ANC mulls plan to end DStv 'monopoly' - TechCentral

ANC mulls plan to end DStv ‘monopoly’

One of the ANC discussion documents, published at the weekend ahead of the party’s national policy conference to be held from 30 June to 5 July 2017, has warned that efforts to license competition to DStv parent MultiChoice have proven “futile” and that a new strategy is needed to open the market to competition.

In a document dealing with ICT, entitled “Towards the Fourth Industrial Revolution”, the ruling party says that “it seems there are limited or no prospects under current conditions of any new player successfully entering and competing against the existing monopoly due to its dominance”.

The document says a “multipronged strategy” is needed to address the problems in the subscription broadcasting market, including a review of the licensing conditions for pay-television companies.

“Facilitating growth in the subscription market requires the review of the licensing conditions of the subscription services,” the discussion document says. “The current regulatory regime imposed at the time when the subscription market was small and had a relatively insignificant share of the total audience must be changed to reflect the size and therefore the obligations to ensure fairness across the whole television market.”

The document says, without elaborating about what it means, that the “technology platform” must be opened “for use by new entrants” and that “diverse suppliers” must be allowed to “provide services across the different elements of the subscription value chain”.

Elsewhere, it says: “South Africa must open the subscription television market, which is currently dominated by one player, Naspers, through MultiChoice and DStv.”

It says there is “a need to review the legislative limitations on advertising revenues, considering the prevailing conditions in South Africa”.

“[These] limitations were intended to protect the [free-to-air broadcasting] sector (which therefore has greater obligations in relation to, for example, South African content quotas). Advertising revenue collected by a pay-TV operator must always, according to law, be lower that of subscription revenue. However, subscription revenue now exceeds total advertising revenue and the limitations are therefore meaningless. This must be addressed to ensure the viability of [free-to-air] services both during and after digital migration.”

The document warns that, in recent years, the broadcasting regulatory system “has not been effective and has resulted in operators not fulfilling their licence conditions”. It doesn’t elaborate on this, but says: “The establishment of two regulators as per the [national integrated ICT policy]white paper, one for content and the other for competition and networks, will help address this issue.

“These two regulators must be established without delay so that they provide the necessary capacity for flexible and proactive regulation…”

Elsewhere in the document, the ANC says the move to digital terrestrial television must be used to strengthen free-to-air broadcasters, benefitting public, community and commercial services.

Moreover, digital migration should be used to break up “monopolies and concentration across the television and audiovisual content value chains and, for example, address [the]decoder monopoly, promote interoperability of decoders and position South Africa to be a preferred producer of all-in-one decoders (decoders enabled with digital terrestrial television, Internet connectivity, the Internet of things and pay-TV, etc”.

The discussion document also touches on the entry of “over-the-top” (OTT) services in broadcasting in South Africa. Such services include the likes of Netflix, YouTube and Amazon Prime Video. The ANC warns their entry could lead to “unfair competition to existing licensees who have public interest obligations attached to their licences”.

“The regulatory framework must be fine-tuned to create a level playing field,” it says. “The review of broadcasting policy, for example, must expand the definition of broadcasting to take into consideration broadcast-like services that have been enabled by technology changes.

“Policy must also encourage the emergence of South African OTTs so that they can meet the needs of local content and societal needs while competing with the foreign OTTs. The regulation of OTTs will be graduated to reflect their market power and ability to provide services that replace the current regulated services.”  — © 2017 NewsCentral Media

  • Simon

    The easiest (and fairest) way to allow competition in this space is to end the exclusive arrangement between SuperSport and DSTV.

    It’s really that simple.

  • Duncan

    As always politicians are late to the party. In the era of streaming they are mulling over entering into satellite television.

  • Greg Mahlknecht

    Is it though? DSTV pays, say R100 for their sports content. Now you have to go to the people that DSTV buys from (many international – not sure how to enforce our regulations on foreign corporations) and tell them you have to sell to someone else. So now they have to find (say) 2 people willing to pay R50. The big problem is that there’s nobody else that can afford that R50.

    Of course, DSTV have long standing relationships with these content creators, they could probably just make a deal that they keep paying what they are, and the content creator doesn’t drop their prices for anyone else. Nobody else could afford it. I’m not condoning that behavior, but it illustrates how regulation like this is unenforceable. DSTV isn’t legally at fault, the government now has to battle the content creators all over the world to enforce South African regulation. Is that even possible?

