Opinion: DStv tariff, market economy and patriotism

by Lanre Asiwaju

DSTVNo one should blame DStv for the failure of competitors to possess the wherewithal to compete.

Following the recent announcement by MultiChoice the parent company of DStv and GOtvof the increment in subscription fees, the social media and messaging platforms were flooded with messages calling for a boycott of DStv and GOtv come April 1st 2015 when the new tariff takes effect. The boycott campaign is a kneejerk response that is becoming typical of the many interventions on Nigeriaâs social media. So far, all I’ve read and heard suggests faux patriotism and ignorance of how market economy works.

BouquetPrevious PriceNew Price
DStv PremiumN11,650N13,980
DStv Compact +N7,850N9,420
DStv CompactN5,000N6,000
DStv FamilyN3,000N3,600
DStv AccessN1,500N1,800
GOtv PlusN1,500N1,800
GOtvN1,000N1,200
Extra View (for DStv)N1,800N2,160

For starters, Nigeria isn’t Venezuela where prices of goods and services are fixed by the state. The Nigerian pay television industry is guided by the principle of demand and supply. Hence, MultiChoice is right to charge what it thinks the market can bear. Folks who accuse DStv of running a monopoly somehow forgets that other pay- TV service providers DAAR Sat, StarTimes, My TV, CONSAT, etc.—operate in Nigeria. The question therefore is, why is there no effective competition? For all I know, it’s the responsibility of government and not DStv to engender competition. Also, you can’t blame MultiChoice for continuously providing cutting-edge products and services that have endeared the DStv brand to subscribers.

Few years ago, HiTV, an indigenous pay-TV operator, took the market by storm when it secured rights to beam 80 percent of English Premier League matches but it went bankrupt after just 3 years. Why? First, HiTV built his customer base around the live football matches, which broadcasting rights it had no control over. Compare this with DStv which owns AfricaMagic, M-Net and SuperSport channels. Nonetheless, DStv continues to repackage its bouquets to keep its customers happy. Secondly, HiTV got its revenue projections all wrong. Prior to HiTV’s coming, the EPL rights reportedly sold for $30m but HiTV bid and won 80 percent of the broadcasting rights for $115m, out of which $40m was paid immediately. They lost the rights when they couldn’t pay the outstanding amount as at when due. Even if banks had provided HiTV with loans, how would they have paid back with a customer base of less than 200,000 subscribers? Among other reasons, HiTV failed because it paid over the top for EPL rights and for not growing its content. No one should blame DStv for the failure of competitors to possess the wherewithal to compete.

Pay-TV operators are like agents, they pay often not in Naira for contents they don’t own. But then, monthly subscriptions are paid in a Naira that’s spiraling out of control. The Central Bank of Nigeria has devalued the Naira twice from N155 to N168 in November 2014 and to N198 in February 2015—in the last 6 months. It’s worthy of note that energy price is also on the increase.

Yes, it’s human for subscribers to want bargains but given current realities and the fact that MultiChoice is in business to make profit, it’s only logical that tariff increases. However, we can still ask questions. Is this increment commensurate? Will MultiChoice revert to old prices if and when the Naira improves? Well, I don’t hold brief for MultiChoice but here are facts. The Naira has lost ca. 28 percent of its value in the past 6 months whereas MultiChoice increased DStv tariff across all bouquets by 20 percent. Furthermore, due to the Ghana’s improving currency, the company last November reduced DStv monthly subscription fees. Perhaps, tariffs will be reduced if and when the Naira improves.

One demand that appears central to this boycott campaign is the introduction of the pay-per-view option. First, DStv doesn’t offer pay-per-view service anywhere as fallaciously stated by proponents of the boycott campaign. Due to technology revolution broadband, PCs, laptops, tablets, phones and the attendant changing consumption habits, the quality of internet-TV has tremendously improved in developed countries.

Pay-per view was therefore introduced to provide additional choice for folks who aren’t subscribed to a pay-TV service but who are occasionally interested in watching specific programmes like live games, television shows and movie series. However, the pay-per view option isn’t cheap and it requires broadband connection. American pay-TV networks, Showtime and HBO are reportedly prepared to charge a record $99.95 or ca. N20,000for a pay-per view subscription to watch the May 2nd fight between Floyd Mayweather and Manny Pacquiao. There is a huge chance you’ll get to watch the fight live on DStv if you are subscribed to the premium bouquet, which will now cost N13,980 from 1st April.

