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    Home»News»Icasa moves to break DStv ‘monopoly’

    Icasa moves to break DStv ‘monopoly’

    News By Duncan McLeod26 August 2017
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    Icasa has listed a range of possible market interventions, particularly related to the acquisition and management of sports rights by broadcasters, as it moves to break MultiChoice’s dominance in South Africa’s pay-television industry.

    The communications regulator on Friday published a discussion document in relation to an inquiry into subscription TV broadcasting services to determine whether there are competition issues in the sector that require action to be taken through the imposition of “pro-competitive conditions” on “relevant licensees”.

    It emphasised that it has not yet reached a conclusion on the existence of any competition problems in the sector and will use the responses to the discussion document to determine what further steps, if any, should be taken. It noted that the sector is being impacted by the arrival of Internet services like Netflix.

    While the South African market may be different from the European market, it may be useful to consider possible lessons from Europe

    Icasa said the pay-TV market is driven by access to premium content on an exclusive basis. “While exclusive contracts may be necessary in certain instances, they nevertheless may create other challenges in the market such as creating barriers to entry and driving up the price of premium content as well as reinforcing the first-mover advantage. This requires a delicate balance to be struck by the authority when addressing these market outcomes.”

    In the discussion document, Icasa has listed a range of possible pro-competitive licence conditions that it may impose on licensees with significant market power to make the market more competitive:

    1. Shortening exclusive contract periods. It said the European Commission considers that contracts of longer than five years raise concerns. “While the South African market may be different from the European market, it may be useful to consider possible lessons from Europe.”
    2. Imposing “rights splitting”. This is where a rights owner must split content rights and sell them to more than one broadcaster. “There are various arguments for and against the splitting of rights. In the end, the authority would be interested in a condition that has long-term benefits for the market.”
    3. Introducing unbundling. The unbundling of sport rights involves offering the rights to more than one buyer, usually making them available on different platforms such as subscription and mobile TV as well as Internet protocol TV services. The European Commission has adopted an approach that sport rights must be sold on open tender; the rights must be “unbundled” allowing more than a single buyer; there must be no excessive exclusivity (a term of three years being regarded as a general norm); and that there must be no automatic renewal of contracts.
    4. Imposing “wholesale must-offer” conditions. Icasa said UK regulator Ofcom in 2010 imposed wholesale must-offer rules on BskyB’s premium Sky Sports channels, requiring these to be made available to other distributors at regulated prices, but later did away with this regulation after the market became more competitive. It said a regulatory intervention of this kind in South Africa, where the market is not as developed as the UK’s, “might still be a possible and feasible remedy”.
    5. Opening MultiChoice’s network. “One way of fostering entry would involve placing an obligation on a dominant provider to open their distribution infrastructure to other subscription television broadcasting providers,” Icasa said. “Technical interventions can create the conditions in which competitor offerings are better able to take on a dominant subscription television broadcasting provider.”
    6. Introducing set-top box interoperability. Customers wanting to switch service providers must buy a new set-top box and dish due to a lack of interoperability, which leads to high switching costs, Icasa said. Interoperability of equipment can help to stimulate competition by lowering switching costs. However, due to the technical complexities of interoperability, further work would be needed before any regulations in this regard are formulated, it said.

    Following a public consultation process, including public hearings and a draft findings document, Icasa will publish a final findings document. Only then will it consider developing regulations.

    Interested parties have until 31 October to make written submissions to be considered by Icasa in developing its report.

    • Read the full Icasa discussion document here (PDF)
    DStv Icasa MultiChoice Netflix top
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