Scrap TV licences and review SABC's business model

The solution to maladministered, failing state-owned entities is not to simply divert more funds to them

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24/11/2020 08:19:48

                                                                                                                                                                                                                    Scrap TV licences and review SABC's business model

                                                                                                                                                                                                                    The TV license model has failed and must be scrapped, and the incompetence, maladministration and corruption at the SABC should not become a burden to successful private industries or South Africans. This is the view of the Organisation Undoing Tax Abuse (OUTA), which made these recommendations in its submission on the Department of Communications and Digital Technologies’ Draft White Paper on Audio and Audiovisual Content Services Policy on Monday. OUTA also repeated its stance that any tax or levy that fails to achieve its purpose due to failed administration or unenforceable mechanisms should be closed down. 

                                                                                                                                                                                                                    The policy is aimed at regulating a fast-evolving digital industry whilst maintaining the purpose of the SABC as the public broadcaster. 

                                                                                                                                                                                                                    Julius Kleynhans, OUTA’s Executive Manager: Public Governance Division, describes the policy as fundamentally flawed and lacking substance. “The State should focus on enabling economic growth through policies instead of trying to curb it due to their shortfalls.” 

                                                                                                                                                                                                                    According to the SABC’s report for the 2019 financial year, the entity collected payments from only 2.9 million of the 9.4 million TV licence holders on its database, resulting in an estimated revenue shortfall of R2 billion.
                                                                                                                                                                                                                    The policy outlines government’s plans to increase its revenue through various mechanisms, including getting pay-TV broadcasters like DStv and Netflix to help regulate TV licence compliance. Other suggestions include forcing internet and television streaming websites to pay a percentage of subscription fees to the SABC for any SABC content aired on it, as well as expanding the definition of devices subject to TV licences to include smartphones and tablets that are capable of streaming its content. 

                                                                                                                                                                                                                    The proposed regulations have far-reaching implications for South Africans, including owning a smartphone or tablet would require a TV licence, regardless of whether it is used for streaming or not or what TV channels are watched. Annual subscriptions would have to be paid before buying a phone or tablet.  Pay-TV subscriptions will require a TV licence, and pay-TV subscription fees might increase to contribute to the SABC.

                                                                                                                                                                                                                    Regulatory changes may even require influencers on digital media and businesses which create online content to have broadcasting licences.

                                                                                                                                                                                                                    Content from on-demand services, such as international audio and audiovisual services (eg Netflix), would be regulated to ensure South African content is given airtime or face being blacklisted. “This is a blatant rebuttal of freedom of choice, the democratisation of information and universal access,” says Kleynhans. 

                                                                                                                                                                                                                    “Whichever way you look at it, citizens once again have to pay for government’s incompetence and failure to run state-owned enterprises like the SABC. We will be forced to throw more money at the SABC despite its systemic corruption, maladministration, service issues and outdated and unappealing television content.”   

                                                                                                                                                                                                                    OUTA is also concerned with the legalities of sharing SABC customer information with private enterprises such as the pay-TV industry, as well as how the money will be used.  “Considering government entities' track record of poor transparency and accountability, how will the Department of Communications and Digital Technologies ensure that the collection of revenue from Netflix and DSTV is transparent and that all funds collected are used in an appropriate manner? We fear that this will be another method of getting more money from citizens to fund the corrupt,” says Kleynhans.

                                                                                                                                                                                                                    Practical issues regarding the collection of money by private enterprises such as DSTV and Netflix and the subsequent payover of such to the SABC also raises concerns. “How will the calculation of TV licence fees – which are now calculated on an annual basis – work, considering that pay channel customers can cancel subscriptions at any time?” asks Kleynhans.

                                                                                                                                                                                                                    OUTA recommendations include:   
                                                                                                                                                                                                                    1.    Reviewing the SABC’s business and revenue model; 
                                                                                                                                                                                                                    2.    Reviewing content, as relevant and appealing content will help the SABC to become financially viable as a broadcaster of choice;  
                                                                                                                                                                                                                    3.    Determining how much of the SABC’s funding needs to come from levies or general tax, and where oversight of this will lie. 
                                                                                                                                                                                                                    4.    A review of the department's SOEs to determine their relevance, as many (SABC, Sentech, USAASA and NEMISA) fail to attain their goals and are mismanaged. 
                                                                                                                                                                                                                    5.    The focus should be on providing more access to the internet and devices at lower cost to the public, as an enabler to society. Digital tools provide significant opportunities, especially for entrepreneurs, the youth and previously disadvantaged members of the public, to tap into local and global economies. This will make for a more vibrant business environment and may generate more taxpayers.

                                                                                                                                                                                                                    Kleynhans says it is imperative that the Minister and the department should consider the greater environment of the policy and address areas of concern.  “It is impractical to recommend policy changes in one sphere, essentially plugging a hole, without fixing the broader systemic issues. If ICASA, Sentech, USAASA, the FPB and SABC are currently incapable of attending to their instaaitutional and service delivery requirements, they certainly will fail at equipping South Africans with the requisite literacy skills and electronic capabilities required to be effective in the 4IR.” 

                                                                                                                                                                                                                    OUTA opposes any new revenue streams for the SABC until all holes are plugged. “South Africans are tired of SOEs which fail to provide services, while taxpayers are expected to pay more and more to stabilise them. No new policies relating to TV licences and broadcasters should be implemented until the government successfully attends to seriously delayed policies, such as the digital migration,” says Kleynhans.

                                                                                                                                                                                                                    OUTA's submission is here.
                                                                                                                                                                                                                    Picture: Shutterstock

                                                                                                                                                                                                                    OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.