It’s worthy of note that DStv transmits via a downlink satellite signal and not broadband connection. Hence, it’s impossible for DStv to know whether you’re at home watching or othere is no-one at home to utilize the service. Currently, household broadband penetration in Nigeria is low and if telecom companies are to scale-up investments in infrastructure, broadband services aren’t going to come cheap. Pay-TV service is in fact luxury and not a necessity of life. During my 12 months stay in the university accommodation while at Newcastle University, I didn’t watch television because I found the annual cost, £145.5 or ca. N42,600 of a colour television license, required to watch only free-to-air channels, too expensive.

From my discussions with friends who support the boycott campaign, I deduced that they’re largely driven by faux-patriotism. A friend asked me, How dare a South-Africa company come here to exploit us? I responded, asking if it would have made any difference if MultiChoice is a Nigerian company. Perhaps this explains why Nigerians didn’t boycott Dangote Cement cement is a far more important than satellite television to the common man when its 50kg bag sold for over N2,000. My point is that exploitation, whether by a local company or multinational corporation, is exploitation and must be condemn in equal terms. However, I don’t even believe Dangote and MultiChoice exploit Nigerians because any other company operating in a market economy wouldn’t act any differently.

On a second thought, let me concede that Nigerians are being exploited, but with whose permission? These exploitations are simply the result of government’s inability to engender competition and regulate sectors of the economy. For instance, there are four pay-TV service providers in the UK Sky, Virgin Media, BT and TalkTalk and the decent competition for market share means more choices, better content and better value for consumers. However, noting Sky’s dominance, Britain’s communications regulatorOFCOM recently launched a review of the digital sector with a view to increase competition, reduce prices for consumers and encourage investment in faster networks. Government’s responsibility isn’t just to issue licenses. It must continually ensure fair and effective competition, and even when leading competitors are colluding to rip off consumers, government has a duty to sanction them and restore sanity to the market.

Another example of this faux patriotism is when Nigerians are urged to patronize local manufacturers and entrepreneurs, even when the products and services on offer are poor. By the way, nobody stopped Nigerians from buying foreign music and movies before folks began to patronize local artistes. The Nigerian entertainment industry simply got better. Therefore, local manufacturers and government must stop whining and get their acts together. Nigerians will buy made in Nigeria products once they can compete quality and price wise with imported products.

To get it right, government must learn from history. The aim of any industrial policy must never be to target our huge domestic market but to build a brand that can compete globally as feedbacks from the global market is required to continually improve products. Protecting the domestic market has hardly helped local manufacturing because banned and tariffed foreign products continue to find their way into the country via our porous borders. Instead, protectionism results in the loss of accruable revenue to neighbouring countries and loss of manufacturing capacity as smuggled imported products are often cheaper than locally produced goods.

Furthermore, government policies must never be aimed or implemented to favour cronies. Rather, government must create competition among multiple companies, provide support via energy subsidy, tax rebate, cheap credit etc.—, enforce export discipline, and subsequently sanction failing companies. However, I understand this well-tested model requires huge political will to implement. Government can therefore start by doing the little things like making it easier and cheaper to register a company, obtain the Right of Way permit required to deploy broadband infrastructure, acquire a domain, etc.—that are often highlighted in the World Bank’s Doing Business annual report. The 2015 report ranks Nigeria 170th out of the 189 economies appraised, signifying that a lot needs to be done.

To economically develop, Nigeria must engage advanced countries to absorb and adapt existing technology and as Ricardo Hausmann advises, we must refuse to see these relationships as pure exploitation, but as value-creating opportunities. Boycotting DStv won address the lack of effective competition in the pay-TV industry. Rather than embark on a wild-goose chase, proponents of this campaign will do well to redirect their anger towards government. For instance, the National Broadcasting Commission can force MultiChoice to increase the number of free-to-air channels on DStv or perhaps, share some of its premium content to other pay-TV providers at a controlled price. However, folks who are ready to boycott DStv come 1st April are free to do so while unpatriotic citizens like myself who isn’t ready to subscribe to the poor content offered by indigenous pay-TV service providers wouldn’t mind being exploited.

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Lanre Asiwaju tweets from @lenin4real

 
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija

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