primarily focused on FTA terrestrial broadcasting services. The second migration stream is happening because governments are interested in achieving better use of spectrum and using released spectrum to drive new services. As a result, policy makers (i.e. Governments and/or regulators) are likely to accelerate the introduction of digital transmission, and to encourage digital reception penetration, in order to achieve a faster switch-off, especially for terrestrial television. Market players (broadcasters, network operators and consumers) do benefit from the switch to digital, so this switch is likely to happen under market forces, though at a moderate speed, which will be determined by transition and switching costs (like the upgrade of networks to support digital broadcasting or the equipment of every household with digital-compliant receivers). However, the possibility to switch-off as soon as possible which results in better spectrum efficiency would benefit entities that are not directly involved as players in the television market, like Governments, non-television spectrum users and society as a whole. This lack of incentive for digital switch-off in the market driven model is what leads to a policy driven migration with a firm switch-off date.

A study of digital switchover reflects that there are usually three phases of digital adoption:

In the first phase, some television viewers (subscribers to subscription broadcasting services) are being “digitised” by their service provider, who supplies them with digital decoders when they subscribe to a subscription broadcasting service92. Phase one, has occurred on satellite platforms in South Africa, but not in respect of terrestrial subscription broadcasting platforms

In a second phase, following the switch-on of digital FTA broadcasting services other consumers (early adopters) consider the characteristics and new services provided by FTA digital broadcasting services as sufficiently useful to justify purchase of the necessary equipment. In South Africa, based on STB affordability, this would be limited to only 2.7 million television households out of the total existing 7.2 million television households, however as this figure includes households who already have subscription broadcasting services (analogue and digital) there may be little incentive for early adoption of DTT.

In a third phase (which may also be taking place simultaneously with the second), a significant proportion of consumers (the reluctant) will remain indifferent to the new functionality offered by digital TV technology. They can only be migrated to digital reception within a planned policy framework. The situation requires an organised technological migration and a planned switch-off based on a change of infrastructure (including reception equipment), in contrast to the preceding two phases where the emphasis is put on a change of service with market forces driving the process (see Figure 14)93. In South Africa, approximately 4.4 million television households will not be able to afford a basic STB, at a projected retail

92 An example of phase one, is that in the United Kingdom, BSkyB turned off its analogue satellite service in September 2001. An intensive marketing campaign was

launched to remind analogue subscribers of the forthcoming change and the digital equipment was offered free of charge.

93 BIPE. 2002. Digital Switchover in Broadcasting. A BIPE Consulting Study for the European Commission (Directorate General Information Society. Brussels pp. 30-31

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price of R850 for 2008, and this will require government involvement in the form of subsidies and setting a firm switch-off date for analogue television broadcasting.

FIGURE 14: THREE PHASES OF DIGITAL ADOPTION94

PROPOSAL:

In the interests of achieving a swift digital switchover and freeing-up frequency spectrum for other uses, such as HDTV, during the switchover process, the WG would propose that the terrestrial subscription broadcasting service investigate options to switchover its existing subscribers to digital as rapidly as possible.

Similarly, it would be the right of any other commercial broadcasting service or the commercial division of the public broadcaster to do a digital switch-on and an analogue switch-off based on commercial and market-related reasons.

The WG would also propose that rather than government depending on a market-led phase for the adoption of FTA digital broadcasting in South Africa it consider implementing a policy driven migration approach to digital switchover from the switch-on of digital broadcasting in South Africa.

94 BIPE. 2002. Digital Switchover in Broadcasting. A BIPE Consulting Study for the European Commission (Directorate General Information Society. Brussels p.31

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The WG has identified the following options for the introduction of digital broadcasting in South Africa:

The Big Bang Approach – Government identifies a “hard target” date for the termination of analogue television transmissions and broadcasters continue analogue broadcasting up to that specific time/date and on that time/date switch-off analogue transmission and initiate digital television and radio broadcasting. An advantage is that if a three-year period is set it addresses the problems of digital radio being introduced in Band III prior to a 2015 switch-off. However, there are also tremendous disadvantages to such an approach, amongst others, firstly, it does not take into consideration consumer behaviour with the result that nobody may have purchased an STB at the point that analogue broadcasting services cease resulting in social upheaval; secondly it does not give broadcasters an opportunity to test the right mix of digital services or additional channels that will be attractive to the market prior to the switch-off of analogue television broadcasting services; thirdly it creates no scope for any new channels into the market until analogue television broadcasting switch-off occurs. This approach should be a last resort and only considered where there are no frequencies available to support dual illumination of existing analogue broadcasting services and introduction of new digital broadcasting services.

The Modified Big Bang Approach – The government identifies a “hard target” date for the termination of analogue television broadcasting transmissions, the existing broadcasters and broadcasting signal distributors are assigned frequencies which can be used to establish a digital broadcasting transmission network (in line with the ECA) or broadcasting services are carried as a channel by a digital multiplex operator (new licence category), licensed through a beauty competition (this would require the amendment of the ECA), while at the same time continuing to broadcast on their existing analogue frequencies up to a specific time/date and on that time/date switch-off analogue transmission and continue only with their digital broadcasting service. The advantage once again if a three year period is set is that it would address concerns of Digital Radio in Band III being implemented before 2015. It allows broadcasters to test digital broadcasting services and there is some scope for new channels. However, once again there are tremendous disadvantages to such an approach, amongst others, firstly, it does not take into consideration consumer behaviour with the result that a large proportion of households may not have a STB at the point that analogue television broadcasting services ceases resulting in social upheaval; secondly it does not consider technical problems which might ensue during the switch-off resulting in households being left without access to any television broadcasting services at a national level.

