The Botswana Communications Regulatory Authority (BOCRA) may pull the plug on Multi Choice Botswana (MCB), which manages multi-channel pay-TV and subscriber management services DSTV in the country.
According to papers before High Court’s Justice Tshepo Motswagole, at the centre of dispute is Clause 13 of the licence BOCRA granted MultiChoice Botswana (MultiChoice Botswana). The clause allows the Multichoice to operate as a subscription service manager in Botswana.
Also at the centre of controversy is Section 90 of the BOCRA Act which requires all licensed service providers to submit their intended tariffs to BOCRA for approval.
MCB argues that it is impossible for them to provide such tariffs because they do not provide such services, instead such services are provided by MultiChoice Africa (MCA).
BOCRA states that “If, however, the Court finds that Multi Choice Botswana cannot comply with clause 13 of the License on any basis then BOCRA contends that in the event that MCB cannot comply with clause 13 of the License then the very basis upon which the License was granted is flawed and one cannot simply set aside or exclude clause 13 of the Licence since its provisions are severable.”
“In any event, MCB would be operating illegally since it cannot comply with clause 4.1 of its Licence in as much as the broadcasting service itself would be unauthorised and BOCRA will seek a declaratory order to that effect as part of its counter application,” BOCRA states.
According to BOCRA, the consequence will then be that it will be open to MCB to either conduct business illegally in Botswana or to voluntarily seek to apply for a licence in terms of section 31 of the Act-which will ultimately lead to both MCB and MCA being compliant.
While BOCRA said it was not in a position to provide information in regard to which entity in the group performs which roles, it is clear, however, from the diagram of the group structure that both entities still form part of the same group.
It states that Naspers Limited holds 100 shareholding of MCA and holds 100 MCB’s 51 shareholder, namely MIC Holdings (Proprietary) Limited. BOCRA states that Naspers therefore ultimately controls both entities.
“The fact is that as already alluded to above, MCB pays a very important role in marketing and supporting the DSTv service in Botswana and most importantly in collecting the subscriptions fee paid,” states BOCRA.
In circumstances where due to failure to comply with Tariff Regulation that subscription fee is unauthorised, BOCRA states that MCB will clearly be collecting such subscription on behalf of its principal MCA.
“It will therefore be operating illegally and hence the importance of clause 13 of the Licence in the light of the agency in relationship between the parties. MCB continues to act as a collecting agent and an agent for various other tasks on behalf of MCA,” said BOCRA.
It further states that “It is in the light of these circumstances that it is clear that if MCB is to be prevented to operate as an SMS provider because it cannot comply with its Licence or the Act, then MCA will be disadvantaged in providing its services. It is due to this competition that the traditional monopoly that DSTv held in Sub Saharan Africa is being diluted. It has resulted in the reduction of prices in various African countries.”
Moreover, BOCRA states, the exchange rate fluctuations in various countries means that the price charged for DSTv service by definition differs from country to country.
“In these circumstances there cannot be no plausible reason to argue that pricing in Botswana must the same as for the rest of Africa because the prices to the various subscribers differ from country anyway. As far as content is concerned, it is clear that local television services are provided through the DStv platform and content can vary from country to country. It appears that MultiChoice as a group is even considering pay-per view services being provided in certain countries,” BOCRA says.
It says “In these circumstances the arguments that MCB wishes to raise as to why MCA will not be willing to cooperate in regard to Tariff Regulation introduced through clause 13 of its agent’s Licence are unconvincing and simply untrue.”
Accordingly, what BOCRA envisages is the following; the tariffs proposed to be charged by MCA and to be collected by MCB are to be submitted for approval in terms of section 90 of the Act. BOCRA will then either approve the tariff or make a counter-proposal. If after 60 days there is no response from BOCRA then the tariff will in effect be approved.
BOCRA says “After the counter proposal, the engagement process envisaged in section 90(4) of the Act will be followed. There will be interaction between BOCRA and MCB, who will, if need be, engage MCA.”
If no agreement can reached, BOCRA says, then there will be an appeal to the Minister available to MCB.
“We emphasise that the process for Tariff Regulation in section 90 is a relatively consensual process where the intension is clearly to ensure that prices are reasonable but commercial realities are taken into account,” says BOCRA.
In these circumstances, BOCRA says, given the way in which MCA operates throughout the continent and in other countries, no doubt through similar structures, there is no reason why MCB cannot engage with MCA and seek to persuade it on any issue as part of its engagement with BOCRA.
