ttv (PTY) LTD IN THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, PRETORIA Case number:26166/2015 MINISTER OF COMMUNICATIONS

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4 1 IN THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, PRETORIA Case number:26166/2015 In the matter between: ttv (PTY) LTD Applicant and MINISTER OF COMMUNICATIONS MINISTER OF TELECOMMUNICATIONS AND POSTAL SERVICES INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA UNIVERSAL SERVICE AND ACCESS AGENCY OF SOUTH AFRICA SOUTH AFRICAN BROADCASTING CORPORATION SOC LIMITED ELECTRONIC MEDIA NETWORK LTD ASSOCIATION OF COMMUNITY TELEVISION SA NATIONAL ASSOCIATION OF MANUFACTURERS OF ELECTRONIC COMPONENTS SOUTH AFRICAN COMMUNICATIONS FORUM SENTECH SOC LTD st 1 Respondent Respondent 3rd Respondent 4th Respondent 5th Respondent 6th Respondent 7th Respondent 8th Respondent 9th Respondent Respondent CELL C (PTY) LTD TELKOM SOC LTD TELLUMAT (PTY) LTD th 13th Respondent Respondent Respondent SUPPORT PUBLIC BROADCASTING COALITION MEDIA MONITORING AFRICA Respondent 15th Respondent

5 2 SIXTH RESPONDENT'S ANSWERING AFFIDAVIT I, the undersigned, KAREN HELENA WILLENBERO do hereby make oath and say that: 1. I am the Director of Regulatory and Legal Affairs of Electronic Media Network (Pty) Limited (M-Net) at 137 Bram Fischer Drive, Randburg. 2. I am duly authorised to oppose this application and depose to this answering affidavit on behalf of M-Net. 3. The contents of this affidavit are true and correct and, unless otherwise stated, fall within my personal knowledge and experience. 4. I have followed and been involved in key aspects of the broadcasting digital migration planning process since In the course of my regulatory work at M-Net I have monitored and made submissions on the development and implementation of television broadcasting policy and regulations. Digital migration has been a key area of focus for M-Net which, as a terrestrial television broadcaster, is directly affected by the digital migration process. I have also played a broader advisory role as a co-chairperson of the Content Committee of the ministerial Digital Migration Working Group and as a member of the Digital

6 3 Dzonga Advisory Councils established by Ministers of Communications Ivy Matsepe-Casaburri and Siphiwe Nyanda to oversee the implementation of digital migration in South Africa. 5. Where I make factual allegations which are within the knowledge of other persons, I this affidavit. refer the Court to their confirmatory affidavits filed with 6. Where I deal with technological aspects of 'digital migration', 'STBs', 'conditional access' and 'encryption', I refer the Court to the confirmatory affidavit of Gerhardus Jacobus van Eeden. 7. Where I make submissions of a legal nature, I do so on the advice of M-Net's legal representatives, which I believe to be correct. TERMINOLOGY 8. The issues canvassed in the affidavits and documents in this application involve a number of technological concepts and terms which are specific to the television broadcasting industry. The key terms which are used, and the meanings which I ascribe to them, are set out hereunder: 8.1. Analogue terrestrial television broadcasting: terrestrial television where the broadcast signal is in analogue format;

7 Conditional access (CA): a broad term referring to a range of security technologies which enable a television broadcaster to restrict access to its broadcast content based on payment or the use of an authorised device. Conditional access generally includes the encryption of television broadcast signals (known as full conditional access, as used by subscription television broadcasters), but the term is also used to refer to software-based security technologies which do not include the encryption of television broadcast signals; 8.3. Control systema'stb control: uniquely South African terms, initially proposed by the SABC in May 2008 to refer to softwarebased security technologies which do not include the encryption of television broadcast signals; 8.4. Digital migration: the transition from analogue broadcasting to digital broadcasting; 8.5. Digital terrestrial television broadcasting (DTT): terrestrial television where the broadcast signal is in digital format; 8.6. Encryption: the use of cryptography to scramble television broadcast signals so that they can only be unscrambled and viewed by those who have the software necessary to decrypt those signals;

8 Free-to-air broadcasting services: broadcasting services which viewers can access without having to pay a subscription fee; 8.8. Integrated digital television set (1DTV): a television set with a built in digital tuner for receiving DVB-T2 transmissions, which dispenses with the need for a set top box for converting digital signals for reception on a television set; 8.9. Satellite television broadcasting: transmission of television broadcast signals via geostationary communication satellites; Set top box (SIB): a device capable of receiving DTT broadcast signals and converting those back into analogue format so that viewers with analogue television sets are able to continue to watch television broadcasting services. In this affidavit this term is used to refer only to the STB required to view free-to-air terrestrial television broadcasting services; Subscription broadcasting services: broadcasting services which viewers can access only by paying a subscription fee; Terrestrial television broadcasting: transmission of television broadcast signals via terrestrial transmitters.

