ICASA’s pro-competition sanctions against Multichoice in South Africa are unfair and unrealistic [Pulse Editor’s Opinion]
On August 14, 2020, the Department of Statistics in South Africa reports that 49.2% of the population over the age of 18 falls below the upper-bound poverty line.
In 2019, the Independent Communications Authority of South Africa (ICASA) launched an inquiry into the state of competition in the subscription broadcasting services sector in July 2016.
It then published its draft findings in April 2019 after publicly consulting and engaging with stakeholders.
MyBroadBand has since reported that ICASA notes that there is a lack of competition in the TV market and that Multichoice, the company that controls the cable TV service, DSTV possessed significant market power. This isn’t dissimilar to the antitrust crusade against tech giants in the US.
Markets need competition and diversification of interests to prevent monopoly and abuse of the market. Economies also require diversification of interests in market segments; this prevents the potential of one company to determine the unintentional fall of that market segment.
For this reason, ICASA proposed to shorten exclusive contracts, impose rights splitting and wholesale-must-offer, open MultiChoice’s network, and introduce set-top box inter-operability.
Aside from monopoly, the timing of the decision in favour of over-the-top platforms like Netflix, Disney+, Peacock, HBO and YouTube looks to make a lot of sense.
Those platforms are internet-based and as of 2018, Statistica reports that roughly 21.6 million of South Africa’s 57.4 million inhabitants were 19 years or younger.
In 2019, Statistica also reports that 56.2% of South Africa’s population were internet users. Statistica also projects that by 2025, around 63% of South Africa’s population will be internet users.
But does the decision make sense overall?
Despite the merits of the decision, it’s absolutely unrealistic as a whole concept.
On August 14, 2020, the Department of Statistics in South Africa reports that 49.2% of the population over the age of 18 falls below the upper-bound poverty line. For a country with that level of potential poverty, costs of internet access are ludicrously high.
In December 2019, Business Insider South Africa reported that, “South Africa has the most expensive home fibre internet connections of any country, according to a new survey. South Africans fork out a staggering R1,273.84 per month on average to get access to 100 Mbps speeds of uncapped residential line internet packages.”
While in December 2020, Business Insider South Africa elucidates that the price of broadband internet access [R899] in South Africa was then aligned with global averages, slow internet speeds raise questions around value.
The point is that as a country, South Africa isn’t as ready for the immersion of OTT services like Netflix as a competition for Multichoice because they are not a competition and they won’t be for a while. ICASA might then be shortening Multichoice’s reach for nothing.
The South African people will still continue to use things they can afford and things that offer the best value for money.
It’s amazing how government institutions across Africa always seem ignorant to the African realities when it comes to issues of antitrust and anti-competition. The mega company that you are trying to hamper maintains the lead for a reason.
It’s because they provide reasonably better services at reasonably effective ways via cost-effective means - even though they might have faults.
In an argument against ICASA’s supposed pro-competition move, Multichoice also argues that, “Strangling MultiChoice does not guarantee access to rights and will impact other licensees, jeopardise jobs, erode the tax base, and cause harm with no benefits to the country,”
OTT platforms are unreasonable, content aggregation platforms are the future
Moreover, the original content-subscription model that OTT platforms operate isn’t exactly reasonable - either in Africa or across the world. These companies are trying to appeal to the same market, yet they have triggered a saturation of content at unreasonable prices.
While Multichoice also argues that three-thirds of DSTV subscribers in South Africa already switched to DSTV OTT, there’s still a difference between multifunctional DSTV OTT that offers a range of services and OTT film/TV-based services like Netflix and HBO which expect separate subscriptions and costs more than certain DSTV bouquets.
*Pulse Editor's Opinion is the viewpoint of an Editor at Pulse. It does not represent the opinion of the Organisation Pulse.
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