This week the Independent Communication Authority of South Africa (Icasa) is holding hearings into “the subscription television broadcasting sector… to determine whether there are competition issues in the sector, which require action to be taken by the Authority [sic] through the imposition of pro-competitive conditions on relevant licensees”.
Let’s decode this double-speak from the Government Gazette of 25 August 2017 where the announcement for the hearings were made. Icasa is essentially asking: does MultiChoice have a monopoly?
I can save Icasa the time and wasted effort. The short answer is: yes.
The next question is, does it matter. The short answer: no.
MultiChoice is the only operator that provides subscription television in the country but Icasa’s hearing is pointless. Pay TV as we know it now is rapidly being overtaken by streaming services like Netflix or plain old YouTube.
The origins of what was first M-Net, then DStv, might have been an economic gift from the old government to the Afrikaans-language newspapers. But 30 years later MultiChoice has built a sophisticated and impressive broadcasting operation that is arguably one of South Africa’s best companies. Using low-orbit satellites, it broadcasts a TV signal to most of sub-Saharan Africa, a complex and costly exercise that requires enormous investment. MultiChoice has never published any figures but I estimate the costs to have built its current status quo to be in the billions of rands over the past three decades.
MultiChoice was the second satellite operator in the 1980s to use the then new-fangled digital transmission technology that is now what every broadcaster uses. The investment over the years has been staggering.
Icasa investigating “competition issues in the sector” is like holding hearings into how dominance of the steam train engine in the 1950s when the petrol-driven motor car had superseded this once-dominant form of technology of the 1800s.
The horse has bolted. A long, long time ago.
The motor car in this analogy is Netflix which is spending $6bn a year to produce its own content, and is the leading streaming service globally. Like everything else, the internet has made entertainment easier and cheaper.
Streaming video on demand (Svod) services don’t have nearly the same overheads because they don’t have to pay for satellites and decoders.
To see off competition from Netflix and the like, Naspers launched its own streaming service, ShowMax, which has its own pure-play, standalone internet video offering in Poland.
This week’s seemingly pro-consumer inquiry by Icasa might convince you that the “Authority,” as it likes to call itself, truly cares about South African consumers. If it did, it wouldn’t have so spectacularly capitulated in its regulations last week to police how cellphone networks handle the roll-over of data. Icasa has effectively asked the foxes to police the henhouse. This relates to how networks manage the way data is rolled over, which is a spectacular climb down from last year’s announcement that data bundles would remain valid for three years.
Pay television is a premium service, that is currently used by a sliver of South Africa’s population. Mobile phones that provide cellular telephony and internet access are used by tens of millions of people in this country. If Icasa truly cared about “the imposition of pro-competitive conditions on relevant licensees” it would flex its new-found muscles on mobile data costs.
This article first appeared in Financial Mail