9 6 9. In what follows, unless I indicate otherwise 9.1. my reference to 'free-to-air broadcasters' and to 'free-to-air broadcast signals' should be taken to refer to free-to-air terrestrial broadcasters and broadcast signals; 9.2. my reference to 'STBs' should be taken to refer to free-to-air DII STBs; and 93. my reference to a 'control system with encryption' should be taken to refer to a control system in an STB which includes the capability to 'encrypt' and 'decrypt' broadcast signals (encryption capability). THE APPLICATION 10. This application concerns the Broadcasting Digital Migration Policy for South Africa which was published by the Minister of Communications (the Minister) on 8 September 2008 and amended on 7 February 2012, 17 February 2012, and 18 March 2015 (the Policy) in terms of section 3(1) of the Electronic Communications Act, 36 of 2005 (the ECA). 11. In what follows I refer to the relevant iterations of the Policy as 'the 2008 Policy',1 'the 2012 Policy'2 and 'the 2015 Policy'.3 2 The Policy published on 8 September 2008 I The Policy foliowing its amendment on 7 February 2012 and 17 February 2012 The Policy following its amendment on 18 March 2015 \J

10 7 12. The main relief sought by e.tv relates to two clauses inserted in the Policy by amendment on 18 March 2015 (the impugned amendments): Clause 5.1.2(A), also referred to as 'the non-mandatory STB control amendment', which provides as follows: "In keeping with the objectives of ensuring universal access to broadcasting seivices in South Africa and protecting government investment in subsidised 5Th market, STB control system in the free-to-air DTT will be non-mandatoty." Clause 5.1.2(B)(a), also referred to as 'the encryption amendment', which provides as follows: "The STB control system for the free-to-air DTT STBs shall...not have capabilities to encrypt broadcasting signals for the subsidised STBs." 13. e.tv seeks an order reviewing and setting aside the Minister's decision to enact the impugned amendments; declaring the impugned amendments unlawful and invalid; and 'remedying' an alleged defect in the non-mandatory STB control amendment. 14. I have read e.tvs founding affidavit deposed to by Lara Jane Kantor. Insofar as Ms Kantor deals with technological aspects of digital migration, STBs, and encryption, I point out that she does not refer to any qualifications which permit her to give evidence on these issues.

11 8 15. As will appear from what follows, M-Net contends that e.tv has failed to make out a case for the relief which it seeks. 16. In this affidavit, I set out M-Net's general response to the application, canvassing M-Net's case in overview; e.tv's claim to standing in the public interest; the background to the application; the implications of an SIB control system with encryption; the reviewability of the impugned amendments; the lawfulness of the encryption amendment; the rationality of the encryption amendment; the rationality of the non-mandatory STB control amendment; the procedural fairness of the impugned amendments; and the relief sought by e.tv; and

12 I deal with the individual allegations in the founding affidavit. GENERAL RESPONSE TO THE APPLICATION M-Net's case in overview 17. e.tv wishes to encrypt its free-to-air television broadcast signals in the DTT environment. It is the only free-to-air television broadcaster in South Africa which wishes to do so, and its intention is at odds with the global trend. The overwhelming majority of free-to-air terrestrial television broadcasters worldwide do not encrypt their broadcast signals. 18. The reasons which e.tv puts forward for wishing to encrypt its free-toair broadcast signals are based on flawed and incorrect assumptions which are contradicted by e.tv's own previous statements. 19. Contrary to the misconceptions promulgated by e.tv in its founding affidavit, and by recent commentators in the media, encryption of freeto-air broadcasting signals is not required to prevent piracy of television broadcasting content. As I explain below, this objective is met by the incorporation in the STB of High-bandwidth Digital Content Protection (HDCP), a form of digital copy protection which prevents unauthorised copying of content. The standard developed by the South African Bureau of Standards (SABS) for

13 10 STBs, SANS 862:2013 Edition 2.1 (the National Standard), explicitly requires the inclusion of HDCP in STBs; is required to enable free-to-air broadcasters to obtain high definition content. As I explain below, the majority of free-to-air terrestrial broadcasters worldwide broadcast their signals unencrypted and obtain and broadcast high definition content. These broadcasters include, in the United Kingdom, the public broadcaster, the BBC, and public commercial broadcasters llv and Channel 5; in the United States, the public broadcaster PBS, and commercial broadcasters ABC, NBC and CBS; and in Australia, the public broadcaster ABC and commercial broadcasters Seven Network, Nine Network, Network Ten and SBS. Leading international programme suppliers do not require encryption of their programmes on free-to-air terrestrial networks; and is not required to prevent the importation and sale of cheap, poor quality STBs to the public. As I explain below, this objective will be addressed by a range of conformance measures to protect consumers against poor quality products, including the adoption of the National Standard, the certification of compliant products, and consumer education on the risks of purchasing STBs which are not certified.

