Nation, Royal Media lose appeal for signal distribution licence

Two of Kenya’s leading broadcasters Tuesday warned of a looming affront on media freedom as the government remained on track to awarding the second digital TV signal distribution licence to a Chinese firm.

Nation Media Group and Royal Media Services made the statement after they lost an appeal they had filed with the Public Procurement Review Board seeking to reverse the Communications Commission of Kenya’s decision to award the licence to the Chinese firm after knocking out other contenders on technicalities.

The two media firms had bid for the licence as National Signals Network but the consortium was disqualified on grounds that its bid bond was valid for only 60 days, instead of the 120 days. The official tender documents did not specify the validity period for the bid bond. Award of the signal distribution licence to Pan African Network Group (PANG), a firm with Chinese roots has bred fears that the government is setting up the country for an era of media control.

Coming from a country with a tradition of government control of information, the Chinese firm is not expected to resist any attempts by state agencies to interfere with free access to information.

Four other bidders - Mayfox Limited, Africa Link Agencies, Signal Distributors Ltd and Globecast Africa - were disqualified for various reasons leaving PANG, owned by the Star Times of China, as the only qualified bidder to proceed to the financial evaluation.

National Signals Network was informed of the disqualification six weeks after the tender was opened on May 30, 2011 and just two days before the financial proposals were due to be opened on June 20, 2011.

The consortium and Mayfox appealed to the oversight authority challenging the technical basis on which they were knocked out of the tender.

National Signals Network argued in its appeal that the tender committee did not specify the grounds upon which its application was disqualified in the request for proposals. The request proposal only indicated that the bid security could be extended.

It also argued that PANG did not have the 20 per cent local share ownership as required by the law, having been registered two weeks after an international tender was floated on February 16. Information permanent secretary Bitange Ndemo, however, said that an international investor is allowed up to three years to operate without a local shareholder.

Records at the company registry show that PANG is owned by two Chinese companies - Qiang Wu (1 per cent) and Startimes Communications Network Technology Company (99 per cent) and has nominal capital of Sh8,186,000.

The Public Procurement Review Board dismissed all the complaints by National Signals Network, leaving the signal distribution licences in Kenya in the hands of national broadcaster KBC, which owns the other licence through a subsidiary, Signet, and the Chinese firm.

Media operators said this has the potential of deepening government control over the broadcasting industry -- pointing to the fact that the winning firm comes from an environment that places little premium on freedom of information.

There is also fear that digital broadcasting technology gives distributor the power to censor content, hence the need for a party independent of government to perform the role.

Although a third licence is to be issued, the holder is expected to find the market dynamics heavily slanted in favour of the pioneer distributors.

Kenya’s TV market is migrating from the current analogue broadcasting platform to digital broadcasting by next June as part of a global initiative.

Broadcasters will cede transmission of their content to the signal distributors for a fee.

The second signal licence was issued on condition that it runs on an open access platform, have national coverage and the operator meets the level of funding needed to put up the national infrastructure.

Signet was recently embroiled in a tussle with local broadcasters after it issued content from eight channels to a private Swedish pay-TV firm for onward distribution without their permission.