26 May 2009

Broadcasting and Electronic Communications practice area

Update on developments in March and April 2009

This update has been prepared by the Broadcasting and Electronic Communications practice area to inform clients of recent regulatory developments in the communications sector during March and April 2009.  These developments include the publication of new regulations by the Independent Communications Authority of South Africa (ICASA).

Please feel free to contact any member of the practice area if any further information or advice is required.

General

  • On 3 March 2009, ICASA published an invitation to apply (ITA) to Broadband Infraco (Pty) Ltd to apply for an individual electronic communications network services (ECNS) licence and an individual electronic communications services (ECS) licence.  This is the licence required to operate a large-scale electronic communications network.  An ITA for an individual ECNS licence can only be issued by ICASA subsequent to the publication of a policy direction from the Minister of Communications directing ICASA to do so.  The Minister published this policy direction in February 2009.  Broadband Infraco is a state-owned entity which was established in 2007 in terms of national legislation with the intention of expanding access to communications services to areas which are presently under-developed and under-serviced.  The Department of Public Enterprises which drove the establishment of the company indicated that the intention behind its establishment was to construct a new fibre-optic network and to provide an alternative to Telkom SA Limited for network operators (being other ECNS licensees) in obtaining access to core networks on a wholesale basis.  Broadband Infraco has now also been invited to apply for an individual ECS licence which would, in addition, enable it to provide services to end-users.  The application was required to be submitted by 20 February 2009.  ICASA has indicated that it may elect to conduct public hearings on the application.  If such hearings are to be held they will be conducted on 20 May 2009.  The ITA does not indicate by what date comments on the application submitted by Broadband Infraco will have to be submitted by interested parties.  ICASA is required, in terms of the Electronic Communications Act, 2005 to give interested parties an opportunity to comment on all such applications and notice in this regard will presumably be published in due course.
  • A discussion paper on fees for radio spectrum licences setting out the policy framework for new regulations, together with draft regulations on radio frequency (RF) spectrum fee licences were published by ICASA on 16 March 2009.  Subsequent to an extension of the period for comments, comments on the draft regulations are required to be submitted by 29 May 2009.  The draft regulations will replace those parts of the existing Radio Regulations, 1979 (initially published in terms of the repealed Radio Act, 1952) which deal with the annual fees which are payable by holders of RF spectrum licences. These fees have not been updated for many years and are out of date.  The examination and certificate fees and application fees which are also dealt with in the Radio Regulations will also be amended in due course.  The discussion paper indicates that ICASA intends to impose initial application fees for RF licences which, at least, reflect the costs to ICASA of making an assignment and issuing a licence.  ICASA has stated further that a competitive process may be followed in respect of spectrum assignments which are in high demand and the annual licence fee may, in such instances, be determined in an auction process.  The discussion paper states that, for the most part, annual licence fees will be based on an “Administrative Incentive Pricing” method.  ICASA has indicated that the annual licence fees should at least cover the costs of spectrum management and monitoring which are incurred by ICASA.  As such, charges will vary according to the frequency band, power output, volume of bandwidth used, geographic area, whether the assignment is used exclusively or shared, according to relative supply and demand and the perceived value of the services utilising a particular band.  The proposed formulae which will be used to determine an annual licence fee are set out in the draft regulations.  The draft regulations indicate that ICASA may determine that particular frequency assignments may be made on a competitive basis (including an auction) but do not indicate the circumstances in which such a determination will be made.  Broadcast services will not be subject to the regulations.
  • ICASA published new Licence Fees Regulations, 2009 on 1 April 2009.  These Regulations detail the administrative fees which are payable to ICASA in respect of registration notices for class licences and applications for the renewal, transfer and surrender of both individual and class licences in terms of the Electronic Communications Act, 2005 (ECA).  The Regulations also set out the annual licence fees which are payable by licensees, which are calculated as a percentage of revenue generated from the licensable activity.  ICASA had previously published a Position Paper on General Licence Fees on 6 March 2009 setting out the policy considerations which ICASA had taken into account in drafting the Licence Fees Regulations.  ICASA published a supplementary Position Paper at the same time as publishing the Licence Fees Regulations, setting out additional policy considerations which had been taken into account.
  • During the transition period in which existing licences issued under repealed legislation (including the Telecommunications Act, 1996 and Independent Broadcasting Authority Act, 1993) were converted to new individual or class licences in terms of the ECA, ICASA had by way of a notice published on 28 August 2008 imposed a moratorium on accepting applications or registrations for new licences or applications for the transfer, amendment or renewal of licences until such time as the conversion process was completed and new regulations dealing with application and licence fees had been published.  Although ICASA has not published any further notice lifting the moratorium, the moratorium has presumably lapsed given that the conversion process was completed in January 2009 and the Licence Fee Regulations referred to above were published in April 2009.