14 At the heart of e.tv's challenge is the claim that the encryption amendment will directly preclude free-to-air terrestrial broadcasters from encrypting their broadcast signals in respect of the five million households which will have government-subsidised STBs, and indirectly preclude them from deciding to encrypt their signals at all. Both parts of this claim are unfounded and untrue. 21. What e.tv does not acknowledge or even disclose is that it can itself fund the manufacture and provision of its own customised SIBs with encryption capability for the households which it wishes to reach. As a commercial broadcaster which, we are told, has identified the encryption of its signals as 'critical to its business', e.tv does not explain why it expects the cost of this decision to be borne by government. 22. Also absent from e.tv's account is a recognition of the transitory role which the STB is expected to play in the terrestrial television broadcasting landscape. It has always been accepted that the STB will be a temporary feature of television broadcasting. It is attractive in the early stages of digital migration as a low cost means of enabling an existing analogue television set to receive digital transmissions. Viewers already using idtvs when digital migration is concluded will not need to use STBs at all. When, as has happened globally, idtv5 become more widely available and affordable, the STB will become redundant.

15 If the government-subsidised SIBs were to incorporate encryption capability to meet e.tv's needs, viewers would be reliant in perpetuity on STBs and STBs would have to be manufactured, purchased and maintained indefinitely for e.tv's commercial benefit. Since digital tuners can and will be built into a wide range of consumer products, including portable TVs, viewers using all of these products would require STBs as well. 24. e.tv also does not deal with the other significant implications of including encryption capability in STBs, which include not only the cost but also the technical complexity which it will add to each STB, thus increasing the risk of SIB malfunction and giving rise to higher maintenance and repair costs for the consumer, and a higher risk of replacement. As explained below, the inclusion of encryption capability also has important implications for emerging manufacturers of STBs in South Africa. 25. Evidently e.tv does not wish to make the investment necessitated by its decision to encrypt its free-to-air broadcast signals. Instead, it wants encryption capability to be incorporated in the control system in all the government-subsidised STBs. Having failed to persuade government of the merits of its views for purposes of the formulation of government policy, it now seeks to achieve this objective by way of judicial review. It seeks, in essence, to usurp government policy for its own commercial advantage.

16 e.tv acknowledges that its views on the merits of encrypting free-to-air broadcast signals are 'strenuously contested' by 'certain interested parties', but asserts that its case does not depend on the Court determining whether encryption of free-to-air broadcast signals is good or bad for broadcasters or the country as a whole. 27. In fact, e.tv's views on encryption are unsupported by the facts, have no support among South African free-to-air television broadcasters, and are aberrant globally. In these circumstances, e.tv's contention that it brings this application in the public interest is unsustainable. The application has self-evidently been brought only in e.tv's commercial interest. Since the reasons afforded by e.tv for wishing to encrypt its free-to-air broadcast signals are groundless, it can only be assumed that e.tv has a different, undisclosed objective. 28. For reasons which will be canvassed in legal argument, the impugned amendments do not constitute administrative action and are accordingly not reviewable under the Promotion of Administrative Justice Act, 3 of 2000 (PAJA). Even if they were, e.tv has not established that the impugned amendments fall to be reviewed and set aside on any of the PAJA grounds on which it relies. 29. If the making of policy is reviewable as an exercise of public power in terms of the constitutional principle of legality (a matter for legal argument at the hearing of the application), the impugned amendments in any event do not fall foul of legality standards.

17 14 e.tv's claim to standing in the public interest 30. e.tv claims to bring the application both in its own interest and in the public interest. For reasons which will be canvassed in legal argument, e.tv has failed to make the allegations necessary to establish that it is has standing to act in the public interest and its claim to such standing is disputed. Background to the application 31. The process of developing national policy on broadcasting digital migration commenced in 2005 with the Minister's establishment of the Digital Migration Working Group. 32. Among the issues addressed in policy planning were SIBs, which have a key role to play in digital migration. After digital migration has been completed, viewers who do not have idtv5 will require STBs in order to continue viewing terrestrial television on 'old' television sets with analogue tuners. 33. As is the case internationally, free-to-air STBs have always been understood to have a transitory role. As e.tv itself explained in submissions to the Minister in March 2008,

18 15 "The box is merely a bridging mechanism to a/low analogue television sets to receive a digita/ signal when digital television sets are available on a large scale, the box will no longer be required. The notion of such a basic box is in line with international experience including the United Kingdom.'4 34. Since 2005 two key questions related to STBs have been debated: first, whether STBs should include a 'control system', and second, whether such a control system should include encryption capability. 35. Government policy and individual television broadcasters' positions on these issues have fluctuated over the last decade. The debates on these issues have also been bedevilled by different parties' different understanding (and interchangeable use) of the key terms 'control system', 'conditional access' and 'encryption'. Prior to September In the period leading up to the publication of the 2008 Policy, the main terrestrial broadcasters (e.tv, the SABC and M-Net) were opposed to the encryption of the broadcasting signals of free-to-air television broadcasting services and the inclusion of encryption capability in STBs. Paragraph of the e.tv submissions, which will be dealt with in more detail below