    I’m happy to have my logic corrected, but it’s certainly not “simple”.

  • Marcan

    Yeah, more regulation, government intervention will improve things. Gov, through several investment arms invested already heavily in Top TV in 2010.

    techcentral. co. za/toptv-flop-gobbles-up-state-funds/40181/
    remove the spaces after the dots.

  • Simon

    The exclusive arrangement between SuperSport and DSTV. Not the exclusive arrangement between SuperSport and the particular sporting codes.

    For example, in the UK, BT Sport hold the rights to Rugby. BT Sport can be watched by streaming directly, or via Sky, Virgin Media, PlusNet.

    The exclusive arrangement that DSTV (service provider) has with SuperSport (content provider) is unique in the competitive world.

  • Zilla

    Agreed, but I think they have no viable option to focus on streaming yet when the majority of the population they are (claim to be) concerned about do not have ready access to any kind of reliable internet connection. Unless and until they manage to address that (which is a whole othe topic on its own), the only way to try an assist the unconnected masses will be DSTV / TopTv / satellite type broadcasting. The problem is, we are YEARS behind on our digital migration, and the reluctance to get rid of individuals holding up the process is not helping.

  • Andrew Fraser

    But Sky has rights to Premier League football. And you can only watch it live on Sky. No different to vertically integrated Dstv/Supersport.

  • Simon

    Firstly, The Premier League is shared with BT Sport.

    But, as per my example, you can watch Sky Sports via a Sky Package, Now TV, Virgin Media, BT TV and TalkTalk TV.

    Sky Sports (content provider) does not have an exclusive relationship with Sky TV (service provider). For all the obvious monopoly reasons.

  • Chris

    Your minister has run the SABC into the ground, SASSA, Prassa SAA, Post Office, etc etc. Rather just stay on the gravy train and dont mess around where its not needed

  • Greg Mahlknecht

    Premier League is exclusive to MANY broadcasters in many countries all over the world, including US, the world’s biggest broadcast market. How is this different to our situation?

  • Andrew Fraser

    It seems that you’re right. Effectively you’re arguing for unbundling. I’m not sure that that there are sufficient outlets to make that work.

  • Ronald Bartels

    Brought to you by the bunch that cocked up digital TV more times than what I have fingers and toes (so gave up counting….)

  • Skerminkel

    Correct, but they are actually the wet blanket over the development of internet infrastructure in SA. Remove the cleptocrats from the government departments, appoint real leaders and support them. Streaming alternatives to broadcast TV will flourish.

  • Zilla

    No disagreement there

  • tongue in cheek

    er, your ANC policies have run the SABC into the ground, about 6 feet under I would say.

  • Simon

    I’m arguing against the exclusive relationship between content providers and the list actually extends past SuperSport to channels such as HBO, Showtime, EPSN, etc. and the service provider. This exclusive relationship is unique in the competitive world and is the barrier to entry for other satellite/cable/streaming services in South Africa.

  • Andrew Fraser

    Yes, they’re barriers to entry, that the whole point of exclusive contracts. Multichoice either pays a premium for that exclusivity or is vertically integrated with the content provider. I don’t see how that is anti-competitive. If another channel was prepared to pay more for exclusivity, it would get it.

    Multichoice is a de-facto monopoly due to economic power, not because of any failure in regulation. Instituting additional regulations may make life slightly more difficult for Multichoice, but I can’t see how it’ll benefit anyone else. Other channels simply don’t have the capital to compete.

    That said, alternatives to DStv are already available in the entertainment space (streaming services), and it won’t be long before rights holders in the sports arena start the process of divvying up the rights and selling them off separately. That’ll give streaming services an opportunity to compete.

  • Greg Mahlknecht

    I looked this up – Premier League seems to sell off their content in slots – Sky exclusively broadcasts some of those time slots (the best ones), and BT broadcasts some other games (it’s all they could afford)

    “Sky will have the Saturday 12.45pm, Sunday 1.30pm, Sunday 4pm, Monday night and new Friday night matches – plus Bank Holiday and other Sunday slots”

    This leaves BT Sport with the 5.30pm Saturday slot and occasional midweek matches. “

  • Greg Mahlknecht

    So, how would you propose government enforce it that HBO doesn’t enter in to an exclusive agreement with DSTV? If only DSTV could afford their content, would that constitute an exclusive agreement? An exclusive agreement doesn’t necessarily have to say “exclusive” in the contract, there’s other ways of making it happen.

