Cool the invective in MultiChoice row

There is no doubt that more needs to be done to encourage competition in South Africa’s broadcasting industry. But this week’s row between MultiChoice and communications minister Yunus Carrim helps no one. By Duncan McLeod.

Duncan-McLeod-180-profileThe war of words that erupted between MultiChoice and communications minister Yunus Carrim this week is extraordinary. It is also, unfortunately, very damaging.

It is unusual in South Africa — or most countries, for that matter — for a large company to take on a cabinet minister directly, aggressively and in public like this.

One has to assume the decision by MultiChoice to publish full-page newspaper advertisements, in which it alleges that Carrim is pandering to “certain narrow commercial interests”, had the blessing of Koos Bekker, the CEO of parent company Naspers.

But why?

There are big risks for MultiChoice in adopting a confrontational approach with the government.

The broadcaster, which owns DStv, M-Net and SuperSport, has an entrenched monopoly in pay-TV and surely cannot assume, even if that monopoly is benign, that an ANC government, which could veer to the left after the 7 May election, would make decisions that are in its interests.

Carrim has already labelled MultiChoice a bullying monopoly and said its newspapers adverts were “astonishingly inaccurate” and served only to “weaken the case of those opposed to the government’s policy”.

Astonishingly, MultiChoice then inflamed the situation further, basically accusing the minister of lying. I am told reliably that several senior ANC politicians have voiced concerns that MultiChoice is leading a campaign that could cost the party votes in the election.

Cooler heads are needed all round.

It has taken many years to reach this sad state of affairs. South Africa’s migration from analogue to digital terrestrial television has been marred by blunder after spectacular blunder.

This means we are now certain to miss the deadline imposed on us by the International Telecommunication Union to complete the migration by the middle of next year. Many other African countries will complete their projects long before us.

Carrim has tried to bring the warring parties together through an arbitration process. His patience is commendable, but unfortunately his recommendations to the cabinet, tabled in December, are confusing and introduce too much complexity in a misguided effort to balance competing interests.

From what I can fathom, there is a proposal to establish some sort of state-run agency to manage the encryption system. The last thing that is needed is the dead hand of government extending its reach even further in this sector.

Yunus-Carrim-640

I wrote in this column in December that mandating encryption in free-to-air television is a mistake. E.tv argues that it is needed, among other things, to allow it to source high-quality content from the Hollywood studios, thereby helping free-to-air broadcasters to compete more effectively with MultiChoice. But in the process it proposes locking consumers in with costs for them in perpetuity. If e.tv wants encryption in the boxes, it should foot the bill of rolling them out, rather than relying on a state subsidy.

MultiChoice is right that encryption is a bad idea. But it has reached that conclusion, at least in part, for reasons that are not altruistic. It is worried, with justification, that other broadcasters will be able to piggyback off a taxpayer-funded subsidy to launch rival pay-TV platforms. One has to ask why it should expect a free ride.

There is no doubt that more needs to be done to encourage competition in South Africa’s broadcasting industry. But let’s remember that, to a large degree, MultiChoice is in the strong position it is because it’s an exceptionally well-run company that produces and sources some of the best programming in the world. It didn’t get to where it is by serving crap to its customers.

  • Duncan McLeod is editor of TechCentral. Find him on Twitter
  • This column was first published in the Sunday Times

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  • kalibanache

    We should have at least 5 TV licenses in SA, If not 5 why not 10?
    They have lifted their fees continually for nearing 30 years.
    Complexes should be paying much less, instead we still have thousands of Town house complexes if not tens upon tens of thousands of complexes where only a very few have communal dishes.
    Viewing should be much less if living in a complex.
    We got a better quality from Mnet and DSTV is truly nothing special, But they never managed to provide the service for less, even with a massive growing customer base.

    Set on the in correct principles, Purely profit driven.

    Shocking that Africans must pay more than Americans and Europeans for friggin TV.

    Just create new licenses in SA, Lets create 10, allow more people to show re runs.

