South Africa's pay TV in peril

2011-11-08 11:24 by Thinus Ferreira As an independent journalist unbeholden to any interests and having covered South Africa's television industry for the past 13 years, I feel the National Consumer Commission's uninformed demand that pay TV companies in South Africa do a so-called "unbundling" of the TV channels they offer should be of major concern to the industry, consumers and viewers.

This misguided demand will not be in the best interest of the average consumer or TV viewer.

The National Consumer Commission clearly has no idea of the complex and intricate eco-system that makes something like pay TV possible and viable in the first place.

Why the National Consumer Commission wants to be demonstratively prescriptive of the pay TV industry which is actually governed by the Independent Communications Authority of South Africa (Icasa) as the regulator for the country's television industry, is anyone's guess.

For the average consumer, the beautiful fantasy of picking the separate TV channels you want, and letting each of the 3.7 million other pay TV subscribers in South Africa each pick the channels they want, is of course a wonderful, enticing, desirable and lofty idea.

It'll cost you way more

Why not force the big companies who must surely be overcharging us, to give me just the TV channels I want? Why do I get The Hamster Network (when all that they ever do is sleep) when all I really want is the Badminton Channel? What the consumer doesn't know – and clearly also not the National Consumer Commission – is that a so-called "a la carte" approach will end up costing the consumer and you as the pay TV subscriber more, not less.

Even if you pick just a few TV channels, it will end up costing you more. Way more.

While pay TV is expensive and has a price tier depending on the number of premium channels you subscribe to, it's not a super deluxe service. Because of an economy of scale, pay television is not the sole preserve of those with infinity pools and Bentleys and the polo preppy champagne crowd.

But that is what pay TV will be turned into if the National Consumer Commission's busybody orders are enforced.

Also gone will be The Hamster Network and the Badminton Channel – basically any TV channel that's not incredibly popular. Because, although you might really like The Knitting Network, the 10 potential subscribers who might desperately want that channel, won't be enough of an incentive for a commercially-run entity to include and offer that channel.

Less choice; more cost. Isn't a theme park more fun when it doesn't charge per ride but only entry? You can potentially ride on a selection but if you wish, you can just experience the roller-coaster. It's the economy of scale that makes the existence of the theme park possible. Pay per ride and the rollercoaster would be way more expensive, the teacups would limp along and the snake show would disappear because there's not enough general interest.

Delicate eco-system

In reality the pay TV model is an intricate and delicate eco-system of interdependent parts. Pay TV operators like MultiChoice and TopTV have to intricately balance premium TV content as value propositions - the challenge being to bring TV channels to viewers by striking deals with content providers where the effort and the cost of doing that outweighs the cost.

If they can't make money out of it to sustain it, they're not going to do it. Less news, less documentaries, less kids channels, less specialist programming and a leaner TV channel diet centred mostly around what's lucrative: populist sport, soaps and movies with commercials. 

Nothing is wrong with South Africa's pay TV industry except for their below average customer service levels. The National Consumer Commission would really be of service to ordinary consumers looking at real problems rather than enforcing new rules that will have unintended consequences. The unneccessary tampering is not serving consumers.

Will the Commission next order newspapers and magazines to sell their stories individually? In essence a newspaper or magazine is also "bundling" stories and adverts and supplements together to create one product that has enough different parts to make it enticing enough to consumers to buy and make a profit. You might not read every single story in a newspaper, but you bought it.

Step back

The National Consumer Commission should step back and leave pay TV operators to free market forces under the regulation of Icasa which they already fall under, and which has a prescribed code for pay television and strict licensing regulations governing the sector.

How will it be better for the consumer and TV viewer in South Africa if overseas investors, channel suppliers and distributors become scared or no longer want to bring their product here because our pay TV model is forced by silly rules to operate differently than the rest of the world?

If this change goes forward, it is not going to be for the better of the average consumer.

Thinus Ferreira is an independent TV critic and journalist covering South Africa's television industry. Read his blog here.