    I feel that this kind of thing is MASSIVE overreach from the government, and they should create competition by easing the barrier to entry in other areas, to free up cash so new competitors can bid alongside DSTV for content. Government’s job is to create a competitive environment.

  • CharlieTango

    This seems like a strategy by the Zuptas to get a foot into the pay-TV the door. They are no longer happy with their ANN7 propaganda news on DStv channel 405. They want the whole enchilada.

  • MelcolmX

    Why are they not getting a piece of the action! Pr. Zombie and the grave robbers!!

  • Greg Mahlknecht

    I looked up getting premier league on some of those providers – you have to get a separate NBC subscription for it, and then you can access it. Is this what you mean? If so, then I have misunderstood you, and don’t think that’s much of a solution. Paying Multichoice the same subs just so I could see the same content via (say) openviewHD.

  • Simon

    I think you need to look up a little more. 😉

    The point is that you can watch Sky Sport on BT TV (amongst others). You can watch BT Sport on Sky TV (amongst others).

    I don’t think that it’s overreach for the government to insist that a content provider (SuperSport) cannot enter into an exclusive arrangement with a service provider (DSTV).

    As for you HBO argument. I can’t think of anywhere in the world where HBO has an exclusive arrangement with a service provider. I can choose any number of service providers in the US that broadcast HBO.

    Have a good read of prohibited practices listed under the Competitions Act.

  • Greg Mahlknecht

    >I don’t think that it’s overreach for the government to insist that a content provider (SuperSport) cannot enter into an exclusive arrangement with a service provider (DSTV).

    As I pointed out, that would be an utterly meaningless piece of legislation, you could get around it so easily.

    HBO: Do you know for a fact that DSTV airs their content exclusively because of an exclusivity deal, or simply that competition can afford it? It’s notoriously expensive for people to tack on to existing packages.

  • Simon

    Again, I have no problem with SuperSport having exclusive rights to an event. There are enormous production costs associated with being a content producers. These rights are of fixed duration and other content providers have the option to bid when this period ends.

    What I do have a problem with is SuperSport having an exclusive arrangement with a service provider.

    I should be able to watch SuperSport as part of a DSTV package, part of a TopTV bundle, through an over the air Digital TV subscription, and a streaming sports service. Or, any other service provider that chooses to operate in our space.

  • Andrew Fraser

    Why? I understand why you’d like that, don’t get me wrong, but just because I’d like a date with a supermodel isn’t likely to make it a reality.

    I don’t understand how you can argue that in a free market how an exclusive contract between businesses is somehow not acceptable. I’d argue that creating barriers to entry for competitors is a normal strategic activity for a business.

    Supersport in particular is vertically integrated in the Multichoice organisation, so without being forced to unbundle, I can’t see why they would offer competitors access to the golden goose.

  • Simon

    Have a look at the competition act. It is fairly clear on prohibited vertical practices. There’s also some fairly clear guidance on a dominant position that prevents entry into a market.

    This guidance on anti competitive behaviour is common throughout the western world.

  • Simon

    We’re getting a little distracted with HBO. I used it to illustrate a point as HBO isn’t broadcast in South Africa anyway.

    To continue the illustration. In the USA, HBO (a content provider) doesn’t have an exclusive relationship with any service provider.

    There are very few (if any) examples of a content provider having an exclusive arrangement with a service provider anywhere in the world.

    Except of course, SuperSport and DSTV.

  • Simon

    Let’s bring it back to exclusive relationship between SuperSport (content provider) and DSTV (service provider).

    At the moment, the only way I can watch SuperSport 1 is to subscribe to the full DSTV package at around R1000 a month. That’s because there is an exclusive arrangement between the two.

    A competing service provider (if allowed), might offer me the SuperSport 1 channel alone at R400 a month. That’s good for the consumer. SuperSport is able to continue making money (perhaps more so), but DSTV is unable to leverage me into a full package to get it.

    That’s competition. Specifically what the competitions act is designed to do.

  • Greg Mahlknecht

    This works both ways – you’re also saying that any competition that comes along to compete against DSTV couldn’t offer any exclusive content. DSTV has a massive war-chest, and I think in the long run your ideas will work in favour of whoever has the most money (DSTV), to the detriment of competition.

    Would originally created content (of which SABC and Multichoice has a lot of) also be included in your “available for everyone” plan?