    Mutichoice has ripped SA off, How was it possible to justify a increase each and every year, even with millions more subscribed ?

    Its called Robbery

  • Vusumuzi Sibiya

    There were certainly more than 5 licenses awarded when On Digital who launched Top TV, now StaSat, received their license and there are currently 5 applications which ICASA is considering.

    >>We got a better quality from Mnet and DSTV is truly nothing special, But they never managed to provide the service for less, even with a massive growing customer base.

    You are conveniently missing the fact that the cost for this quality content to cater for the growing customer base has also been increasing. Just compare what was paid to PSL in the first contract to what has been paid now and that is just mainly for attracting a local soccer fan customer base;

    The cost to also get the other quality content which is on offer has also increased so unless they opt to go for “crap” content; they have no choice but to increase costs for the business to remain profitable. There’s no government bail-out which would be available to them unlike the other Big player in the market.

  • Vusumuzi Sibiya

    >>From what I can fathom, there is a proposal to establish some sort of state-run agency to manage the encryption system. The last thing that is needed is the dead hand of government extending its reach even further in this sector.

    Your fathom is way off the mark… if only you would steer away from Etv’s assertions then maybe we could use such open channels for discussions to engage towards arriving at the solution that would best serve the interests of South Africa given the looming ITU deadline.

  • Greg Mahlknecht

    >Shocking that Africans must pay more than Americans and Europeans for friggin TV.

    I’m not sure about this – DSTV pay the same as all the other broadcasters for all their material – check out the “full house” packages from SKY or Comcast or other countries’ DSTV equivalents – You’ll be paying R1000+.

    A big problem is that SABC is rubbish, so if people want decent TV they absolutely have to get Pay TV. In that respect, yes – we pay more than other countries. Compare that to the great programming on BBC – you can get away without resorting to Sky in UK. They also have some decent competitors like Virgin – but that’s a competent company unlike the competitors here – and it should be noted that Sky’s prices are still very high even though there’s good competition.

  • Greg Mahlknecht

    Who then will control it? We’re 15 months away from the ITU deadline… we don’t know if we’re going to use CA, and if so, who will control it – eish man, no time for discussion any more, Carrim needs to grow a pair and make a decision. I’d rather have CA on the boxes than have the valuable spectrum tied up for another few years while he bumbles around and pleads for compromises which will never come.

  • Greg Mahlknecht

    >You are conveniently missing the fact that the cost for this quality content to cater for the growing customer base has also been increasing

    Exactly – R2bil for 5 years ending 2018 (up from R1.6bil the previous 5 years)… R400mil/year. People say that DSTV’s competitors should also get this content, but I don’t see eTV or TopTV being able to foot that kind of bill. And even if 4 broadcasters shared the content at R100mil/year, not having exclusive content severely diminishes the value of it.

  • Marcan

    So we all know that MC/Dstv competitor Starsat (previously TopTV) has been immensely struggling and the last time I read about their numbers of subscribers, it was only 200,000, compared to about 4.8 Million for Dstv subscribers to their Premium and Compact packages. This 4.8 m even excludes the subscribers to their most basic package Easyview AFAIK, which probably is also many 100,000s .
    I believe the problem for competitors is not only that they don’t have the funds to pay for premium content as live sports, but by law only 20% or less of shares can be owned by a foreign company. Greatly discouraging FDI, Foreign Direct Investment in this sector.
    Our beloved Big Brother Gov wants by all means to have a say in strategic sectors or companies. Telkom went through a long process of negotiations and due diligence in 2012 or 2011 with KT, Korea Telecoms as KT was interested to take an important share in Telkom. After both companies must have spent millions on this process, Cabinet called it off, stating that Telkom was a strategic asset. Telkom is owned for 39.8% directly by Gov and indirectly by 10.5% through the PIC,Public Investment Corporation.
    The latest amendment of mining regulations, gives Gov immediately 20 % ownership of all mines in SA, and Gov has the inalienable right to buy the other 80% of shares.