19 In submissions to the Department of Communications dated 17 March 2008 (the 2008 e.tv submissions, annexed as 'KWI) e.tv furnished the following reasons for its opposition to a control system with encryption (which it called a 'CA system'): CA is a subscription television concept and is 'wholly unsuited to free-to-air television The inclusion of CA in the basic free-to-air SIB 'raises critical constitutional, economic, financial and competition issues'6 and 'infringes on the right of viewers to freedom of expression' The inclusion of CA in the basic SIB would add 'complexity and expense' to the entire digital migration process 'The use of CA in a free-to-air environment is highly unusual and untested in comparable jurisdictions' 'It would... cause unnecessaty complications down the line, especially when integrated digital TV sets are introduced into the market'.1 (As is evident from its founding affidavit, e.tv now holds a position which directly contradicts the views it expressed in It does not offer any meaningful explanation as to why its position has changed.) 6 10 Paragraph 2.3 of the 2008 e.tv submissions Paragraph 2.5 of the 2008 ely submissions Paragraph of the 2008 e.tv submissions Paragraph of the 2008 e.tv submissions Paragraph of the 2008 e.tv submissions Paragraph of the 2008 ely submissions

20 The SABC articulated its opposition to a control system with encryption in submissions to the Department of Communications in May 2008 (annexed as 'KW2'). 39. In a request for proposals issued by the SABC on 24 June 2008 in respect of control system software for STBs (annexed as 'KW3') the specifications required a low-cost, low-maintenance solution appropriate to a free-to-air market, capable of preventing subsidised STBs from leaving South Africa, and capable of turning off stolen STBs, with no encryption of broadcast signals. The 2008 Policy, the 2012 Policy, and the National Standard 40. The 2008 Policy, published in September 2008, provided that STBs would have 'a control system to prevent STBs from being used outside the borders of South Africa and to disable the usage of stolen STBs',11 and 'capabilities to unscramble the encrypted broadcast signals so that only fully compliant STBs made or authorised for use in South Africa [could] work on the network' In the period which followed, during which various amendments were made to the Policy, the positions of some individual broadcasters have changed. Para of the 2008 Policy 12 Para of the 2008 Policy

21 e.tv, which in 2008 was strongly opposed to a control system with encryption for STBs, has completely reversed its position. The public position of the SABC, on the other hand, has varied over time. 43. The 2012 Policy provided that STBs would have 'a robust STB control system', but deleted the reference in the 2008 Policy to 'capabilities to unscramble... encrypted signals'. 44. The Department of Communications, in a presentation on 18 February 2014,13 described this amendment as follows: "In 2012, an amendment to the BDM Policy was gazetted to soften the use of the STB Control System. For example, Encryption was dropped but STB Control maintained to ensure that STBs conform to SABC (South African Bureau of Standards) standards")'4 45. On 1 June 2012 the SABS approved the National Standard (an updated and full copy of which is attached as 'KW4'), which noted the need for 'control means... to prevent subsidised STB decoders from being used outside South Africa', and provided that the STB decoder control specification could be obtained by manufacturers from the incumbent terrestrial free-to-air broadcasting service licensees. No reference was made to a control system with encryption Annexure LK3O to the founding affidavit Slide 8. Emphasis added

22 19 The e.tv iudgment 46. On 12 September 2012 e.tv instituted an application in the South Gauteng High Court seeking declaratory relief on the question whether the Minister had the power to determine who had responsibility for the set-top box control system' for free-to-air DTT. 47. This relief was sought in circumstances in which Minister Pule had, in May 2012, appointed the signal distributor Sentech Limited to 'assume responsibility for the STB control system, despite the Department of Communications having requested the SABC, in March 2011, to work in co-operation with other free-to-air broadcasters 'to commence a process to select a suitable STB Control vendor'. 48. The narrow issue which the Court was called upon to determine was whether the Minister was entitled to determine who should 'manage' the control system in SIBs. (On the facts before the Court, STB control 'management' involved the selection and appointment of a suitable STB control vendor.) On the basis that the ECA draws a clear distinction between ICASA's power to regulate and the Minister's power to develop policy, the Court found that ICASA, and not the Minister, had the power to decide this issue, and that in the absence of any determination of this issue by ICASA, the responsibility lay with the free-to-air broadcasters.

23 The e.tv judgment is not, as e.tv contends, authority for the proposition that the Minister cannot make policy on the question whether government-subsidised STBs should have a control system with encryption. Proposed amendments to the 2012 Policy 50. On 21 May 2013 Minister Pule announced in Parliament that she had taken a decision to review the policy on the 'SIB control system' 'to make this system non-mandatory. Before any such steps were taken, Minister Pule was succeeded by Mr Yunus Carrim. 51. On 23 August 2013 Minister Carrim invited interested parties to a round-table discussion to try to reach consensus on (among other things) the question whether STBs should have a 'control capability. In the terms of reference for this process (annexed as 'KW5') the issues identified to guide the discussion were (a) whether the SIB should have a 'CA-based control system', and (b) if so, the forms and modalities of the 'CA-based control system'. 52. On 6 December 2013 Minister Carrim published for comment proposed amendments to the 2012 Policy (the 2013 proposed amendments)15 which envisaged that a 'control system' for STBs would be mandatory, but that its 'use' by broadcasters would not be mandatory. 15 Annexure LK3 to the founding affidavit

