Sentech painted as monopoly in Icasa market inquiry
Icasa launched its market inquiry in September 2021 to try and build a picture of the competition landscape within the signal distribution sector, where broadcasters rely on infrastructure to deliver content via television and radio.
Industry stakeholders like eMedia, MultiChoice, and the SABC, which rely on Sentech’s terrestrial signal services, previously had no platform to express concerns with signal distribution.
Icasa was also trying to determine whether market regulation is needed to stimulate competition and fair pricing for broadcasters and, ultimately, consumers.
Over three years, Icasa collected submissions, held public hearings, and published discussion documents to assess the state of competition in signal distribution.
Monopoly games
According to the report, Sentech was found to have significant market power (SMP) in terrestrial signal distribution services, particularly in the three key areas of terrestrial TV, FM radio, and AM radio signal distribution.
This is a strong indication that these markets lack effective competition, as barriers to entry and the need for extensive infrastructure make it nearly impossible for competitors to enter and challenge Sentech’s dominance.
High sunk costs and the requirement to secure or build key infrastructure (read: broadcasting towers) reinforce Sentech’s strong position in the industry.
This dominance limits broadcasters' options, affecting their ability to negotiate service contracts that balance quality and cost.
Industry feedback
Open access broadcasters eMedia and the SABC raised concerns over limited alternatives to Sentech’s terrestrial services.
For example, eMedia argued that alternatives like satellite or internet streaming are not viable substitutes due to high costs and limited internet access in some regions.
Radio broadcasters also expressed frustration over high tariffs for signal distribution, which they say affect their operational sustainability.
Icasa's findings align with these concerns, saying that “the current structure of the signal distribution market fails to provide competitive choices,” leaving broadcasters dependent on Sentech without the leverage to negotiate competitive pricing or service terms.
Changes on the horizon
To address these market failures, Icasa announced plans to establish “pro-competitive regulations” that aim to:
- Define appropriate pricing mechanisms to protect broadcasters from excessive tariffs.
- Implement transparent contract terms between Sentech and its clients.
- Monitor the market regularly to prevent anti-competitive practices and ensure fair access to signal distribution services.
Icasa says it will begin a “consultative process” to shape these regulations, including publishing draft regulations for public comment, holding public hearings if necessary, and engaging directly with industry stakeholders.
This regulatory shift could support greater diversity in South Africa's broadcasting landscape and ensure that essential broadcasting services remain accessible to all.