  • Vusumuzi Sibiya

    You are absolutely right that the decision to be taken requires for Carrim to grow a pair… (and they don’t need to be that Big either) but there’s no way that CA can be allowed to be a policy that affects FTA.

    It’s actually a straight forward decision; look at the top 5; top 10; hell even the top 50 countries who are moving ahead with digital migration; and then do what they have done… there’s a reason why we now refer to the global digital village and that’s because the world has become too small to be an island by having your own silly closed digital plan.

  • Davebee

    ‘It didn’t get to where it is by serving crap to it’s customers”
    Really? Multichoice serves crap to my TV screen by the hour. The only reason I stick with them is mainly that there is no alternative TV service out here that has presenters who can speak a reasonable level of intelligible English.
    DSTV is de-facto a monopoly, that service delivery system that we are so fond of in this country such as ESKOM and to be honest: The ANC, biggest monopoly of all.

  • Gladiator

    It is one thing to attempt at times to mention the International Telecomunications Union deadlines where licencee network operators just throw ITU standards overboard. Not applicable to South Africa we will shortly be an island on our own. Ask the regulator who is not even in possession of tele communication regulations so how do they regulate what a joke and sorry state of affairs. Good thing Multichoice dares to take on the Minister concerned as he is obvilious of who answers to who inhis own portfolio.

  • Lumina SS

    That won’t make a difference, the communications minister clearly has no mandate (no plan) just like the ANC. Multichoice is a business and to make money a business needs a plan, that is why they make plenty of money.

  • Marulaneng

    “…MultiChoice is in the strong position it is because it’s an exceptionally well-run company…”

    Duncan, how did you reach this conclusion?

  • Guest

    “…MultiChoice is in the strong position it is because it’s an exceptionally well-run company…” – Really?
    Multichoice is a bully. They do not have any consideration for the public and doesn’t listen to the public. Multichoice dishes repeat after repeat and promotes OLD movies as new movies. And all the way Koos Bekker & Co laughs all the way to the bank.
    Multichoice’s big problem is there seer arrogance.
    It’s time for them to come down to earth.

  • Guest

    “…MultiChoice is in the strong position it is because it’s an exceptionally well-run company…” – Really?
    Multichoice is a bully. They do not have any consideration for the public and doesn’t listen to the public. Multichoice dishes repeat after repeat and promotes OLD movies as new movies. And all the way Koos Bekker & Co laughs all the way to the bank.
    Multichoice’s big problem is there sheer arrogance.
    It’s time for them to come down to earth.

  • Johann Smith

    “…MultiChoice is in the strong position it is because it’s an exceptionally well-run company…” – Really?
    Multichoice is a bully. They do not have any consideration for the public and doesn’t listen to the public. Multichoice dishes repeat after repeat and promotes OLD movies as new movies. And all the way Koos Bekker & Co laughs all the way to the bank.
    Multichoice’s big problem is there seer arrogance.
    It’s time for them to come down to earth.

    If any other company would attempt to provide a similar service at a better rate, Multichoice would simply undermine that company.
    It is time that the government brings Multichoice down to earth!

  • Johann Smith

    “…MultiChoice is in the strong position it is because it’s an exceptionally well-run company…” – Really?
    Multichoice is a bully. They do not have any consideration for the public and doesn’t listen to the public. Multichoice dishes repeat after repeat and promotes OLD movies as new movies. And all the way Koos Bekker & Co laughs all the way to the bank.
    Multichoice’s big problem is there seer arrogance.
    It’s time for them to come down to earth.

    If any other company would attempt to provide a similar service at a better rate, Multichoice would simply undermine that company.
    It is time that the government brings Multichoice down to earth!

    Just as Oscar Pistorius’s arrogance caused his downfall, so will Multichoice’s arrogance cause their downfall.
    The sooner the better!

  • Johann Smith

    Telkom…please sign a deal with Netflix

  • Greg Mahlknecht

    >If any other company would attempt to provide a similar service at a better rate, Multichoice would simply undermine that company.

