Squelching to court through a quagmire

• This column was first published in ITWeb Brainstorm magazine, February 2008. This is how I earn my monthly ration of beer and cigarettes, dog and cat food, fuel and bread. Subscribing not only gets you these columns on time, but goes some way towards sustaining this starving blogger in health and happiness.

Squelching to court through a quagmire

In the heavily prescriptive television industry, one has to admire the effort the regulator, ICASA, puts into its work. It can’t be easy. But one sometimes wonders: why, why, why, oh why?

Several recent developments in the broadcasting sector are worthy of attention, even if each serves only to exposes a fundamental failing in our telecommunications law.

Three that caught my attention in the last couple of months are the ruling ANC’s call for the SABC (the public broadcaster) to be more tax-funded and less advertising-driven, the suit Black Entertainment Television (BET) is bringing against ICASA over its award of five pay-television licences (it didn’t get one), and the demand by the SABC that pay-TV operators pay it for content they are required to carry (they don’t want to).

The ANC is quite right. One of the most damaging aspects of the SABC’s historical dominance of the broadcasting space is its reliance on advertising for funding.

A public broadcaster, if such a thing is necessary in the first place, should have a specific public service mandate and should be funded by public money. TV licences are a regressive, clumsy and expensive method of generating insufficient revenue. By selling advertising, the SABC, though it is a state-owned institution, sucks a large proportion of potential revenue out of the market, which could sustain competing broadcasters. Diverting available spending to the state is an implicit threat to media freedom, media diversity, media quality and media specialisation.

So I’m right behind the ANC’s proposal, with one caveat. The knee-jerk reaction has been that this will threaten press freedom. I can’t really see how the SABC can be more beholden to the state than it already is. I mean, with extended live coverage of ruling-party birthday parties it is, frankly speaking, kissing arse. Besides, being beholden to advertisers raises the same problems. The solution is to create an inviolable layer of structural separation between editorial and owners (in this case, the state). The SABC should be answerable to an independent, disinterested editorial board appointed by Parliament, rather than being controlled by politically-appointed directors. Only then can its public service begin to be distinguished from government service or ruling party service.

BET is also quite right. Television licences (and, for that matter, any other licence) should not be limited according to some bureaucrat’s notion of what the market can bear. They have no way of knowing how big the market might be and have no motive to take the necessary risks. They can only make and implement their one guess, however educated, rather than letting many competing guesses duke it out. They’ll always underestimate market size (witness cellular licences) or over-estimate it (witness E.sat’s decision to provide content to Multichoice, rather than use its licence, citing lack of space in the market).

Markets are created when risk-taking investors spot gaps and exploit them. Competition is created when those investors can price products as they see fit. Cost-reduction happens when competitors consolidate their interests, and winners buy up losers.
Instead, we get cosy cartels, who are held to arbitrary pricing restrictions, such as that they must generate at least as much revenue from subscriptions as from advertising. What do they do in a good advertising month? Go to customers and say, “Sorry folks, but we’re making a fortune here, we’ll have to raise your rates”? For that matter, why should there be any legal distinction between how broadcasters earn their revenue? Surely that should be a strategic business decision, not a legal prescription?

Unlike the ANC and BET, the SABC is quite wrong. If pay-TV operators have to pay for their SABC content, they should have the choice whether or not to buy it. If they’re obliged by law to carry public service content, it is unjust to expect them to pay over and above the cost of distribution. This is sheer opportunism on the part of the SABC, which is one of the dangers of that curious, cancerous state-capitalist hybrid that is the profit-driven state-owned enterprise.

Solving these problems go to the root of our telecoms legislation. They require setting licence conditions, but not limiting the number in issue. They require that risk-taking investors themselves choose their business plans and pricing models, rather than having them imposed by the state. They require regulation that is purely administrative, rather than restrictive, prescriptive and protective.

Because all this complicated lawyering and regulatory rigmarole, designed to balance the interests of producers, broadcasters and the state, forgets the most important interest: that of the public.