The Independent Communications Authority of South Africa (Icasa) has uncovered that Sentech, the state-owned provider of electronic communications and network services, holds a monopoly over the distribution of television, AM, and FM radio broadcasting frequencies. This conclusion is part of Icasa’s market inquiry report on signal distribution, which spans from 2010 to 2020.
Icasa attributes this market domination to structural issues, such as substantial sunk costs and entry barriers that inherently create a natural monopoly. This situation hampers competition, as new entities face significant challenges when entering the market, leading to increased pricing and reduced quality of services.
In its response to Icasa, Sentech acknowledged its substantial market power within the radio broadcasting sector but argued that the market remains competitive. The company contends that other radio broadcasters can negotiate tariffs effectively, ensuring a competitive environment.
Conversely, eMedia supports Icasa’s findings. The company pointed out that Sentech’s monopolistic power stems from its control over critical transmitter facilities, enabling it to engage in anti-competitive practices. As a response, Icasa has proposed that Sentech be subjected to regulations that encourage behaviour typical in competitive markets.
Icasa intends to actively monitor the market, believing that increased transparency and contracting will promote behaviour that is more aligned with competitive market conditions. To implement these measures, Icasa will initiate a consultation process to develop pro-competitive regulations to tackle the identified market failures.
This consultation will start with a public discourse to address the issues outlined in section 67(4) of the Electronic Communications Act. A draft regulation will be available for public feedback for 30 days, followed by public hearings before final regulations are established.
In light of the South African Broadcasting Corporation’s (SABC) precarious financial status, Sentech has had ongoing conflicts with the public broadcaster over unpaid dues. However, Communications Minister Solly Malatsi intervened, facilitating an arrangement that allows Sentech to maintain SABC’s broadcast signals for the next two months while exploring long-term solutions.
“Following discussions between SABC and Sentech, I have decided to ensure that approximately three million South Africans retain access to radio and television services,” stated Malatsi. He emphasized the importance of finding sustainable solutions amid SABC’s financial difficulties.
eMedia has also expressed concerns about Sentech’s dominance, asserting that broadcasters are at a disadvantage in bargaining power. In a presentation in June 2024, eMedia stated that broadcasters need more equitable agreements to avoid exorbitant prices imposed by Sentech. The company urged Icasa to immediately halt Sentech’s anti-competitive conduct.
E-tv, owned by eMedia, echoed these sentiments, indicating that meaningful tariff negotiations with Sentech are impossible without regulatory intervention. The company asserted that terrestrial television will continue to significantly influence by Sentech.
Additionally, eMedia raised alarms about the future viability of digital terrestrial television (DTT) in South Africa, pointing to the low installation rate of DTT decoders. In a submission to Icasa on June 13, 2024, the company warned that the future of DTT could be dire, predicting that analogue TV may remain in use alongside DTT for the foreseeable future.