    “undermine”? Since when is being competitive “undermining”? None of us like Multichoice, but if they react to competition and provide better products at a lower price (exactly what they did with TopTV), how can you hold that against them?

    >It is time that the government brings Multichoice down to earth!

    So now, after all this time of everyone moaning that DSTV is crappy and overpriced, your solution seems to be to get government to force them to keep their prices high, so they don’t undermine any possible competition?

  • BritinSA

    Duncan, a heated debate is exactly what the SA broadcasting industry needs.

    DSTV needs to be made uncomfortable and its monopoly needs to be challenged. It exists in a cocoon with no real commercial pressures.

    It’s bundled policy suits it very well to avoid erosion of profit. The lack of a Sports bouquet, is intentional. Sky offers Sports bouquets….

    p.s. I am very wary of people who think monopoly is good for any economy…

  • Paul Slabbert

    Agree that encryption should be optional Subsidised boxes should be basic cheap with no encryption, but we should all be enabled to ad encryption at our own costs to provide value to free to air services

  • Greg Mahlknecht

    >I am very wary of people who think monopoly is good for any economy…

    I don’t think anyone thinks monopolies are good for economies, the differences in opinions are how to break this monopoly. I’m more for a fairly free market longer-term solution, as opposed to a quick-fix government intervention method – which the majority seems to be in favour of, pitchforks and all.

  • Paul Slabbert

    Telkom is just as arrogant, and luckily partnering with Netflix will bring no joy, infact they will make even less profit from sale of content doing this, Telkom is like GOV and has no plan and is badly managed.

  • Paul Slabbert

    Yeah Telkom heard of IPTV and want to jump on the bandwagon, but the fact is they cant even provide a constant dialup in the eastern cape

  • Joe Black

    What? ANC votes are the overriding concern in any discussion in SA now? Have the masters spoken? Should people bow down when they pass? Let them fornicate with their daughters?

    What about the right way? What about progress? I hate what this country is turning into. Damned ANC and their royalist tendencies.

    That little rant was just due issue I took with that one bit of the article.

    As far as the discussion is concerned I honestly do not know what the best option is. But I do know that businesses should have a choice in their business model. Which side of the fence does that put me on?

  • Johann Smith

    DSTV USED, please note, USED, to provide value for money.
    However, they now provide inferior products. Repeats after repeats. OLD movies promoted as “NEW”
    BRITINSA made a very good comment…
    How can ANY monopoly be good for any economy?
    People are sick and tired of being provided with a 3rd rate product and pay for a 1st rate product.
    I am certain you have DSTV… so tell me…do you like to see movies and series over and over and over?
    Bully = Yes – TopTv had several channels which made their product sell in the beginning…then DSTV started broadcasting it too…
    With the ADSL rates being dropped, I believe that DSTV will be losing more and more subscriber.
    I personally know of several people that have cancelled DSTV.
    Please do not tell me that DSTV is providing a good product!

  • Greg Mahlknecht

    >How can ANY monopoly be good for any economy

    I don’t think anyone has argued that it is.

    >People are sick and tired of being provided with a 3rd rate product and pay for a 1st rate product

    This is what I don’t get … if DSTV (this also applies to Telkom), is overpriced and rubbish, how come nobody can compete with them? Surely they should be an easy target if they’re so awful and overpriced? Yes, their sport monopoly is part of it, but from what I read in their reports, the majority of their subscribers aren’t there just for the sport.

    >you like to see movies and series over and over and over?

    Nobody does, but this is the nature of broadcast TV. There’s simply not enough content to do fresh content all day every day for dozens of channels. Every person in every country complains about this. It’s not a DSTV problem.

    >With the ADSL rates being dropped, I believe that DSTV will be losing more and more subscriber.

    I’d love that to be true as much as you, but alas the exact opposite is happening – DSTV’s subscriber base swells every year.

    >Please do not tell me that DSTV is providing a good product

    That’s the thing – it really is a good product, the only sticking point is the price. and bouquet breakdown.

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