Market-led approach – this is where industry takes collective action or agreement on the implementation of digital broadcasting and manages the switchover from analogue to digital broadcasting as a market-led transition. The problem with this approach is that it is based on market decisions and ignores the important national role played by FTA television in a democracy. From a government perspective it might also delay the benefits that might accrue from a digital dividend when analogue television switch-off occurs by delaying such switch-off beyond 2015.

The Managed Switchover Approach – government establishes a national forum, comprising representatives from government, broadcasters, broadcasting signal distributors, manufacturing sector and the retail sector to manage and co-ordinate the switchover from analogue to digital broadcasting with switch-off occurring on a region by region basis in line with established criteria and a project plan. This

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approach would take into consideration consumer behaviour and manage the transition not on the basis of hard target national date, but according to a region-by-region timetable in accordance with acceptable levels of STB penetration in those areas. This is the approach preferred by the WG and which will be discussed in more detail in the following section.

RECOMMENDATION:

The WG recommends that South Africa follow a managed transition approach to digital switchover.

The Managed Switchover Approach will require that government issue a national strategy on the transition from analogue to digital broadcasting. The National Strategy should have the following objectives:

To provide guidance to broadcasters, signal distributors and producers on the adoption of new digital television and radio technology;

To promote the continued viability and growth of the South African broadcasting industry and independent production sector, and ensure that South African cultural objectives are maintained;

To provide specifically for the continued viability and growth of South African television and radio broadcasting industry and ensure that South African cultural and language diversity be maintained and presented in the digital broadcasting environment.

To encourage the production, broadcast and distribution of high quality South African programming services;

To ensure that South African viewers benefit from technological advances to the fullest possible extent; and

To facilitate the orderly and timely switchover to advanced digital television services.

The WG proposes that in approaching digital switchover it be divided into three distinct phases, namely:

Digital Switch-on : the introduction of digital broadcasting, involving the upgrading of the infrastructure and consumer awareness campaigns.

Digital switchover : the digital migration process, involving a gradual replacement of analogue broadcasting (transmission and reception) by digital broadcasting (transmission and reception).

Analogue switch-off : termination of analogue transmission which assumes the completion of the switchover process, so that it won’t occur, in principle, before almost all households can receive digital signals on their different receivers.

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FIGURE 15: THREE CONCEPTS TO DESCRIBE THE DIGITAL SWITCHOVER95

Analogue broadcastingDigital ReceptionAnalogue reception

2. Switchover

100%

Time

Penetration3. Analogue Switch-0ff

1. Digital Turn-on

6.2 ECONOMIC MODELING OF DIGITAL SWITCHOVER IN SOUTH AFRICA

The WG was tasked with building a business case for Digital Switchover, considering the economics, fiscal, consumer and social impacts. This entailed;

outlining cost factors, potential benefits and identifying economic risks and mitigating factors;

establishing mechanisms or options of funding mechanisms the digital migration process;

considering dynamics that would facilitate consumer access, network expansion and service provision;

identifying incentives and factors to stimulate demand and market uptake; and defining and assessing the current (and potential market)

The WG obtained the services of a consulting firm to conduct market and feasibility modelling in order to determine the economic viability of digital migration.

There was an assumption that digital switchover would involve a period of dual illumination of existing analogue services together with the introduction of new services. Based on this assumption three scenarios were developed for this dual illumination period:

A short defined dual illumination period which will begin in 2008 and terminate in 2010 to finalise the process prior to the World Cup;

A longer defined dual illumination period, which will begin in 2008 and possibly terminating in 2012;

A longer defined dual illumination period with a delayed start date of 2010 and terminating in 2015. The purpose of the delayed start date is to allow STB pricing to decline to more affordable levels to the benefit of government and consumers (see Appendix B: Economic Model and Report).

95 Adapted slightly from BIPE. 2002. Digital Switchover in Broadcasting. A BIPE Consulting Study for the European Commission (Directorate General Information

Society. Brussels p.17

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6.2.1 Scenario One

The WG based on economic modelling found that a short dual illumination period is costly for government as they must subsidise STBs for those households who cannot afford to adopt. Regardless of subsidisation strategy selected, these costs are large because they are brought forward (increasing the net present value [NPV] of the costs) and because the drop in STB costs have not been fully realised. From the broadcaster’s perspective, this approach is preferable because households will have adopted by 2010 regardless of the number of channels offered. This implies that broadcasters do not have to entice households to migrate by offering new channels and hence do not have to incur the additional costs associated with additional channels. A second benefit for broadcasters of a short dual illumination period is the reduction in transmission costs as broadcasters will incur both analogue and digital transmissions costs for a shorter period of time.

6.2.2 Scenario Two

The WG based on economic modelling found that a longer period of dual illumination reduces government subsidy costs to households who cannot afford STBs. Since broadcasters need to offer new channels to motivate consumers to adopt, broadcasters bear the burden of migrating those households who can afford the STB. Additional channels negatively impacts broadcasters as they incur additional content costs. Moreover, their advertising revenue will be split amongst more channels. A longer period of dual illumination also implies increased transmission costs.