24 The written comments made in response to the 2013 proposed amendments reflect a common understanding that Minister Carrim's reference to a 'control system' meant a control system with encryption. 54. With the exception of e.tv, all the terrestrial television broadcasters opposed the mandatory inclusion of a control system with encryption in STBs. 55. The SABC recommended that the 'control system' in STB's should be non-mandatory and that 'the Department should subsidise the standard box, which has no conditional access, which box the SABC supports and will be using'. The SABC also made the point that '[t]here is no basis for the Department to pay for conditional access because by so doing it will be paying for commercial broadcasters, which would be in contravention of the [Public Finance Management Act]' Act-SA, on behalf of all seven community television broadcasters in South Africa, expressed its disappointment at the proposed amendments requiring all free-to-air STBs to have 'STB control', describing it as 'a system which benefits only the chosen few who have vested interests in a short-term technology which has no added value to the poor' I? Annexure LK12 to the founding affidavit Annexure LK14 to the founding affidavit

25 M-Net canvassed comprehensively the flaws in the various arguments in support of a control system with encryption in STBs,18 and the costs that would be added to every part of the broadcasting value chain if this was required. 58. The National Association of Manufacturers of Electronic Components (NAMEC), representing black-owned small, medium and micro enterprises in the electronics industry, articulated its continuing opposition to any form of conditional access and encryption capability in the STBs on the grounds, among others, that: it is an undesirable system that has never been implemented as a government policy anywhere in the world; the costs that the system introduced would be borne by the South African taxpayer forever; and the requirements for manufacturers to produce STBs with encryption technology would prejudice emerging black manufacturers entering the market Annexure LK13 to the founding affidavit Annexure LK1 5 to the founding affidavit

26 23 The 2015 Policy 59. The current Minister (Ms Faith Muthambi) published the 2015 Policy on 18 March In respect of STB control, the 2015 Policy provides that government-subsidised free-to-air OTT STBs must have a control system to prevent those STBs from functioning in non- South African OTT networks; the STB control system for free-to-air OTT STBs will not have capabilities to encrypt broadcast signals for the subsidised STBs;21 and depending on the kind of broadcasting services that broadcasters may want to provide to their customers, individual broadcasters may at their own cost make decisions regarding encryption of content The current position is accordingly that free-to-air broadcasters who wish to encrypt their signals may do so, but will have to bear the costs associated with this decision. 61. At the same time that the 2015 Policy was published, the Department of Communications announced that Government has decided to fund the five million government-subsidised STBs fully. 20 Paragraph of the 2015 Policy 21 Paragraph 5.1.2(B)(a) of the 2015 Policy 22 Paragraph 5.1.2(c) of the 2015 Policy

27 24 The implications of a control system with encryption Negative impact and effects 62. The far-reaching adverse implications of including a control system with encryption in STBs have been canvassed fully in the 2008 e.tv submissions (annexed as 'KWI), and M-Net's submissions of 3 January 2014 (annexure LK13 to the founding affidavit). 63. Most compelling are the cost implications. The inclusion of a control system with encryption in the government-subsidised STBs wilt significantly increase the costs for government and consumers. 64. The encryption system must be procured from an international encryption vendor. I am not aware of any South African encryption vendors. 65. Encryption vendors require approved manufacturers to go through a security clearance process of certification and licensing. The cost of this process will be incurred by the manufacturers of the government-subsidised STBs and simply passed on to government. 66. The STB hardware will be more costly because it will need to be adapted to accommodate encryption. 67. Encryption vendors will require the payment of annual license fees and royalties for the use of their proprietary encryption systems.

28 In addition, there are costs associated with the daily maintenance and management of the encryption system which include the implementation of business systems to manage the user data base and a call centre to address activations, de-activations, technical support and queries Many of these cost considerations were highlighted by e.tv in its 2008 submissions: "4.1.1 The cost of including CA in the basic free-to-air STB Both the CA itself, as well as the various security elements (necessary only to support CA) which are proposed to be inserted into the STB from the outset, add costs to the basic free-to-air STB. This is unjustifiable in a situation where most South Africans rely on free-to-air television for their information needs and where most cannot afford the STB. Each additional cost to the basic free-to-air STB makes the STB more unaffordable for low-income viewers and therefore inhibits their access to free-to-air television In addition, the inclusion of CA in the basic STB means that, in addition to the royalties payable to the CA vendor for every box, there will be significant ongoing costs in managing the STB both from a security and a subscriber/viewer management perspective. The cost of turning the free-to-air television environment into one which is controlled through CA is not a once-off cost These are ongoing costs which are ordinarily carried by pay-tv operators who cover such costs from their subscribers. In the free-to-air environment, free-to-air broadcasters will need to carry these ongoing operational costs without any additional income stream.,,24 23 encryption capability was to be included in the government-subsidised STBs, and no free-to-air broadcaster decided to use it, these costs would fall to be carried by government 24 Para of the 2008 e.tv submissions