It is in light of these considerations that BOCRA says, it decided to include clause 13 in Licence.
“BOCRA is statutorily obliged to impose tariff regulation and it genuinely believes, given that MCA and MCB are associated entities that clause 13 of the Licence can be implemented effectively. ├äs indicated above, in order for MCB to conduct business legally it must do so in respect of an authorised as envisaged in clause 4.1 of the Licence then MCB is not allowed to conduct business,” BOCRA says.
Therefore, BOCRA states, even if the licence is deemed to be valid, then and in that event it is appropriate for a declaratory Oder to be made that MCB cannot conduct business unless the DSTv service has been authorised. A method by which this can be achieved is by MCA apply for a licence.
“If the Court were to find that a review of BOCRA is appropriate, it is submitted that the court cannot simply review and set aside the inclusion of clause 13 in the Licence for the reasons I have already addressed above, namely that such provision is simply not severable from the rest of the Licence,” BOCRA argues.
It states that “The whole process will have to be started again and it is submitted that is not within the court’s power to rewrite the Licence and that due deference to BOCRA and its processes must be given.”
According to BOCRA, “In such circumstances, it is respectfully submitted that the Licence should be set aside. To the extent that there is an argument that BOCAR cannot simply set aside its own decision, relief is sought from this Honourable Court to then review and set aside the entire Licence.”
Replying, MultiChoice Botswana said that the licence BOCRA issued is explicitly a “Subscription Management Service Provider Licence “which licence MultiChoice Botswana, not to broadcast, but to provide a subscription management service.”
MultiChoice Botswana states that the difference between the parties relates to the kinds of conditions BOCRA may impose on such a licensee.
According to MultiChoice Botswana, BOCRA derives its power to impose conditions on licensees from section 32(2) of the Act. The section states that ├ñ licences issued under subsection (1) may be issued subject to such conditions and restrictions, including geographically restrictions, as the Board may consider necessary and such conditions and restrictions shall be endorsees on the licence.”
“We submit that the language of this provision is clear. BOCRA may impose conditions and restrictions on a licensee in relation to its own performance of the activities for which the licence is required. It may set conditions for the performance of those activities and may impose restrictions on them. But there is nothing in the language of the section to suggest that BOCRA may impose “conditions”on a licensee, which are unrelated to its own conduct, purely to regulate the conduct of a third party,”MultiChoice Botswana states.
MultiChoice Botswana contends that “however BOCRA included clause 13 in MultiChoice Botswana’s licence with the avowed purpose of regulating Multi Choice Africa’s tariffs. That was an impermissible anterior purpose.”
It states further that BOCRA does not have the power to impose a condition on a licensee, not to regulate the conduct of the licensee’s performance of the licensed activities “but to regulate the conduct of the licensee’s performance of the licensed, but to regulate the conduct of a third party. We accordingly submit that clause 13 is ultra vires and thus unlawful.”
MultiChoice Botswana states further that BOCRA’s attempt to regulate Multi Choice Africa’s broadcasting activities by proxy is unlawful.
It says that the BOCRA Act is presumed to only apply within Botswana and not beyond its borders.
“We accordingly submit that Multi Choice Africa’s broadcasting activities are not subject to the Act. It does not require a licence and BOCRA does have the power to regulate its broadcasting activities. It is thus unlawful for BOCRA to attempt to do so indirectly by conditions imposed on MultiChoice Botswana. It is an attempt to do indirectly what the Act does not permit to do directly. It is manifestly unlawful,” says Multi Choice Botswana.
According to Multi Choice Botswana “But it would in any event not avail BOCRA even if we are mistaken and if Multi Choice Africa’s broadcasting activities are indeed subject to regulation in terms of the Act. If that is so, BOCRA’s remedy is to enforce the Act against Multi Choice Africa. BOCRA must require it to license under the Act and prosecute it if does not do so.”
Even if the direct regulation of Multi Choice Africa is permissible under the Act, Multi Choice Botswana states that it will only entitle BOCRA to regulate Multi Choice Africa directoly and not so indirectly via Multi Choice Botswana.
Multi Choice Botswana states that had BOCRA intended clause 4.1 to require that DSTv service be separately authorised before Multi Choice Botswana could provide subscription management services the authorisation would have been framed as a condition precedent to the licence coming into operation.
Motswagole is expected to deliver judgement on August 3.