6.2.3 Scenario Three

With the delayed approach, all households will have adopted by 2014, that is, within five years. The advantage of delaying the commencement of digital migration is that the STB price is reduced, which will naturally speed up the rate of adoption, with a reduced subsidy cost to government. A further advantage is that growing incomes will move households above the threshold. Furthermore, fewer channels need to be offered: even if the number of new channels is reduced to 5, all households will adopt by 2014. This is because the lower-priced STB will induce take-up, lowering the number of channels needed to get everyone to migrate. In terms of subsidy costs to households below the affordability threshold, this delayed approach is also preferable. The delayed approach appears to mitigate the negative impact of digital migration for both government and broadcasters.

Based on purely economic considerations scenario three appears to be the most attractive option. It will reduce costs to both government and consumers in respect of the STB in circumstances where using the latest technology (MPEG-4) would no longer be a barrier to entry. It also allows for some take-up by early adopters during the 2010 World Cup and has the advantage that DTT transmission networks would cover most of the country by the start date.

However, there are national policy objectives that need to be taken into consideration. In the event that the 2010 World Cup requires migration to start earlier, then Scenario 2 is preferable to Scenario 1 as it allows for some reduction in costs as well as providing for adequate time for all stakeholders to plan the rollout.

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RECOMMENDATION:

The WG notes that although scenario 3, which contemplates a longer defined dual illumination period commencing only in 2010 and terminating in 2015, appears to be a preferred option; in the event that the 2010 World Cup requires switch-on to start earlier, the WG is of the view that scenario 2 is the optimal scenario.

6.3 LICENSING AND SURRENDER OF ANALOGUE FREQUENCIES

The WG proposed, for a number of reasons, that digital sound broadcasting and digital television require two distinct policy approaches. In the case of digital television a switchover process is required from analogue to digital transmission networks with a firm switch-off date for the analogue transmissions, in the case of digital sound broadcasting a licensing process can commence where there are frequencies available.

6.3.1 Digital Radio

A key difference between digital television and digital radio is that there is no surrender of frequencies as there is currently no analogue switch-off envisaged for AM/FM frequency bands. The licensing process is thus a new licensing application that can be made by existing broadcasting services or new entrants to the market in terms of the provisions set out under the ECA. The digital radio broadcasting service would manage a bouquet of channel offerings and additional data/interactive services, the adding of any new channels to the service would require authorisation by ICASA. In order to encourage pluralism a percentage of the capacity of the digital transmission network should be reserved for the use of third party broadcasters.

The WG holds the view that ICASA should put in place a licensing regime that encourages analogue radio stations to broadcast as channels on digital transmission networks. In the United Kingdom, national analogue licences are automatically renewed if the licensee broadcasts a programming service on a digital broadcasting transmission network. ICASA should also consider mechanisms to ensure that applicants will behave in a way likely to ensure fair and effective competition in contracting with local radio stations or data services which wish to appear on the bouquet of the terrestrial digital sound broadcasting service.

RECOMMENDATION:

The WG recommends that the licensing of digital radio in Band III and L-Band should be done in a manner which does not derogate from the rights of existing radio frequency spectrum licensees in those bands.

6.3.2 Digital Television

The WG wish to point out that the introduction of DTT is a replacement of the current analogue broadcasting system and will necessitate the switch-off of analogue transmissions following a process of switchover from analogue to digital in the South African market. These digital transmissions can only be received by new digital TV sets

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(which have an integrated decoder) or on analogue TV sets equipped with an STB that can convert digital signals to analogue. In order to ensure that FTA television viewers without new digital TV sets or STB are not deprived of existing FTA signals the current analogue and new digital transmission systems will have to be broadcast in tandem for a period of years.

This has two implications; firstly that government should require a period of dual illumination so that existing FTA viewers are not deprived of television during the period of switchover, whilst acknowledging that at some point analogue transmission will have to be switched-off and secondly, that as DTT is a replacement technology and not a new licence category the digital switchover should respect the existing rights of broadcasters operating on a terrestrial platform. Furthermore, there will be an expectation from viewers that they will be able to receive the existing analogue programming of broadcasters when they transition to DTT or alternatively that they can expect to continue to receive existing programming services on the analogue terrestrial platform until switch-off.

In South Africa, the UHF/VHF Bands are close to spectrum saturation, which prompted ICASA to identify in the absence of a national strategy enough frequencies to allow the introduction of DTT. At ITU RRC-06 a plan was developed that allocated frequencies to two national terrestrial digital transmission networks and two metropolitan digital transmission networks. The WG proposes that these frequencies should be assigned to the main national terrestrial broadcasting services for the analogue/digital simulcast of their existing programming services and the introduction of new programming services to drive consumer take-up of digital broadcasting. The remaining frequencies for one metropolitan digital transmission network should be assigned through a public process to a new entrant in order to launch some additional broadcasting/multimedia services, after ICASA has conducted a market feasibility study to determine the impact of licensing a new entrant on the digital switchover process. In Australia, a decision was taken not to licence new entrants until the digital switchover process was completed. This step would lead to the rapid roll-out of digital broadcasting in South Africa. The existing broadcasters will be incentivised through a voluntary amendment of their licences to keep old installations and the old frequencies for analogue broadcasting in place until the analogue switch-off, while at the same time adding equipment for digital transmission and ensuring that the coverage area of digital transmission equates to that of the legacy analogue transmission. The amendment to the licences of existing broadcasting service licensees can make provision for the surrender of the analogue frequency rights at the time of analogue switch-off. A further financial incentive could be added that terrestrial broadcasters who switch to digital within 36 months of their licence being converted in the conversion process contemplated in the ECA to allow for digital broadcasting will not pay their annual licence fee for the use of terrestrial frequency for a period of six years.96

96 This financial incentive was adopted in Italy to drive a rapid roll-out of DTT within a period of four years. In South Africa, such a step is in line with section 5(7)(a)(iii) of

the ECA which indicates that ICASA must prescribe regulations setting out the licence fees applicable to licences issued in chapter 3 of the Act, taking into consideration any

policy directions issued by the Minister.