29 At the time that these submissions were made, e.tv anticipated that these costs would impact adversely on the future of its business: " e.tv is deeply concerned that the addition of extensive operating costs by the unnecessary inclusion of CA in the basic free-to-air STB will be passed to broadcasters, As a free-to-air broadcaster which is entirely dependent on advertising revenue and which has no access to public or state funding e.tv is concerned at the implications on the future of its business of the unnecessary inclusion of CA in the basic free-to-air S TB." Another risk specified by e.tv in its 2008 submissions is that the inclusion of 'cardless' encryption capabilities in STBs increases the risk of the system being hacked, with the accompanying economic risk. As e.tv put it, 'if the system is hacked after the STBs have been rolled out to the existing eight million TV households, each of these STBs will have to be replaced' Ultimately the inclusion of a control system with encryption would make consumers dependent on STBs. Viewers who had idtvs when the migration is effected, and viewers who acquired idtv5 at a later stage, would nevertheless require STBs27 in order to receive the services of free-to-air broadcasters who had opted to use encryption, and would have to continue to use (and maintain and replace) those STBs in perpetuity. (fr\ Para of the 2008 e.tv submissions Para of the 2008 e.tv submissions Or another device known as a conditional access module

30 The free-to-air STBs, which were conceived of as a temporary solution (and have been employed as such in other jurisdictions) would thus become a permanent feature of broadcasting in South Africa. 74. The inclusion of a control system with encryption would also have a significant adverse impact on emerging electronic manufacturers who tendered to supply government-subsidised STBs. 75. As NAMEC explained in its submissions on the 2013 proposed amendments, the inclusion of a control system with encryption will have numerous adverse consequences for its members The encryption of the signals of free-to-air broadcasters is both unusual and undesirable. Encryption is usually used by subscription broadcasters which wish to prevent non-subscribers from accessing their services. The technology is costly to operate, but is considered essential by subscription broadcasters to protect their subscription revenue. 77. As is confirmed in the affidavit of Andrew John Snoad, filed with this affidavit, Futuresource Consulting Limited (Futuresource), a specialist research and consulting firm which provides services to a range of industry sectors, including the broadcasting sector, has found that 28 Annexure LK15 to the founding affidavit

31 more than 150 countries worldwide have commenced or completed digital migration and, with the exception of Ukraine, Futuresource was unable to identify any country which has required the encryption of terrestrial free-to-air broadcast signals; the possibility of requiring encryption was debated, but rejected, in countries such as the United Kingdom, the Netherlands and Singapore, for reasons which included the cost implications and the inappropriateness of encrypting public broadcasting services; certain countries, such as Tanzania, Malaysia, Uganda and Kenya, have provided for the optional inclusion in STBs of a 'smart card reader' or 'DVB-Cl (Common Interface) slot', which allows for the optional introduction of encryption, but does not require the encryption of free-to-air services, and free-to-air services have continued to be broadcast unencrypted; and in most jurisdictions the free-to-air OTT STBs which have been introduced to the market have not contained encryption capability.

32 29 The alleged necessity of a control system with encryption 78. e.tv contends that the encryption of free-to-air broadcasting signals is required for three main purposes: to enable free-to-air broadcasters to protect their content from piracy; to enable free-to-air broadcasters to obtain high definition content; and to prevent the importation and sale of cheap, poor quality STBs. 79. As I have indicated above, encryption is not required for any of these purposes. 80. The incorporation of HDCP in STBs (in accordance with the National Standard)29 will prevent unauthorised copying of content. 81. As is confirmed by Mr Snoad, most free-to-air broadcasters worldwide do not encrypt their signals, and are nevertheless able to, and do, obtain high definition television content from international studios and other sources. As is evident from the letters annexed as 'KW6' and 'KW7' respectively: CBS Studios International (CBS), a leading supplier of programming to the international television market, does not require encryption of its programming (in respect of standard definition or high definition content) for free-to-air linear broadcast over analogue or digital terrestrial networks; and 29 Table 1 of the National Standard

33 The Walt Disney Company Limited (Walt Disney), another leading supplier of programming to the international television market, when licensing programming content (including high definition content) in the sub-saharan region, does not typically require encryption of that content on free-to-air linear channels distributed over an analogue or digital terrestrial television network. 82. Encryption is also not required to prevent the importation and sale of cheap, poor quality STBs to the public. Internationally, consumers are protected against poor quality products by less costly and less complex measures. In South Africa the measures to be used will include the adoption of the National Standard, the incorporation of the National Standard into type approval regulations by ICASA in terms of section 35 of the ECA, funding by government of a conformance testing process to be administered by the SABS, the certification of conformant STBs, and a comprehensive consumer education campaign on the risks of purchasing STBs which are not certified. 83. It is remarkable that e.tv contends that encryption is required for this purpose. In its 2008 submissions it specifically highlighted the alternatives to encryption which would meet this objective: " If the concern is that the imported goods would not meet the SABS specifications (Le. inferior products), then this can be addressed through means other than creating a closed system with a CA-controlled box. The following lawful measures could be considered:

34 Make the standard mandatory and provide for conformance testing. Both SABS and ICASA can provide this facility; There are secure technical solutions that can ensure that non-compliant imports are unable to provide the full functionality of a locally developed and certified STB (e.g. restricting access to the EPO application, the extended programme information, and 7 day programme schedules). This will not add cost to the STB bill of materials (BoM) and would require a minimal development overhead Consumer education and awareness campaign (which broadcasters could support with airtime): To promote South African STBs; and, In addition, broadcasters would be required only to advertise STBs with a Digital Dzonga or. ICASA approved logo in the same manner as employed by Freeview and Digital UK in the United Kingdom Consumer incentives at retail level (Le. discount vouchers, etc.)."3 Review of the impugned amendments To warn consumers of the dangers of buying grey products. 84. For reasons which will be canvassed in legal argument at the hearing of the application, I am advised and submit that Para of the 2008 e.tv submissions

35 the Minister's decision to make the impugned amendments did not constitute administrative action as defined in PAJA and the impugned amendments are accordingly not reviewable under PAJA. Even if they were, e.tv has not established that the impugned amendments fall to be reviewed and set aside on any of the PAJA grounds on which they rely; and insofar as the impugned amendments may be reviewable in terms of the constitutional principle of legality, the grounds on which they may be so reviewed are limited to the standards encompassed in lawfulness. 85. In what follows I deal in any event with e.tv's challenges to the lawfulness, rationality, reasonableness and procedural fairness of the impugned amendments. The lawfulness of the encryption amendment 86. The Minister has the power, under section 3(1 )(d) of the ECA, to make policies on matters of national policy applicable to the ICT sector, consistent with the objects of [the ECA] and of the related legislation in relation to... the application of new technologies pertaining to broadcasting services'. 87. The Minister has decided that, as a matter of policy, the government-subsidised STBs will have a control system which does not include encryption capability.

36 This decision falls within the Minister's powers under section 3(1) of the ECA. 89. It also accords with the distinction made in the ECA (and recognised in the e.tv judgment) between the Minister's power to make policy and ICASA's power to regulate. 90. e.tv contends that it is by virtue of its effect that the encryption amendment is ultra vires the Minister's powers. It does so on the grounds that: the practical effect of the encryption amendment is (a)to prevent free-to-air broadcasters who choose to encrypt from accessing the five million households with government-subsidised STBs; and (b) to prevent any free-to-air broadcaster from choosing to encrypt at all; and this is an unlawful effect. 91. It will be argued at the hearing of the application that the effects of a decision are not a cognisable basis for legality review. In any event, as indicated elsewhere in this affidavit, the effects which e.tv alleges are not supported by the facts. Nor can the encryption amendment have any effect on the rights of free-to-air broadcasters. The effects relied upon by e.tv could flow only from a decision based on the Policy. No such decision is raised or impugned by e.tv in this application.

37 34 The rationality of the encryption amendment 92. e.tv contends that there is an internal contradiction in the amendments introduced by the Minister in that the encryption amendment renders 'nugatory and meaningless' broadcasters' 'right' under clause 5.1.2(C) to make their own decisions on the question of encryption, and that this contradiction renders the Minister's decision to enact the encryption amendment irrational and unreasonable For reasons which will be canvassed in legal argument at the hearing of the application, I am advised and submit that in legality review the 'rationality' standard requires only that the exercise of executive power is rationally related to its purpose, and not arbitrary, and that objective 'reasonableness' is not a ground of review. 94. The encryption amendment is rationally related to the purpose for which the Minister's power under section 3(1) of the ECA was granted, namely to make national policy on 'the application of new technologies pertaining to... broadcasting services'. 95. The contradiction which e.tv alleges is based on the proposition that clause 5.1.2(C) purports 'to allow broadcasters the rjgkt to make their own decisions on the question of encryption' while clause 5.1.2(B)(a) 'render[sj this entirely nugatory and meaningless'. 31 Paragraph 124 of the founding affidavit

38 This proposition is incorrect. To the extent that broadcasters have the right to decide to encrypt their signals, it is not the Policy which confers such a right on them. 97. There is accordingly no contradiction which gives rise to arbitrariness or irrationality. The contradiction which e.tv alleges is entirely selfconstructed and illusory. The rationality of the non-mandatory STB control amendment 98. e.tv contends that the non-mandatory STB control amendment has been afflicted by a drafting error, and that it was intended to provide that 'the use of' the STB control system would be non-mandatory. 99. However, e.tv has not made out a case for the meaning or the correction for which it contends Properly interpreted, in the context of all the control system provisions in the 2015 Policy and as confirmed in the statement issued by the Department of Communications on 13 March 2015 (annexure LK39 to the founding affidavit), clause 5.2.1(A) means that the Minister does not seek to make policy on the question whether STBs other than the government-subsidised STBs should have a control system, or whether such a control system should contain encryption.