  • Greg Mahlknecht

    “There are very few (if any) examples of a content provider having an exclusive arrangement with a service provider anywhere in the world.”

    ESPN springs to mind. They do provide subsets of their B content to other service providers, but in many tech podcasts, they moan about exactly the same issues as us – you have to get ESPN to get many of the A event.

    Would you think Supersport would have to provide their full library of live and normal content to everyone, or be able to provide a subset, like ESPN (and HBO) do to other service providers?

    In fact, it’s precisely because of these exclusives, that if you want to get a service with the same content as DSTV, you’re paying $150+ in USA

  • Simon

    I know you like the supermodel analogy, so I’ll run with it.

    The supermodel has signed exclusive rights to her modelling agency.

    I can see that supermodel in You magazine, bundled with a lot of other junk.
    I can see that supermodel in Vogue magazine, with other supermodels, modelling fashion.
    I can see that supermodel in Playboy magazine, with other supermodels, ….
    I can purchase images of that supermodel directly.

    The vertical integration is precisely what the competition act seeks to prevent. Let’s assume that TopTV got the rights to the premiership. Should I pay the full subscription to TopTV to watch the premiership and the full subscription to DSTV to watch the rugby. Absolutely not. I’ve given enough examples in the UK where I can watch Sky Sport on BT TV and BT Sport on Sky TV. That’s because the content producer does not (and cannot?) have an exclusive relationship with the service provider.

  • Simon

    I’m starting to lose track of these replies. If I do, please forgive me. I spent a lot of time in the USA as well as Europe and of course South Africa.

    Almost all providers in the rest of the world have gone with the base plus add on subscription model. This is not quite the same as choose your own channels, but it’s a fairly happy medium. DSTV is (possibly) the only service provider left where you have to pay the full subscription in order to watch one channel. This, in of itself displays an excessively dominant market position.

    Using exchange rates to talk about channel costs is also a moot discussion. To get a ticket to watch the Bears play at Soldier Field (awesome stadium by the way), is a $150 experience. It’s R150 to watch the Stormers at Newlands. So, to get the full ESPN experience is less than a ticket to the game, to get the full SuperSport (Rugby) experience is 5 times the game.

    But, back to the example. ESPN does indeed have exclusivity for a number of things. I cannot watch ESPN directly, but I can get ESPN through a number of service providers (which I listed) with different packaging, different pricing and different options. I can even have a package that includes ESPN and NBC Sports from one provider, so I can see everything …. 😉

    There are some inexpensive streaming options too.

    ESPN 1&2 plus 30 channels on Sling TV for $20
    NBC Sports plus 30 channels on Sling TV for $25
    ESPN 1&2 plus NBC Sports plus other channels on Sling TV for $40

  • Greg Mahlknecht

    I get back to a point I had a while ago – is it not possible the Supersport/DSTV relationship is purely because there are no customers for the Supersport feed? DSTV is the only pay-for platform of significance. Supersport is available in other countries. Perhaps the South African market is only big enough for one premium pay-for sports channel? Legislation wouldn’t help a jot if this was the case. I think you’re jumping to dangerous conclusions.

  • Andrew Fraser

    The prohibition in the competition act assumes that the parties are separate entities. Supersport is DStv is Multichoice. They’re the same corporation.

    If they were separate entities and wished to merge, I guess that the competition act would come into play, but they’re not.

    They’ll argue that their dominant position does not prevent entry. They do not stop content providers from supplying content to their competitors. They choose not to do it themselves (which is not in itself uncompetitive), but all other licenses are purchased on the open market. There is nothing to stop others from bidding for that content. As far as sports content is concerned, all of those rights are auctioned.

    The only reason that Multichoice is dominant is economic, they are able to outbid for licenses. I can’t see how that can be regulated within a free market system.

  • chacma

    you can watch 300 free to air channels on your wifi on chrome

  • Simon

    It’s SuperSport International (PLC). A wholly owned, but separate company.

    But I’m not sure of your resistance. As I’ve given in countless examples, South Africa is the only place where a content provider has an exclusive relationship with a service provider.

    Because of this dominant position, the only way that you can watch this content is to buy the full package from the service provider.

    That is anti-competitive and abuse of a dominant position. Breaking this exclusive relationship would not necessary mean loss to DSTV and it certainly wouldn’t mean a loss to SuperSport. I can only see it growing the market in exciting ways.

    Have a look at Now TV to get an idea of what is possible. You could also look up Sling TV too …