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RECOMMENDATION:

The WG recommends that:1. Existing broadcasters and broadcasting signal distributors receive preferential

treatment by the conversion of their licences and assignment of additional frequencies to allow for the rapid introduction of DTT in South Africa;

2. The Minister issue a policy direction on licence fees for digital broadcasting services aimed at incentivising the broadcasting services to switchover to digital transmission networks, and

3. ICASA through a public process and after an economic impact assessment consider the licensing of the remaining frequencies for one metropolitan digital transmission network to allow for the introduction of new digital services by new entrants to the market.

DISSENTING VIEW:

Sentech, does not agree with recommendation 1 above, according to Sentech a broadcasting service licensee who utilises another entity for the provision of broadcasting signal distribution does not need radio frequency spectrum to be assigned to it. A broadcasting service licensee who self-provides broadcasting signal distribution may provide a broadcasting service utilising any portion of the radio frequency spectrum by first obtaining a radio frequency spectrum licence in terms of the ECA. Orbicom shares Sentech’s view that frequencies should be assigned to the Electronic Communication Network Service licensee instead of the broadcaster in a digital environment. .

(a) Practical implementation for Television Broadcasting Services

The existing licensed FTA terrestrial broadcasting services (SABC 1, SABC 2, SABC 3 and etv), the existing terrestrial community television broadcasting service (TBN) and the existing subscription terrestrial broadcasting service (M-Net, which has two programming services M-Net and CSN) have to be migrated from analogue to digital broadcasting transmission networks. This will entail a period of dual illumination followed by the switch-off of analogue television broadcasting and the surrender of the analogue frequencies (the so-called Digital Dividend) held by television broadcasters to ICASA.

An examination of the introduction of DTT in Europe would suggest that the incumbent broadcasters would require as an incentive to migrate a significant stake in DTT. It is proposed that as in Italy the existing broadcasting services be offered the option of having their licences amended to allow for digital broadcasting and that they are assigned sufficient frequencies as reflected in the National Frequency Plan to establish at least a single digital transmission network for multi-channel digital broadcasting. This would mean that the existing licences will have to be amended to make provision for the surrender of existing analogue frequency rights when analogue transmission cease and the inclusion of the frequencies required for a national or metro-level digital broadcasting transmission network. This step would be in the favour of the state as multiple channels can be broadcast on a single frequency as opposed to the analogue situation of a channel per frequency, meaning that the surrender of analogue frequency rights will result in a digital dividend for the state upon switch-off of analogue transmission. This option is the

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most feasible for a smooth transition to digital broadcasting as it deals with the issue of broadcaster’s existing rights being deprived in the move to DTT.

A problem that arises of course is that there are five national television broadcasting service licensees and a community television broadcasting service licensee in South Africa. This is a challenge as the current frequency plan, as mapped out at the ITU RRC-06 for introducing digital broadcasting, only envisages sufficient frequencies to allow for two national digital broadcasting transmission networks and two metropolitan digital broadcasting transmission networks (each comprises four metropolitan areas in South Africa). The ITU-RRC-06 plan was a result of the fact that currently there is a scarcity of frequency spectrum in the UHF/VHF Bands and there was only sufficient frequency spectrum to accommodate two national and two metropolitan digital transmission networks until switch-off of analogue broadcasting transmissions. The original requirement submitted by industry to the DoC, when the South African submission to the ITU was being developed, was that the future requirement was likely to be sufficient frequencies to accommodate ten digital broadcasting transmission networks (a mix of national, regional and local level broadcasting services).

Core Principle for Broadcasting Services in switchover

There appears to be agreement in the WG, with the exception of Sentech and Orbicom, that there be a principle put in place that each licensed broadcasting service should receive, when surrendering analogue frequencies, sufficient frequencies to roll-out a digital transmission network that is similar in coverage to the analogue transmission network of the broadcasting service. There is also agreement in the WG that the current frequency plan is meant to be for the switchover phase only and that post-switchover, in an all digital plan, any licensed broadcasting services that have been constrained through frequency availability to share a digital transmission network with another licensed broadcasting service during the switchover phase will be able to roll-out their own digital transmission network if they wish to do so in line with principle articulated above.

Awarding of frequencies in switchover phase

Based on RRC-06 digital plan, there appears to be common consensus, amongst the WG that there are two options for implementation once the principle articulated above has been accepted.

In Option 1, the frequencies for one national digital broadcasting transmission network should be awarded to the public service channels of the public service broadcaster (SABC) and the frequencies for the second national digital broadcasting transmission network, as an interim solution until switch-off, could be identified for use by commercial broadcasting services and it could potentially carry SABC 3, etv and M-Net. These broadcasters would then have to form an association for the operation of the network and select a broadcasting signal distributor. There would also have to be some planning to accommodate TBN perhaps by means of interleaving in the Eastern Cape. This interim solution would mean that after switch-off the SABC, etv, TBN and M-Net would have to receive frequencies to roll-out individual digital transmission networks similar to the analogue coverage enjoyed under their broadcasting service licences prior to the digital switchover process commencing.

