In South Africa, the communications regulator, Icasa, has released draft regulations to enhance oversight of Sentech’s terrestrial broadcasting signal distribution business. These regulations officially recognise the state-owned company as possessing significant market power in television, FM radio, and AM radio transmission services.
Published in the Government Gazette recently, the proposed signal distribution services regulations are the culmination of Icasa’s lengthy market inquiry into the structure and competitiveness of South Africa’s broadcast signal distribution sector.
Icasa has found that the wholesale markets for terrestrial signal distribution are inadequately competitive, primarily due to high entry barriers and the capital-intensive demands of broadcasting infrastructure. Consequently, the regulator has concluded that Sentech operates effectively as a natural monopoly in providing signal distribution services to broadcasters.
Icasa stated in the draft regulations, “Sentech has significant market power due to its dominance” in the terrestrial television, FM sound broadcasting, and AM sound broadcasting sectors.
This dominance has led to market inefficiencies, such as a lack of pricing transparency and limited ability for broadcasters to determine if transmission tariffs and service quality align with competitive standards. Icasa warns that without regulatory intervention, prices and service quality are unlikely to be managed by market forces.
The SABC and eMedia, which owns e.tv, have vocally criticised Sentech for the high fees imposed for transmitting their signals across South Africa. Currently, the SABC and Sentech are embroiled in a dispute over these fees, with the public broadcaster reportedly owing Sentech hundreds of millions of rand in outstanding payments—a matter now under arbitration involving the Department of Communications and Digital Technologies.
Sentech plays a pivotal role in South Africa’s broadcasting landscape, facilitating the transmission of television and radio signals for both public and commercial broadcasters nationwide. For many, there are no viable alternative suppliers.
Icasa is proposing a set of pro-competitive obligations for Sentech as the regulations take effect. A central requirement is that Sentech provide “reference offers” for each defined wholesale signal distribution market. These offers will include standardised terms and conditions for accessing Sentech’s transmission services, covering pricing, technical specifications, service levels, and dispute-resolution mechanisms.
Sentech will have 45 days from the effective date of the regulations to submit these reference offers to Icasa for approval. Following approval, these offers must be made publicly available, enabling broadcasters and stakeholders to examine the terms for signal distribution services.
Additionally, Icasa mandates that Sentech’s tariffs must be reasonably based on the actual cost of service provision, allowing for the recovery of efficiently incurred costs along with a return that aligns with risk. Although detailed cost modelling will be addressed in a later phase, Icasa stresses that cost-based pricing is crucial to avoid excessive or ambiguous charges in a monopolistic environment.
The draft regulations also bolster Icasa’s dispute resolution authority. If an agreement on transmission terms cannot be reached between a broadcaster and Sentech, either party may escalate the issue to the regulator, whose determination will be final and binding.
To ensure ongoing oversight, Sentech may be required to provide detailed information on the assumptions and inputs underlying its tariffs. Noncompliance with key provisions of the regulations could lead to administrative fines of up to US$305,220 under the proposed rules.
Icasa plans to review the regulated markets at least once every five years, or sooner if critical developments occur.
Stakeholders have 30 working days from the publication date to submit written feedback on the draft regulations, which will be considered in the final version.