39 I am advised and submit that, in any event, e.tv has laid no basis for the exceptional corrective remedy which it seeks, and that this is not competent relief. This will be a matter for legal argument at the hearing of the application. The procedural fairness of the impugned amendments 102. e.tv contends that the impugned amendments should have been published for comment before they were enacted, and that the failure to publish them renders them reviewable for procedural unfairness The ECA does not require the Minister, prior to making amendments to a policy issued in terms of section 3(1), to publish the proposed amendments for comment In any event, the impugned amendments were made after all interested parties had had an opportunity to comment fully on the issue whether STBs should include a control system with encryption in response to the 2013 proposed amendments As is evident from the submissions made by the fifth to thirteenth respondents in respect of the 2013 proposed amendments, this issue was fully canvassed in the process Minister Muthambi, in her introduction to the 2015 Policy, states directly that her amendments were made taking into consideration submissions made by stakeholders on the amendments proposed by the Department of Communications on 06 December 2013'.

40 Contrary to e.tv's contention that the encryption amendment 'was not a result of the representations made to the Minister' and 'no party proposed that only government-subsidised STBs should be precluded from decrypting encrypted signals, the SABC in terms recommended that the amendments should be confined to making the control system in the free-to-air STB 'non-mandatory' and that the Department should subsidise the 'standard box' without conditional access.32 The relief sought by e.tv 108. For all the reasons set out in this affidavit, e.tv is not entitled to the relief which it seeks. RESPONSE TO SPECIFIC ALLEGATIONS IN THE FOUNDING AFFIDAVIT Ad paragraphs Ito II 109. For the reasons set out in this affidavit, M-Net denies that all the allegations in the founding affidavit are true. 32 Paragraph 3 of the SABC submissions, annexure LK12 to the founding affidavit

41 While it is correct to say that the 2013 proposed amendments were different to the amendments now enacted by the Minister, both sets of amendments canvassed the common issue whether, and to what extent, the government-subsidised STBs should contain a control system, and if so, whether that control system should include encryption capability. Whereas Minister Carrim proposed that a control system with encryption should be required for all STBs, Minister Muthambi has made policy in respect of the narrower category of government-subsidised STBs. Ad paragraphs 12 to Minister Carrim, in seeking public comment on the 2013 proposed amendments, did not act in accordance with section 3(5)(b) and 3(8) of the ECA. These provisions did not at that time, nor do they now, require amendments to a policy made under section 3(1) of the ECA to be published for comment. Ad paragraphs 17 to For the reasons set out in this affidavit, M-Net denies that the impugned amendments fall to be reviewed and set aside on any grounds, and denies the effects contended for by e.tv e.tv presumably means to put forward its contentions on the proper interpretation of the impugned amendments, rather than 'explain' their meaning.

42 39 Ad paragraph For reasons which will be canvassed in legal argument at the hearing of the application, M-Net denies that the Minister's decision to make the impugned amendments amounts to administrative action in terms of PAJA To the extent that the impugned amendments may be reviewable in terms of the principle of legality, such review is limited to the standards encompassed by lawfulness. Ad paragraph As set out in paragraph 30 above, M-Net disputes e.tv's claim to have standing to bring the application in the public interest. Ad paragraph 23 (including sub-paragraphs) 117. For reasons which will be canvassed in legal argument, M-Net denies that the encryption amendment is ultra vires or breaches any relevant principles emerging from the e.tv judgment The only judgment proposition relevant to this application for which the e.tv is authority is that the ECA distinguishes between the Minister's power to make policy and ICASA's power to regulate.

43 There is nothing in the e.tv judgment which can be construed as precluding the Minister from deciding, as a matter of policy, that the government-subsidised STBs should contain a control system which does not include encryption capability For the reasons set out elsewhere, the encryption amendment does preclude free-to-air broadcasters from encrypting their broadcast signals. It simply precludes them from doing so at the government's expense. Ad paragraph 24 (including sub-paragraphs) 121. For the reasons set out in this affidavit, the encryption amendment does not preclude free-to-air broadcasters from encrypting their broadcast signals There is no internal contradiction in the amendments introduced by the Minister. In the encryption amendment, the Minister states that the control system in the government-subsidised STBs will not include encryption capability. In clause 5.1.2(C), she states that free-to-air broadcasters may encrypt their signals at their own cost e.tv fails to distinguish between its freedom to encrypt its signals and its freedom to do so at the government's expense. As I have indicated above, clause 5.1.2(c) does not confer a on free-to-air broadcasters to encrypt their signals.

44 The 'very significant deleterious effects' alleged by e.tv are, for all the reasons set out in this affidavit, baseless. Ad paragraph 25 (including sub-paragraphs) 125. For the reasons set out above, this clause, properly interpreted, means nothing more than that the Minister does not purport to make policy regarding the inclusion of a control system in the STBs which are not subsidised by government. This is precisely the meaning ascribed to the clause by e.tv itself in paragraph 25.2 of the founding affidavit The correction which e.tv seeks is incompetent relief, and in any event e.tv has laid no basis for it. Ad paragraph 26 (including sub-paragraphs) 127. M-Net denies, for all the reasons set out in paragraphs 102 to 107 above, that the process followed by the Minister in enacting the impugned amendments was unfair, irrational or unlawful. Ad paragraph 27 (including sub-paragraphs) 128. M-Netagreesthatthis application should be determined urgently This is not because there has been 'negative reaction from a wide range of players', but because the ongoing delay in digital migration is preventing the release of valuable radio frequency spectrum which is crucial to the economy.