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In Option 2, the frequencies for the one planned (RRC-06) national digital broadcasting transmission network are assigned to the public service channels of the public service broadcaster (SABC) and that the SABC be allowed to use the existing frequencies assigned in the analogue plan for SABC 4 and SABC 5 to roll-out a third national digital broadcasting transmission network to be used by its Commercial Division. This would then enable etv to be assigned the frequencies for the second planned (RRC-06) digital broadcasting transmission network. Under this scenario, M-Net could be assigned planned (RRC-06) frequencies to establish metropolitan digital transmission networks and provide a hybrid (DTT/DTH) subscription broadcasting service to its subscribers. This would have cost implications for M-Net as they may have to subsidise the difference between the DTT and DTH consumer premise equipment for their existing subscribers in rural areas when migrating their subscriber base to DTT/DTH.

The benefit of this second option is that it would lead to there being enough frequencies to create three national digital broadcasting transmission networks in the switchover phase instead of only the two that have been planned for thus far. It would also mean that etv and M-Net would be able to switchover from their existing analogue frequency rights to frequencies enabling roll-out of digital broadcasting transmission networks similar to the current analogue coverage enjoyed by the broadcasting service licensees. The SABC would still need frequencies for at least one more digital broadcasting transmission network post switch-off in order to retain the rights currently accorded to it by being the holder of three broadcasting service licences. TBN of course will still need to be accommodated by means of interleaving during the switchover phase in the Eastern Cape and post switchover may have to be accorded frequencies to roll-out a digital transmission network. It would make sense in order to drive STB take-up in the Eastern Cape, to in a digital environment, extend the coverage of TBN to cover the whole province.

Addressing Pluralism Concerns

There is of course the need to balance the rights of existing broadcasters against the need for pluralism/fair access to spectrum and this could be achieved in the switchover-over phase, as approached in Italy, by setting in place a requirement that a certain percentage of the channels on the commercial digital broadcasting transmission networks be set aside for third-party channels (i.e. not channels of the licensed broadcasting service). In the case of digital terrestrial subscription broadcasting ICASA has already stated in the Subscription Broadcasting Position Paper that a channel must be reserved for public access television.97

97 Id, p.75

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RECOMMENDATION:

The WG therefore makes the following recommendations, namely that:1. ICASA during conversion or at a later date amend the broadcasting

service licences of existing television licensees to make provision for the surrender of existing analogue frequency spectrum rights upon analogue switch-off and to assign frequencies that will allow each existing licensee to broadcast on a digital transmission network in accordance with a national strategy for digital switchover and the national frequency spectrum plan;

2. a principle be put in place that each licensed broadcasting service should receive, when surrendering analogue frequencies, sufficient frequencies to roll-out a digital transmission network that is similar in coverage to the analogue transmission network of the licensed broadcasting service; and

3. If the principle articulate in recommendation 2 above cannot be accommodated in the switchover phase it must be done so at switch-off and the introduction of the all digital plan for broadcasting in South Africa.

4. a portion of the capacity of the commercial digital broadcasting transmission network be set aside for 3rd party channel usage including (a) Government Information and Data Services and (b) regional and/or community TV.

DISSENTING VIEW

Sentech has placed on record its dissenting view to similar recommendations in this report, namely that in the migration process from analogue to digital broadcasting, frequencies must not be assigned to broadcasters. The two national network of frequencies submitted to the ITU during the RRC-06 should both be assigned to the electronic communications network service licensee, in particular Sentech.

Orbicom shares the Sentech dissenting view that frequencies should be assigned to the Electronic Communication Network Service licensee instead of the broadcaster in a digital environment. Orbicom has no objection to the frequencies assigned at RRC-06 for the purposes of creating two national digital transmission networks being assigned to Sentech on a preferential basis, so long as it does not include the frequencies for digital broadcasting transmissions already undertaken by Orbicom and the frequencies for the metropolitan digital transmission network which it has been proposed will carry the M-Net broadcasting service.

(b) Radio Frequency Spectrum

The ECA defines radio frequency plan as:“‘‘radio frequency plan’’ means a national plan that includes, but is not limited to:(a) a table of frequency allocations for all bands below 3000 GHz taking into account the ITU table of allotments, in so far as such allotments have been

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adopted and agreed upon by the Republic, which may include designations of certain utilisations; and(b) a plan, as applicable, for the migration of systems and equipment of existing users within specific radio frequency bands, including radio frequency bands for security services, to different frequency bands;”

This definition poses a number of difficulties. In spectrum management, the terms allocation, allotment and assignment have very specific meanings that are defined in the ITU Radio Regulations. No 1.16 of the ITU Radio Regulations defines allocation as follows:“allocation (of a frequency band): Entry in the Table of Frequency Allocations of a given frequency band for the purpose of its use by one or more terrestrial or space radiocommunication services or the radio astronomy service under specified conditions.This term shall also be applied to the frequency band concerned.”Allotment is defined in No 1.17 of the ITU Radio Regulations as:“1.17 allotment (of a radio frequency or radio frequency channel): Entry of a designated frequency channel in an agreed plan, adopted by a competent conference, for use by one or more administrations for a terrestrial or space radiocommunication service in one or more identified countries or geographical areas and under specified conditions.”No 1.18 of the ITU Radio Regulations defines assignment as:“assignment (of a radio frequency or radio frequency channel): Authorization given by an administration for a radio station to use a radio frequency or radio frequency channel under specified conditions.”

