The Independent Communications Authority of SA (Icasa) is enjoined by law to conduct a market review in the electronic communication services and network sectors whenever there are real or perceived market failures.
The most critical aspect of such a review is evidence-based research. One of the major pitfalls is trying to make findings based largely on anecdotal evidence. The other is doing research that is guided by an endgame.
The research itself is also published, and mapped out together with a discussion document so that the basis of the findings is easy for readers to follow.
Unfortunately, in the case of its plans to open up the pay-TV market, Icasa has not done this critical step.
In April, Icasa published its draft findings, highlighting remedies to boost competition and lower subscription prices. These include reducing the duration of contracts, specifically for sports rights, and splitting content rights and selling them to more than one broadcaster.
Icasa's discussion document and the draft findings do not in any way address the original question of why entrants to the market have failed.
Rather, there appear to be assumptions that they failed because of MultiChoice - which suggest that MultiChoice engages in strategic entry deterrence strategies.
For example, there is a suggestion that MultiChoice engaged in such strategies with its launch of lower-tier bouquets. It is unclear why this should be seen as entry deterrence; it seems like normal commercial behaviour.
Neither the discussion document nor the draft findings contain any direct evidence of why licensees did not enter the market or what contributed to their failure to grow. It is important that the cause of failure of licensees be established properly, otherwise Icasa risks losing credibility.
There are several observations to make about how Icasa has looked at the industry. No-one can credibly debate the presence of OTT [over-the-top content, delivered over the internet] services in SA and across the world, yet Icasa seems determined to dismiss their significance.
Netflix is investing in local content, has set up a local office in SA and gone into partnership with telecoms companies. This would not happen if SA was not a serious market for it.
Also missing are actual figures obtained from telecoms companies, broadcasters and streaming services such as Netflix. Rather, the draft findings document relies in part on third-party estimates. Icasa has the power to request this information directly from the providers, and the fact that it hasn't raises questions. What if the estimates are inaccurate or the figures do not reflect how fast a platform is growing?
Estimates should not be relied on if actual numbers can be obtained, especially where one then proposes far-reaching remedies that have potential to destroy not just MultiChoice, but other levels of the value chain, including free-to-air broadcasters that have contracts with MultiChoice.
Icasa proposes wide-ranging remedies, some of which require changes to how rights are sold. The scale and scope of the proposed remedies calls for a regulatory impact assessment, given their potential for massive damage.
Going by the breadth of content covered by the remedies, it appears MultiChoice will be unable to enter into any exclusive contracts for the identified sports and may potentially only be able to do so for the Hollywood movies portion that Icasa will permit. This has massive knock-on effects on sports bodies that rely on demand from the likes of MultiChoice to earn revenues.
The draft findings document does not demonstrate how Icasa weighed up the impact on sports bodies. This is an exercise worth undertaking and extends beyond summarising submissions from various stakeholders and picking the position one wants.
There also seems to be a presumption that by imposing these remedies, it automatically means content is available on competitor platforms. The obvious question is, which ones? We know for sure that the SABC did not broadcast Bafana Bafana matches and the Two Oceans Marathon because of disagreements with rights owners over the value of the rights. Will the same happen across a wide range of content? Will current consumers of MultiChoice's products be worse off? Are the proposed remedies then justified?
• Pongwana is a former CEO of Icasa
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.