DStv overplaying Netflix threat: Cell C - TechCentral

DStv overplaying Netflix threat: Cell C

Cell C chief legal officer Graham Mackinnon

Cell C has argued that Netflix and other so-called “over-the-top” (OTT) services, including its own Black platform, do not pose a significant threat to MultiChoice in the near term.

MultiChoice has argued that Netflix and other streaming services pose a real risk to its business, in part because they do not face the same level of regulation in the South African market.

But Cell C reckons MultiChoice, which owns DStv, is being disingenuous. It argued at hearings arranged by communications regulator Icasa on Wednesday that OTT providers pose no real challenge in the near term to the company’s dominance in pay-television broadcasting.

Digital terrestrial TV, which promises more channels to South African consumers, is still someway off, while OTT players are “not a substitute at this time and won’t constitute a substantial competitive threat to pay TV for the majority of viewers in the near term”, said Cell C chief legal officer Graham Mackinnon at the hearings. “Free-to-air licensees and Cell C’s Black will take years to influence MultiChoice’s market share and growth.”

Cell C pointed out that MultiChoice argues that OTT providers have a “huge” advantage in that they don’t have to pay licence fees or contribute to the Universal Service and Access Fund. However, it said it would like to see an example where such a rival streaming player has dislodged an incumbent like MultiChoice anywhere in the world. “OTTs are good for consumers; South Africa must move with the times,” it said.

Mackinnon said MultiChoice has had a head-start of at least 20 years over prospective rivals, allowing it to entrench its dominance and making it difficult for rivals to emerge. He said Cell C arrived in the South African market just seven years after the licensing of Vodacom and MTN and has found it difficult to catch up to those incumbents.

He claimed that MultiChoice has been unregulated for “almost all” of the years it has been in operation and has built up scale that allows it to “leverage its position in various ways”.

‘Leverage dominance’

“It can leverage its dominance in audio-visual content in the pay-TV market into other wholesale and retail markets, and deny access to upstream audio-visual content,” he said.

In its presentation, Cell C said competition in the pay-TV market is not effective and should be regulated.

“Contrary to MultiChoice’s predictions, it is entirely likely that less than 10% of its DStv Premium subscribers will leave it if the price of their package increases,” the company said in slides accompanying its presentation.

Mackinnon argued that MultiChoice uses its market power to acquire premium content rights, including sports content, that it then “squats” on. He accused the company of buying rights for various distribution platforms and sometimes only using a subset of these rights – usually for satellite distribution.

“When other platforms try to acquire content, it is sterilised, often for long periods of time — and Cell C has asked for content and been refused. If every contract concluded by MultiChoice could be examined, this would assist in supporting its claim that it is not controlling content in these markets.”

Cell C proposed various possible regulatory remedies in its presentation. These include obligations on MultiChoice to:

  • Publish information concerning long-term or exclusive contracts for premium content with a view to shortening exclusive rights periods.
  • Disclose the terms on which such content is available for acquisition by third parties.
  • Maintain separate accounts for each of its various offerings by platform, premium and non-premium type of content, and wholesale and retail content.
  • Make programmes and channels available separately on terms regarding distribution, reselling and access imposed by Icasa.
  • Be subject to rate regulation on wholesale services, such that no content should be made available on terms that are less favourable than MultiChoice first acquired it, pro rata to the total price if content is sold by programme.

MultiChoice is expected to make a formal presentation to Icasa on Friday. — © 2018 NewsCentral Media

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