Subsection (a) of the definition makes reference to the “ITU table of allotments”. The ITU does not publish a table of allotments, but a table of allocations (own emphasis), which is contained in Article 5 of the Radio Regulations. As a consequence, paragraph (a) in the definition of a “radio frequency plan” is rendered meaningless as there is no Table of Allotments, there is only a Table of Allocations. This error should be corrected in any future amendments made to the ECA.

Section 34 of the ECA deals with the radio frequency plan in detail. S 34(2) states that the frequency plan must set out the specific frequency bands designated for use by particular types of services. This therefore implies that the national frequency plan is an allocation plan. Similarly, S 34(6)(a) states that the national radio frequency plan must designate the radio frequency bands to be used for particular types of services. Section 34 makes no mention at all of a broadcast frequency assignment plan which ICASA was empowered to develop in terms of the now repealed IBA Act. This may mean that there is now no longer a legislative requirement for ICASA to publish a frequency assignment plan. It is acknowledged that this is probably an implicit power of ICASA to publish such a plan as and when it deems fit. It is recommended that the ECA be amended to include this requirement that previously existed in the IBA Act.

The perceived need for ICASA to develop a frequency assignment plan should not hold up the process of digital broadcasting switchover. The digital broadcasting frequency plan developed by the ITU at RRC-06, and contained in the Final Acts of GE-06 is an assignment plan in respect of digital television broadcasting, and an allotment plan for digital sound broadcasting. In the absence of a national television broadcasting frequency assignment plan, any assignments for digital television during the switch-over phase, and thereafter can be made in accordance with the provisions of the ITU GE-06 Plan until such a time as clarity is obtained on frequency planning in South Africa.

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RECOMMENDATION:

The WG recommends that as the ITU RRC-06 adopted a frequency assignment plan for digital television broadcasting and an associated allotment plan for sound broadcasting in Band III, the assignments in these plans must be used for the implementation of digital broadcasting during the digital switchover process and after analogue switch-off.

See Figure 16 for a diagram reflecting the understanding of the WG on the practical implementation of digital switchover in terms of the ECA.

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FIGURE 16: PRACTICAL IMPLEMENTATION OF PROPOSED LICENSING MODEL FOR DTT (NO AMENDMENT TO ECA REQUIRED)

Legend =

SABC

Existing holders of a Broadcasting Service Licence as amended for the packaging of television or radio programme services . Plus other services depending on frequency availability.

Combining of the multiple television or sound programming channels, data streams, together with an embedded EPG, CA and SMS into a single complex signal for the purposes of transportation by a carrier or network.

Channel 1

Channel 2

Channel n

EPG / Data

CA, SMS

Sentech (Common

Carrier)

Multiplexing

Electronic Communication Network Service Licence for broadcasting signal distribution

Radio Frequency Spectrum Licence

etv

Mnet

Industry Forum

establishedto deal withagreement on :common

terrestrial STB standard,

CA, software

updates, EPG Orbicom

Other ECNS

licensees TBN

Electronic Communication Service Licence required for EPG/Data service included in the combined signal, unless exemption granted by ICASA.

Radio Frequency Spectrum Licence required by both the broadcasting service and the signal distributor.

Licensable or regulated activities

Non-regulated areas of value chain

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6.3 DRIVERS OF CONSUMER ADOPTION

The main drivers for the take-up of DTT by consumers in South Africa are likely to be:

Affordability of STBs and potential subsidies for STBs is the single most important driver of take-up of digital broadcasting;

The setting of a switch-off date for dual illumination;. Additional services – increase in the number of channels transmitted and the

introduction of new types of services (EPG, teletext, interactive services, e-mail, etc) within a fixed amount of bandwidth;

Improved picture and audio quality Portability and Mobility – portable indoor reception will reduce installation

costs or mobile broadcasting services to new devices; World Cup 2010 will drive consumer take-up in terms of the improved visual

and audio quality.

The WG economic model (see Appendix B) proposes a standard subsidy percentage that applies to all STBs sold, and a different subsidy for the existing TV households falling below the affordability threshold. For the latter group, it also explores the option of subsidising these households in the final year of migration or continuously over the migration period at a rate defined by the user. However partial STB subsidies alone will not address all of the low income and special groups needs, and despite subsidies there will still be a proportion of the existing TV households that would not able to afford digital broadcasting services.98In addition there are those households who currently do not have access to television and have not been catered for in any of the scenarios.

