Communications Minister Solly Malatsi has released a draft policy to regulate media services in South Africa, inviting public feedback on proposals that include setting local content quotas for streaming services.
This Draft White Paper on Audio and Audiovisual Media Services and Online Safety also explores the taxation of global streaming platforms like Netflix and Disney+, questioning whether they are taxed less than local broadcasters.
The policy outlines a 24-month implementation plan divided into three stages, which will run simultaneously in some respects.
The initial phase, which lasts 6 to 12 months, focuses on finalising the policy, identifying necessary legislative amendments, and conducting research and consultations.
Following this, Stage Two spans 12 to 18 months and aims to update outdated regulations, introduce new rules, assess whether new legislation is necessary, outline amendments to existing laws, and finalise a code of conduct.
The final stage will depend on the outcomes of Stage Two and the aim of drafting new legislation, which will likely take the entire 24-month period.
During the first two stages, the draft policy will examine whether international streaming services should be subject to higher taxes or comply with local content quotas.
The policy highlights that many countries face the challenge of regulating over-the-top (OTT) services, raising questions about the necessity and format of such regulation.
OTTs refer to services like Netflix and Disney+ that operate over existing internet networks. The policy highlights concerns from market players and regulators regarding OTTs’ lack of contributions to national revenue when they operate from outside the country.
An assessment of potential fees for registration and notifications will be conducted in Stage One.
The draft policy stresses the need to evaluate the disparity in regulation between broadcasting licensees and OTTs to ensure fair and proportionate treatment for both service types.
Current obligations imposed on broadcasting licensees regarding local content do not apply to OTTs, raising additional concerns.
Until the review in Stage One concludes, existing South African content quotas for broadcasting services, including online offerings, will remain in effect.
The Independent Communications Authority of South Africa (Icasa) plans to revise the current approach of defining local content quotas based on individual TV channels. Instead, the quotas will be evaluated across the range of channels each broadcasting service licensee offers.
If a service fails to meet the South African content quota, it may be required to pay a fee or a percentage of its gross revenue into a fund dedicated to supporting South African content creation.
The proposed obligations for South African content may also extend to on-demand services, with specifics to be determined in Stage Two within 12 to 18 months.
This isn’t the first initiative by the South African government to impose additional taxes on international media companies.
In 2020, the Presidential Commission on the Fourth Industrial Revolution suggested a digital tax targeting global firms like Netflix, Amazon, and Facebook.
Industry players like MultiChoice, Vodacom, and MTN have previously argued that platforms like Netflix should obtain operating licenses in South Africa and comply with Black Economic Empowerment (BEE) regulations.
In 2021, an earlier version of the white paper proposed a stringent 30% local content quota for streaming services, a move Netflix warned could backfire, leading to a downsizing of libraries or the production of numerous low-budget local offerings to meet quotas.
