Friday, October 21, 2011
BREAKING. National Consumer Commission orders MultiChoice and On Digital Media to amend their DStv and TopTV subscriber contracts.
The National Consumer Commission has told MultiChoice that runs DStv and On Digital Media (ODM) that runs the TopTV pay TV services to amend their current contracts with subscribers which the Commission says do not apply with the new Consumer Protection Act.
The National Consumer Commission also wants both South African pay TV operators to break down the channels in its bouquets and give subscriber the choice of a la carte channel subscription and has issued compliance notices to MultiChoice and ODM.
TopTV told TV with Thinus today that the operator can only comment at a later stage. ''We are engaging with the National Consumer Commission on some procedural aspects,'' said Thato Mahapa, senior manager of regulatory affairs at TopTV. ''We have not yet taken a decision or adopted a view as regards the signing of the notice or opposing it.''
MultiChoice's Jackie Rakitla, general manager for corporate affairs at MultiChoice South Africa, told TV with Thinus that ''we have received a compliance notice and we are currently considering it.''
ALSO READ: Might MultiChoice ever go a la carte with channel bouquets or do new bundled DStv bouquets? ''It is something we're watching,'' says MultiChoice.
The National Consumer Commission wants MultiChoice and ODM to allow subscribers to pay for just the specific TV channels they want, and want the DStv and TopTV channel selection to be grouped into genres.
South Africa's Consumer Act prohibits the bundling of services, but the National Consumer Commission seems confused as to how the pay TV business works. The Commission is of the opinion that South Africa's pay TV operators are ''bundling'' services, while they're in fact aggregating TV channels that would simply not be economically viable as singular streams.
More popular TV channels and content actually subsidise less popular TV channels according to the pay TV model used globally. Because of scale and the number of subscribers, operators can offer a selection of more watched and less watched TV channels to cater for a wider overall variety of programming taste.
While a so-called ''a la carte'' channel selection would theoretically be possible, it will actually cause pay TV operators to increase the individual price of popular channels, especially popular ones. For instance: While subscribers would for instance be able to subscribe to just a SuperSport or SuperSport channels on DStv or just a Fox or Fox channels on TopTV, less popular channels will completely disappear because of a lack of demand.
Because operators still have to make a profit as commercially run businesses, in all likelihood an a la carte channel offering will increase the individual price of a TV channel. Meanwhile news channels, kids channels carrying less commercial advertising, and less appealing channels that still delivering some unique content and cater to a niche audience will disappear, leading to less choice and less overall programming diversity. No DTH (direct-to-home) pay TV satellite operator in the world has the back-end technological infrastructure to organise, customise and run unique channel selection sign-ups to hundres of thousands, if not millions of individual pay TV subscribers.
Think of MultiChoice and ODM as a shop that sells bags of mixed vegetables that contain in the one bag bits of carrots, cauliflower, beans, peas and potatoe. A bag of mixed vegetables is not a bundling of services. It's not a ''bundling'' of bags; it's different bits of vegetables together as it's own product. Now imagine the shop deciding to stop selling bags of mixed vegetables and instead just separate bags of just carrots, just peas, just potatoes and just cauliflower.
More total bags of potatoes will be sold than bags of cauliflower. The shop might decide to drop carrying bags of cauliflower even though a small number of customers really like it. Cauliflower - if you can find it elsewhere - will become really expensive. And ''bundling'' would be the shop forcing you to buy a bag of carrots, when you buy just a bag of just peas, even though you don't want the bag of carrots.
Three takes on this issue:
IT World / Los Angeles Times Business / Reuters