The groups that need additional support and assistance to access digital broadcasting services include isolated rural and poor communities, people who are functionally illiterate, people with disabilities, the elderly and individuals depended on social services. The assistance can take various forms including subsidies, financial, technical and installation support. The timing and implementation of targeted assistance support should further provide for sufficient production, installation and support lead-times to ensure a minimum level of service disruptions. A planned assistance rollout will also ensure the availability of reasonably prices and suitable equipment to address the needs of people with vision or hearing impairments before analogue switch off.99

It is proposed that additional assistance schemes should draw on established government initiatives, including the Department of Local and Provincial Government’s (DPLG) municipalities framework for basic service provision for indigent groups. This framework further provides for an identification criteria and a national indigent register, which serves as a means of disseminating assistance to economically vulnerable groups.100 While it is originally intended for delivery of basic

98 2004 StatsSa Household Survey

99 Consumer Expert Group on digital switchover for the Department for Culture, Media and Sport and the BBC, April 2006, Supporting Vulnerable Consumers

with targeted assistance at and after Digital TV Switchover, page 20

100 According to the Draft National Indigent Policy this refers to households with a collective monthly income of less than R1100 and are unable to ability to

afford and pay for basic services including basic water supply, sanitation, energy and refuse services, Health care, Housing etc. qualify for support and would be

provided with Free Basic Services in the form of Free Basic Water (FBW), Free Basic Electricity/ Energy (FBE) and Free Basic Sanitation (FBSan). DPLG 2004

“Framework for a Municipal Indigent Policy”

services and infrastructure to vulnerable groups, it proposes that implementation of national department polices should be aligned to provincial structures’ service provision strategies and it can therefore be used to implement digital broadcasting universal access goals.

RECOMMENDATION

The WG recommends that government implement various take-up incentives such as subsidy criteria and mechanisms; as well as communicating the tangible benefits of migration for consumers..

6.4 CO-ORDINATION OF DIGITAL MIGRATION PROCESSES

The National Strategy needs to provide guidance to the industry. The WG, therefore suggests the following policy directions should be included in the strategy:

Government needs to formally indicate it’s acceptance of the DVB-T standard for the introduction of DTT in South Africa and the DVB family of standards as a whole for the introduction of digital broadcasting on other platforms;

Government should indicate that the minimum format requirement for DTT is SDTV in 4:3 and 16:9 aspect ratio, but allow broadcasters to choose modulation schemes thereby allowing them to reduce transmission bitrate in order to show some channels on the digital broadcasting transmission network at a higher quality of video than others and to do so at any time as may be required by the broadcast schedule;

Government should indicate that HDTV digital broadcasting transmission networks should only be licensed on DTT, once analogue switch-off has occurred, but that there should be flexibility to authorise HDTV channels on the digital broadcasting transmission networks planned for the digital switchover process if there is capacity available.

Government should establish a joint body with industry to develop an action plan for the region-by-region switch-off of analogue television broadcasting, monitor the switchover process in South Africa, encourage interoperable standards and promote consumer awareness;

Government should set a target date for the switch-off of analogue television broadcasting transmissions.

Government needs to formally indicate it’s acceptance of the T-DAB (Eureka 147) standard as well as the DRM (Digital Radio Mondial) for the introduction of Digital Radio in South Africa.

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6.5 DIGITAL TELEVISION SWITCHOVER PROCESS

The WG propose that the digital switchover process be conducted in South Africa in three distinct phases, especially if there is a policy intention that switch-on commence in 2008 to be ready for World Cup 2010.

6.5.1 Digital Switch-on

The first phase (2007-2008) should be focused on the following aspects of the digital switchover process:

Publication of a national strategy to commit South Africa to a digital switchover by no later than first quarter 2007.

Establishment of a committee to develop an action plan, co-ordinate and monitor the digital switchover by no later than second quarter 2007.

Establishment of a technical sub-committee of the joint government-industry organisation to deal with technical aspects of the digital switchover by no later than second quarter 2007.

Conversion/Amendments to the licences of existing broadcasting services and broadcasting signal distributors to allow for the introduction of DTT by no later than the fourth quarter 2007 and public processes to licence the remaining frequencies available for metro level digital transmission networks by no later than first quarter 2008.

Consumer awareness campaigns and the introduction of DTT certified STBs in the market, this aspect of the switchover should also be applied to new digital radio broadcasting services and digital radio receivers.

New network infrastructure and the replacing/upgrading of existing network infrastructure for the metropolitan areas of Johannesburg, Pretoria, Durban, Pietermarizburg, Cape Town and Port Elizabeth to enable dual illumination in those areas by fourth quarter of 2008.

6.5.2 Digital Switchover

The second phase (2008-2011) should be focused on the following aspects of the digital switchover process:

Authorisation of new channels and services by ICASA on the frequencies assigned to broadcasting services and electronic communication network services for establishing digital broadcasting transmission networks;

Consumer campaigns promoting DTT and Digital Radio and additional programming services

New network infrastructure and the replacing/upgrading of existing network infrastructure for the remaining analogue “legacy” terrestrial coverage areas in South Africa by 2010, as well as the use of DTH where required for universal coverage obligations;

Phased introduction of new channels and additional digital services; Monitoring of consumer take-up and roll-out of digital transmissions;

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6.5.3 Analogue Switch-off

The third phase (2012-2015) should be focused on the following aspects of the digital switchover process:

The roll-out of government subsidised STBs. The economic model developed by the WG assumes that this will commence in 2012, but this roll-out could commence earlier in order to achieve a more rapid switchover in specific areas;

An area-to-area switch-off commencing in 2012, according to a project plan of analogue switch-off based on target dates and dependent on television household take-up in the area having reached 85% or a government decision to switch-off (whichever comes first).

Monitoring of consumer take-up and analogue switch-off. All remaining analogue transmissions to be terminated by 2015, assuming

that the targets for a complete analogue switch-off having been reached. At that point all remaining analogue spectrum used by existing broadcasters will revert to ICASA.101

6.6 DIGITAL DIVIDEND

The WG has looked at the digital dividend from two views, the first being the RRC-06 plan which will govern the use of frequencies in the all digital television frequency bands post 2015 and the demands that digital broadcasting services will make on such spectrum which will reduce the overall digital dividend somewhat for usage by non-broadcasting services.

