DStv, TopTV ordered to change contracts

22 Oct

The National Consumer Commission has told DStv’s operator MultiChoice and TopTV’s operator On Digital Media to amend their current contracts with subscribers which the commission says do not apply with South Africa’s new Consumer Protection Act.

In a move that could have serious repercussions for South Africa’s pay TV industry, The National Consumer Commission also wants both South African pay TV operators to break down the channels in its bouquets and give subscribers the choice of a la carte channel subscriptions.

The Commission has issued compliance notices to MultiChoice and ODM.

The National Consumer Commission wants MultiChoice and ODM to allow subscribers to pay for the specific TV channels they want, and want the DStv and TopTV channel selection to be grouped into genres.

TopTV told Channel24 on Friday 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.”

Jackie Rakitla, general manager for corporate affairs at MultiChoice South Africa, told Channel24: “We have received a compliance notice and we are currently considering it”.

Bundling services or offering a product?

South Africa’s Consumer Act prohibits the bundling of services. The National Consumer Commission seems to regard the offering of separate TV channels together as a single product as tantamount to bundling services.

The pay TV model that South Africa’s operators follow – similar to the practice worldwide – is to aggregate TV channels that would simply not be economically viable as singular TV streams.

How the worldwide pay TV model works is that more popular TV channels and content actually subsidise less popular TV channels in order to offer a product. 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.

Smaller channels will disappear

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 TV channels, especially popular ones.

For instance: While subscribers would be able to subscribe to just a SuperSport channel on DStv or just a Fox channel on TopTV, less popular channels will completely disappear because of a lack of demand.

Meanwhile, news channels, kids channels carrying less commercial advertising, and less appealing channels that still deliver 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 currently has the back-end technological infrastructure to organise and customise unique channel selection sign-ups to hundreds of thousands, if not millions of individual subscribers.

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Posted by on October 22, 2011 in Changing Things


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