Economy

Subscribers lose millions as Smart TV goes off air

Digital TV migration presentation: Pay-television provider Smart TV has closed shop after failing to secure adequate funding for its operations, leaving thousands of its subscribers and dealers with obsolete decoders. Photo/WILLIAM OERI
Digital TV migration presentation: Pay-television provider Smart TV has closed shop after failing to secure adequate funding for its operations, leaving thousands of its subscribers and dealers with obsolete decoders. Photo/WILLIAM OERI 

Pay-television provider Smart TV has closed shop after failing to secure adequate funding for its operations, leaving thousands of its subscribers and dealers with obsolete decoders.

Word that the signal had gone off at Smart TV started last week after more than 2,000 subscribers failed to access premium content through the decoders.

Calls to the operator’s offices also went answered, with the chief executive officer and his compliment of seven members having left a month ago.

“We have closed shop and are currently shopping for an international investor following the exit of the Swedish investors – Next Generation Broadcasting (NGB) — which has put us into financial constraints,” said Mohammed Nyaoga, chairman of Transmex, which owns Smart TV.   

Mr Nyaoga said the directors of the firm would meet on Friday to decide if subscribers will be refunded the Sh5, 000 they invested on decoders and the subscription fees for the month of January.

SmartTV’s bouquet of eight channels covering news, entertainment, sports, kids’ content and gossip was going for Sh990 a month.

Smart TV becomes the second pay- television operator in Kenya to close shop after GTV fell into financial distress in 2009, amplifying the need for a consumer protection law.

The closure now leaves Wananchi’s Zuku as the main rival of MultiChoice DStv that has dominated the market for over 15 years.

By the time of its exit, NGB had injected Sh400 million into marketing, leasing the terrestrial broadcasting platform from Signet — a subsidiary of the state owned Kenya Broadcasting Corporation KBC — and importation of the decoders.

The Swedish investor’s exit followed legal tussles with local media houses over unathorised use of their content and the government’s decision to change the model of set top boxes from the Digital Video Broadcasting -Terrestrial (DVBT1) technology to a much superior version, DVBT-2.

This meant that the firm, which had already invested on set top boxes based on DVBT1 technology, had to invest again in the new ones.

NGB had been taken to court by six Free To Air operators who were unhappy that it was using their programmes as part of its DTT bouquet without authorisation and payment of a fee. The court ruled that there was no irregularity in the process and gave NGB a go-ahead to continue with operations. It had partnered with state broadcaster KBC to offer its pay-TV channels.

Information Permanent Secretary Bitange Ndemo yesterday dampened the hopes for compensation by subscribers, saying the government was only willing to compensate importers of decoders.

“When the government switched to the superior technology DVBT2, we asked those who had already imported the DVBT1 to come for compensation, but no one did, as they did not have the import duty receipts” said Dr Ndemo.

He said an option would be for the Treasury to buy the convertors and provide them for free, like the US and other countries have done.

GTV went under with more than Sh100 million in supplies and subscription fees. It had no assets in Kenya that could be liquidated.
For close to eight years, Parliament has faltered in its attempts to enact a law that would shield local consumers from exploitation in an increasingly open market.

However, the Consumer Protection Bill, 2011, which would protect consumers in case of a vendor’s collapse has gone through the second reading in Parliament, bringing the law closer to reality. It contains a hybrid of consumer laws operational in leading countries such as the US, India, UK, South Africa and Germany.

A preview of the draft Bill shows it seeks to consolidate consumer laws to establish a legal regime for consumer protection and appropriate recourse for those aggrieved.

The proposed law further fronts for the establishment of a committee to ensure that all consumer complaints are tackled consumer rights are upheld.
Protection of consumers from inaccurate or misleading estimates and unfair business practices are also to be curbed if the Bill becomes law.

The uptake rate of pay- TV currently stands at one per cent with DStv dominating the market for the last 15 years. The service provider has 100,000 clients compared to 35,000 for its nearest competitor Zuku while SmartTV had 2000.

Pay-television in South Africa reaches 43 per cent of the population and is expected to reach 63 per cent by 2015 mainly driven by the switch from analogue to digital broadcasting.

The  pay-television providers are hoping to get more customers with the migration to digital platforms by local broadcasters.

The Communications Commission of Kenya has set a 2012 deadline for the migration from analogue to digital broadcasting after which analogue will be switched off.

The world deadline is 2015 as set by the International Telecommunication Union.

mokuttah@ke.nationmedia.com