Icasa is set to crack open South Africa’s free-to-air television industry to more competition. As South Africa moves to digital broadcasting, the communications regulator is planning to license a third terrestrial player to compete head-on with the SABC and e.tv.

If it goes ahead, which seems likely, South Africa will get its first new free-to-air terrestrial broadcaster since e.tv was launched 16 years ago.

Last week, Icasa advertised for a consultant to help it with “analysis of the market research, financials and business plans of applications for individual commercial free-to-air television broadcasting services licences”.

Industry watchers say interested bidders are likely to include Kagiso Media and Times Media Group. The latter, which owns the Sunday Times, is showing a keen interest in broadcasting and multimedia content. It has snapped up a number of radio assets in the past year and is planning to launch a broadband video-on-demand service called Vidi next month.

Though the licensing process is at an early stage, Icasa’s move already appears to be causing consternation at the SABC. Talk is that the public broadcaster is lobbying the ruling party, arguing that a third player, if it’s licensed, will prove disastrous to its already precarious financial position.

But unless there’s a change in policy regarding broadcasting by the ANC, it’s unlikely Icasa will back down.

Icasa will need to move quickly, though. The business case for new free-to-air television is getting weaker by the day as subscription broadcasters — led by MultiChoice — push new services into the mass market and as consumers turn to the Internet for their television entertainment.

Can the market sustain a third free-to-air player? “It’s an awfully difficult question to answer,” says media expert Chris Moerdyk. “Clearly, competition under normal circumstances would always be welcome, but the broadcast environment is so regulated in South Africa that free competition can’t really function properly. The broadcast environment is far from free and fair.”

Moerdyk says e.tv represents a “unique and somewhat miraculous” case study. He says it will be hard for a third player unless it is given significant regulatory help, but the established rivals will take a dim view of such support.

Competing with the SABC, which has a huge broadcasting footprint that reaches most South Africans, will be particularly difficult.“I cannot imagine another free-to-air operator being able to get the kind of reach or audience that the SABC has,” Moerdyk says. Despite this, he believes the SABC, which relies heavily on advertising and sponsorship revenue rather than licence fees, is “terribly vulnerable” if the market becomes more competitive.

The other challenge is competing with subscription services. MultiChoice has entrenched its dominance in pay TV in recent years, launching new bouquets that appeal to people in lower living standards measures. DStv Compact, which at R295/month costs less than half of the broadcaster’s Premium bouquet, has proved hugely successful, especially among black, middle-class viewers.

Icasa also recently provisionally licensed five new subscription broadcasters, its second attempt at fostering competition in pay TV. Siyaya TV, which recently secured the rights to Bafana Bafana matches, and Kagiso Media are both seen as potentially strong challengers in that space, and both plan to target the same market that a new free-to-air player would have to go after.

The digital migration process — when it’s eventually concluded — will also have a big impact on competition. The SABC and e.tv will both be able to broadcast significantly more channels than they do now, giving consumers far more choice and stretching advertising spend thin.

The bigger threat, however, is looming just beyond the horizon. Over the next decade, broadband will turn the broadcasting industry on its head as everyone — not only the wealthy — watch what they want to on demand on the Internet. In 10 years from now, the concept of linear broadcasting could seem as quaint as a dial-up modem.