Content sharing rules set to end DStv’s monopoly

Pay TV service providers are headed for a big market shift when regulations requiring them to re-sell exclusive content such as the English football premier league rights to competitors come into force.

Francis Wangusi, the Communications Authority of Kenya’s (CA) director-general, said sharing of content is part of the regulations the agency will use to license broadcasters, including pay television service providers.

“We are coming up with regulations that will require all pay television service providers to share premium content on a commercial basis,” Mr Wangusi said, adding that this will be part of the new licensing conditions.

“I know I am going to rattle some players but that is it. CA is the regulator and does not expect all decisions to please all service providers.”

The telecoms sector regulator told the Business Daily that the regulations — to be soon shared with industry players — would effectively deal with practices that give operators undue advantage over competitors.

The announcement is a big win for rivals of pay TV service provider DStv’s rivals such as the Wananchi Group, who have been pushing the regulator to compel DStv to share its premium content.

READ: Zuku asks watchdog to penalise DStv in content sharing row

The authority said that unlike previously when it had to seek authorisation from the parent ministry to come up with such regulations, it had acquired enough room to independently legislate with input from stakeholders.

Mr Wangusi said the new rules would come into force by October and that their formulation had borrowed from practices in markets such as Nigeria.

“DStv will have to put a price tag on their premium content but that value should not be set at a level that discourages other providers from buying the said rights,” Mr Wangusi said.

The guidelines are expected to come with a formula for the pricing of content sold to rival firms. Italy and the UK uses the same concept that is not only meant to increase competition but to also enable end users to access such content from providers of choice.

In the UK, the industry regulator has in the past instructed Sky TV, which had exclusive rights over English Premier League (EPL) to re-sell to Virgin Media — a cable pay television.

A similar battle ensued in Nigeria pitting DStv against local pay TV operator HiTV in 2010. DStv finally prevailed when it won the right to buy the lucrative EPL matches from the Nigerian company.

In Kenya however, the latest development marks a complete U-turn on a decision the CA made last July, when it dropped the bid to compel DStv to share premium content with local pay TV operators. The CA had then argued that there was no law to back the demand.

READ: DStv freed from selling football rights to rivals

Mr Wangusi said the decision was also informed by national broadcaster, KBC’s recent successful court battles that questioned the legality of the regulator’s directive that sought to compel it to share World Cup broadcast content with its rivals.

The regulator had asked KBC to share the football content on grounds that the broadcaster had acquired the rights using taxpayers’ money.

The CA had said in a letter to KBC that the public broadcaster was in breach of its universal obligation by denying other operators the rights to carry World Cup matches yet it had offered GoTV and DStv the same.

KBC said in response that DStv, a subsidiary of Multi-Choice, had bought its rights from world football governing body, FIFA. The national broadcaster claimed that StarTimes and Zuku had hacked into its signals and broadcast the World Cup opening ceremony, including the first match along with paid adverts.

The court ruled that Zuku and StarTimes had broken the law and barred them from carrying the World Cup content.

Zuku then changed tact and filed a complaint with the competition authority seeking to compel DStv to re-sell some of its exclusive content to rivals and impose a financial penalty of up to 10 per cent of DStv’s annual sales.

The regulator is yet to make public its enquiry as to whether DStv had unwarranted concentration of economic power that locked the majority of pay TV viewers into its network and ultimately made it difficult for other players to break even.

On Monday, the Wananchi Group welcomed Mr Wangusi’s announcement saying it would benefit consumers.

“We have been pushing for sharing of premium content to eliminate the dominance of one pay TV service provider which also comes with  very high costs,” Wananchi Group’s chief executive officer Richard Alden said.

“We believe that all consumers should have access to the EPL, news channels like CNN and CNBC that have been locked down to one provider in Africa.”

There have been concerns that DStv’s monopoly of premium content had enabled it to lock in the majority of pay TV viewers, making it difficult for other operators to thrive.

MultiChoice Kenya office declined to comment on the subject, saying it has not received any communication from the regulator.

“Once notification is received MultiChoice Kenya be in a position to respond,” said MultiChoice Kenya finance manager Janet Oyugi.

DStv has maintained a stranglehold on Africa’s pay TV market in the past 20 years, winning a loyal following of about three million subscribers on the back of exclusive content.

Entrants into Kenya’s pay TV market have accused Multichoice ofmonopolising content and hampering the growth of the industry.

Rival pay TV service provider, Smart TV, closed shop in 2012 citing low uptake of its products and inadequate funding.

MultiChoice has previously said that forced sharing of content had been tried in South Africa without much success because without exclusivity, the value of content drops immensely, translating to lower earnings for the sporting and film industry and low uptake by advertisers.