6.6.1 Where does the Digital Dividend come from?

The ITU Regional Radio Conference, RRC-04/06, was convened to update the Stockholm 1961 and Geneva 1989 VHF/UHF television broadcasting Plans for the European and African Broadcasting Areas, respectively. It takes account of the spectrum needs for digital radio and television terrestrial services in the European and African Broadcasting Areas, and also in neighbouring areas (see Figure 12). The first Session, RRC-04, was completed in May 2004 and established the planning criteria and parameters for the later second Session, RRC-06, held in May 2006.

FIGURE 17: THE EXTENT OF THE PLANNING AREA FOR RRC-06

101 The proposed digital switchover process does not preclude any broadcasting service from selecting to do a “hard” switchover in this period.

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The second Session, RRC-06 held in Geneva adopted the New Agreement and associated Frequency Plans. There appears to be a misconception by people who were not part of the RRC-06 process that RRC-06 would plan for the Digital Dividend. This is not the case, the objectives of the RRC-06 were to plan for digital terrestrial broadcasting and to define an all digital plan for use by broadcasting services after all analogue television broadcasting services had been closed.

The GE-06 essentially puts in place the following foundations: A list containing the frequency of each transmission site (assignment) or

service area (allotment); A procedure to co-ordinate any future requirement with other affected

countries; and A concept of an interference envelope (mask concept) to enable:

o Broadcasting services with different parameters to that which has been planned for (for example, DVB-H or HDTV);

o Spectrum uses other than broadcasting.o

In essence this means that you can add new types of services if you do not cause increased interference and if you do not demand additional protection beyond that defined in the plan.

Based on this we can say that the “digital dividend” would be the frequency spectrum in 174-230 MHz and 470-862 MHz vacated following the conversion of all existing terrestrial analogue television broadcasting transmission systems into digital television transmission systems. In most countries a conservative estimate is that up to 100 MHz of frequency spectrum will be freed-up by the switchover to digital broadcasting and the consequent switch-off of analogue transmissions.

The WG has noted that there has been a lot of hype that this freed-up spectrum can be used for a range of non-broadcasting services such as mobile services, wireless broadband, defence, and hybrid satellite/terrestrial services. It is true that frequency spectrum in this band has a lot of potential uses, but it is also true that there a number of constraints to such usage. The first constraint is that such service must fit into the interference envelope planned for at RRC-06, and the RRC-06 plan is best suited for applications with interference patterns similar to what has been planned for (for example, downlinks to mobile/fixed terminals). Once a reception mode (rooftop, portable or rooftop/portable) has been chosen by a country for the GE-06 plan, any future evolution must be kept within the envelope chose or coordinated with other countries. This would mean that the plan is sufficiently flexible if the digital dividend is used only for broadcasting or mobile/fixed downlinks, but mobile uplinks would not be easily or efficiently catered for.

In fact extensive use of mobile uplinks would require further work and potentially the re-planning of the entire frequency band in order to be accommodated. Re-planning may also be required for usage of other broadcasting services in the frequency bands as the 100Mhz that may potentially be freed-up does not exist in a single block of spectrum, but is scattered randomly amongst the frequencies which were planned for the digital transmission networks to be used during the switchover phase. A re-planning would then result in a second migration of broadcasting services from these frequencies to new frequencies.

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6.6.2 Digital Broadcasting needs post-2015

As indicated previously in this report the needs of the broadcasting sector could not be met when planning for switchover in the context of the RRC-06 because of frequency scarcity. This will result in broadcasters not receiving frequencies for digital transmission networks that will be equivalent to their existing analogue transmission networks in the switchover phase leading up to 2015. Television broadcasting services post a 2015 switch-off will expect that they will be awarded frequencies to enable them to emulate their current analogue transmission networks both in terms of coverage and sole-ownership. Currently, an obstacle to extensive digital radio transmission networks being rolled out is the occupation of frequencies in Band III by existing analogue television broadcasting services. After an analogue switch-off, prospective digital radio broadcasting services will expect that licence applications for freed-up spectrum in Band III, as planned for at RRC-06, will enjoy a priority over other usage of spectrum in Band III.

Currently, in the frequency plan for digital switchover there is not much scope for the licensing of mobile television broadcasting services targeting mobile phone, car entertainment systems, laptops or PDAs. It will be expected post switch-off that provision would be made for competitive licensing of frequency spectrum to address the needs of the public in this regard. There will be other broadcasting services in the areas of education, community television and local television that will be interested in acquiring licences to provide standard definition television services.

There will also be a need to plan for the introduction of High Definition Television (HDTV) on the DTT platform to allow the platform to compete effectively with satellite and cable platforms. HDTV even using MPEG-4 compression will likely only result in two to three channels on a single frequency.

The potential value of the digital dividend has been calculated in the economic model and report, please refer to Appendix B.

RECOMMENDATION:

The WG recommends that in planning the use of the freed-up spectrum after switch-off, due consideration must be given to the needs of the broadcasting sector to grow and development on a terrestrial platform in South Africa (including future terrestrial HDTV use). HDTV must be planned for to ensure platform competitiveness, otherwise DTT will not be able to compete with Cable and Satellite platforms offering HD broadcasting services.

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