ICASA blamed for pay-TV monopoly

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 27 Jul 2015
ICASA has so far chosen not to enable competition in the pay-TV space, say observers.
ICASA has so far chosen not to enable competition in the pay-TV space, say observers.

The local pay-TV market will remain dominated by a single, entrenched player, unless the county's communications regulator decides to get serious about introducing real competition into the space, market observers have warned.

It is up to the Independent Communications Authority of SA (ICASA) to regulate the market in such a way as to open the door for real competitors to incumbent MultiChoice, which holds about 90% of the South African pay-TV market.

In light of the demise of the Altech Node - which technology group Altron unveiled less than a year ago with hopes of it becoming a significant competitor to MultiChoice's DSTV offering - the ball is squarely in ICASA court, says independent broadcast analyst Kate Skinner.

"We do need real competition in the pay-TV market, so that consumers can have access to an affordable service and local content. The problem is that new entrants have made attempts to enter the space, but they never survive," says Skinner.

"MultiChoice is just so well entrenched, we have to look at ICASA to ask what it's doing in terms of competition."

Skinner notes ICASA should be addressing aspects such as decoder interoperability and access to premium content to lower the barriers for entry for new pay-TV players, but says the regulator has simply chosen not regulate the market for competition.

She explains this is despite the law making provision for the establishment of competition in the local broadcasting space. "In a market dominated by a single, entrenched player, you have to have a regulator that strongly regulates the market for competition."

Lack of interest

Altron announced last week it would sell its Altech Node business, due to a lack of interest from consumers.

The company revealed in a trading statement that "as a result of the poor uptake of this product to date by retail customers, Altron TMT has identified a third party, with whom it is at an advanced stage of negotiations, to acquire this business".

The Altech Node set-top box was unveiled in September last year and described as a fully-converged home "gateway" console, that offers movie entertainment, TV series, sports and business content, Internet access, and wireless smart home solutions.

The device was Altech's foray into SA's fledgling video-on-demand market, but also offered a smart home solution in addition to incorporating smart TV and smart entertainment functionality.

ICT veteran Adrian Schofield is not surprised by the Node's demise, saying the standard set by satellite TV incumbent MultiChoice - via its DSTV offering - is very high.

"Many consumers tend to complain about the high cost of this offering and about paying for products they don't want. But the DSTV content they want does meet their expectations," says Schofield.

The Altech Node content, however, never grabbed consumers, he says, while the console's other functionality - that of network controller and home automation device - was too advanced for the average user. "The device had niche market appeal and its value proposition was simply not broad enough. If they came up with a device that only acted as a home automation device, it would have appealed to a different market," says Schofield.

"However, due to the entertainment component, it was marketed as a competitor to DSTV and did not grab the attention of consumers."

Limping StarSat

Meanwhile, On Digital Media (ODM) - whose StarSat pay-TV service was expected to create some rivalry for DSTV - is still limping along, as it waits for ICASA to transfer its ECNS licence to its current shareholders.

ODM executive consultant and former interim CEO Eddie Mbalo this morning revealed the company is gearing for the licence transfer process to be concluded "shortly", so the business can be recapitalised and a new assault on the pay-TV market launched.

Meanwhile, the broadcaster - the only alternative to MultiChoice on the market - has been languishing under a business rescue process, which it entered into in April 2013, after failing to make a significant impact in the local pay-TV space. Chinese-based media group StarTimes took a 20% equity stake in ODM at the time when the local broadcaster was entering business rescue.

While its modest subscriber numbers dwindled even further during the business rescue process, the broadcaster was granted licences to broadcast adult channels Playboy TV, Desire TV and Private Spice - within a set of conditions, including a watershed period and child-proof security features.

The adult channels started airing in November 2013 as a standalone StarSat sex TV package, at a subscription fee of R159 per month. However, the broadcaster terminated the service in March, after the Supreme Court of Appeal dismissed ODM's application for leave to appeal a high court judgment last year that ICASA reconsider its decision to grant it licences for the adult channels.

Mbalo says the company will decide whether it will try to revive its adult offering once it concludes the business rescue process.

Meanwhile, pundits say MultiChoice does not have much to worry about with the imminent arrival of video-on-demand services such as Netflix, as SA's bandwidth dearth will most likely limit uptake to the top end of the market.