Broadcasting

  • ICASA published draft regulations on advertising, infomercials and programme sponsorship and a code of advertising practice setting out the standards, practices and prohibitions in advertising, sponsorships and other forms of commercial promotion by radio and television broadcasting service licensees on 13 February 2009.  The date by which comments on the draft regulations and code must be submitted was extended to 28 April 2008.  The draft regulations impose requirements with regard to issues such as product placement, competitions linked to programming and limits on the amount of advertising which may be transmitted in a particular period of time by the different types of broadcasting service licensees (public, commercial free-to-air, commercial subscription and community).  An explanatory memorandum setting out the rationale for the changes from the previous regulations dealing with advertising and sponsorships was published on 3 April 2009.
  • New Party Election Broadcasts and Political Advertisements Regulations, 2009 (PEB Regulations) were published on 3 March 2009.  The PEB Regulations set out the framework within which party election broadcasts (PEB) and political advertisements should be carried by broadcasting service licensees during national and provincial elections.  PEBs are broadcasts by political parties which are broadcast by broadcasting service licensees free of charge whereas political advertising is advertising by a political party which is paid for by the party in question.  The Regulations deal with issues such as the time periods within which PEBs must be supplied to broadcasters, rejection of PEBs by a broadcaster and the air time which must be made available for the broadcasting of PEBs.  The PEB Regulations should be read in the context of the provisions made in the ECA for PEBs and political advertising.  The ECA prohibits the broadcasting of PEBs and political advertising except during an election period.  Public service broadcasters are required to make time available to political parties for the broadcasting of PEBs and ICASA must determine the time to be allowed.  Commercial and community broadcasting services are not subject to similar requirements although, where they elect to broadcast PEBs, the same requirements become applicable.  Broadcasting service licensees (whether public, commercial or community) are not required to broadcast political advertising.  However, where they choose to do so for one political party, they must afford the same opportunity to all other political parties (although this will be subject to those political parties’ ability to pay for the transmission of the advertisements in question).
  • ICASA published an invitation to apply (ITA) for new individual electronic communications network services (ECNS) licences for the purpose of providing a broadcasting service, on 26 March 2009.  The invitation is restricted to existing broadcasting service licensees.  Applications are required to be submitted to ICASA by 21 May 2009.  Amongst the issues which prospective applicants are required to address are their strategies for facilitating universal access, the manner in which they will “empower the poor when the licence is issued” and “how they will ensure that the poorest are their primary target customers”.
  • On 27 March 2009 ICASA published an ITA for new individual commercial free-to-air sound broadcasting (radio) licences in the primary markets of Gauteng, KwaZulu-Natal and the Western Cape.  The closing date for the submission of applications is 31 September 2009. 
  • ICASA published draft Digital Terrestrial Transmission Regulations (Draft DTT Regulations) on 31 March 2009.  The closing date for comments is 30 April 2009.  The Draft DTT Regulations deal with the manner in which the existing terrestrial television broadcasting services (SABC, e.tv and M-Net) are to be migrated from analogue to digital transmission and the radio frequency multiplexes which have been allocated for digital terrestrial transmission (DTT) are to be assigned to those services.  The Draft DTT Regulations indicate that three DTT multiplexes will be reserved for existing television service licensees.  DTT multiplex 1 is indicated to be reserved for public service and community broadcasting.DTT multiplex 2 is indicated to be reserved for commercial free-to-air television broadcasting purposes and DTT multiplex 3 is indicated to be reserved for commercial subscription television broadcasting purposes.  A twelve-month dual-illumination period during which broadcasting services will be broadcast on both analogue and digital platforms is also provided for except that M-Net will conduct a “hard switchover” without broadcasting on both platforms.  The Draft DTT Regulations provide that e.tv will be authorised to utilise 60% of the capacity of the multiplex in the provision of its services while M-Net is authorised to utilise 50%, subject to the condition that it conducts a “hard switchover”.  Each of e.tv and M-Net may be permitted to utilise additional channel capacity within the respective multiplexes as an incentive for migration, where authorised by ICASA to do so on application by the broadcasting service licensee.  The criteria which will be taken into account are set out in the Draft DTT Regulations.  At the end of the dual-illumination period, other interested parties will be able to make application to provide text services on either multiplex 2 or 3 using the additional, reserved channel capacity in those multiplexes.  The transitional provisions of the Draft DTT Regulations provide that the various broadcasting service licences held by the SABC in respect of each of its existing channels (presently regarded as separate broadcasting services), will be consolidated into a single broadcasting licence “to provide any type of television services”.

South Africa has committed to completing the digital migration process by 2015, which is the deadline set for Region 2 of the International Telecommunications Union.  No indication has yet been given as to the uses for which the frequencies presently used for analogue transmission will be re-allocated subsequent to digital migration. 

Electronic communications

  • In terms of the Numbering Plan Regulations, 2006 (Numbering Regulations), ICASA must determine an annual date on which persons to whom numbers from the national numbering plan have been allocated must submit certain information to ICASA for the purpose of an annual audit of numbering allocations.  ICASA published a notice on 6 April 2009 calling “licensees” to provide numbering data for the purpose of such an audit by 31 August 2009.  For future purposes, the date by which numbering data must be submitted to ICASA for the purposes of the annual audit is 31 March of each year.  As such, any licensees to whom numbering allocations have been made must submit the requisite information to ICASA.  The affected licensees should be restricted to holders of individual licences for the provision of electronic communications services (ECS), which is the type of licence required for the provision of voice telephony services utilising numbers from the national numbering plan.
  • On 16 April 2009, ICASA released a statement indicating that it did not require Vodacom (Pty) Ltd, which holds individual ECNS and ECS licences, to obtain ICASA’s approval in respect of changes to the shareholding of Vodacom’s holding company, Vodacom Group (Pty) Ltd, which will alter the beneficial ownership of shares in Vodacom in terms of a transaction whereby Telkom SA Ltd is selling a 15% stake in Vodacom Group to Vodafone Group plc (which previously held 50% of Vodacom Group) and unbundling its remaining 35% shareholding.  The Ownership and Control Regulations, 2006 in terms of which, in certain circumstances, ICASA’s approval must be obtained where a control interest in a licensee is transferred, were found not to be applicable to the transaction.  The transaction, being a large merger, had been unconditionally approved by the Competition Tribunal on 25 February 2009.
 
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