On Wednesday, Nigeria’s parliament discussed
a motion on the “Unwholesome Practices by
Multichoice Nigeria (DSTV) – a subsidiary of
South African-based Multichoice Africa”. On
the same day, the pay TV service hit the streets
of Lagos, Nigeria’s commercial nerve,
informing subscribers of better value on their
subscriptions. Earlier in the week, the
Consumer Protection Council (CPC)
had ordered MultiChoice Nigeria to
compensate its subscribers and henceforth
provide them toll-free lines for their
complaints. This is the latest of consumer-
related issues to have faced the cable TV
company in recent times, exerting more
pressure at a time it risks losing a huge
portion of its market to online TV subscription
services like Netflix.


Blame Monopoly
DSTV has for decades been the sole provider
of premium entertainment on TV and this has
made it easy for it to increase prices with little
or no objection from consumers, most of who
believe cable TV is luxury and only for those
who can afford it. Truly, it was too expensive
for an average Nigerian in the 80’s and even
90’s but as the middle class grows and DSTV
expands its target market, it signed on
subscribers whose use of Cable TV had
nothing to do with class but was more about
having access to much needed entertainment;
they want value for every kobo (100 kobo = 1
naira) they spend on subscription. Hence,
there have been issues between DSTV and its
subscribers in recent years but the pay TV
service has had it easy due to the inefficiency
of the CPC. Now alive to its duty, the CPC is
handing out penalties and making bold
statements that would ensure other smaller
players see the consumer as king.

While DSTV’s monopoly in Nigeria has
allowed it increase prices at will for years,
cable costs in other parts of the world have
also grown astronomically as a result of
monopoly. According to Andrew Dodson
of Cut Cable Today , average cable bill in the
United States would only be $35 per month, as
opposed to $99.10 per month, had pay TV
prices tracked with inflation during the past
two decades. The website claims that cable
prices have risen at four times the inflation
rate during the past five years. Huge price
increases have thus made customers to flee. In
the third quarter of 2015, pay TV lost 300,000
subscribers . Most of these subscribers move
to more affordable streaming services like
Netflix and the live streaming service Sling TV .
As internet access and quality improve in
Nigeria, a similar switch will be witnessed.


Now we know our job
Nigeria’s Consumer Protection Council (CPC)
might not have done enough in the past to
protect cable TV subscribers in the country
against DSTV’s excesses, but it has now come
out in full force. After an extensive
investigation over alleged violation of
consumers’ rights by the company, the CPC
noted that DSTV’s billing system is “not
contemporaneous with the provision of
service” and is therefore not in the best
interest of consumers. The consumer
protection council has ordered MultiChoice to
suspend its service when consumers are away,
release free-to-air channels even when
subscription had expired and compensate
consumers for lost viewing time. It also
ordered the cable television company to
introduce local toll-free lines and equitable
spread of popular sports channels.

Apparently in compliance with the CPC’s
orders, MultiChoice has introduced two sports
channels to a bouquet that costs about N6,000
($30) per month. Nigerian subscribers can
now watch the English Premier League and
the Spanish La Liga. This move, to many
Nigerians is fair enough. But they would have
wanted the CPC to move earlier. But it is not
only the CPC that is moving late, the United
States’ Federal Communications Commission
(FCC) has also just taken steps to increase
competition in the US cable set-top box
industry. Cable customers in the US rent the
boxes at an average cost of $231 per year in
addition to cable TV charges.


What now?
Compliance to recent orders by the CPC
regardless, MultiChoice should prepare itself
for what may come out of a public hearing
Nigeria’s Senate President said lawmakers
would have with stakeholders like the
Nigerian Broadcast Commission (NBC) and the
Consumer Protection Council. The hearing,
according to Dr Bukola Saraki is aimed at
working out “ways to ensure that Nigerian
customers are protected from exploitation,
and to guarantee that our regulatory agencies
begin to take their responsibilities as
‘Watchdogs’ more seriously”.

“Distinguished Senators noted that
Multichoice’s arbitrary subscription charges,
price hikes and refusals to adopt a pay-as-you-
use model, affect Nigerian subscribers
negatively,” the Senate President said in a
statement.

With other issues raised by consumers seemed
to have been addressed by the CPC, the pay-as-
you-use-model is expected to be advocated by
stakeholders at the public hearing to be
organised by the Senate Committee on
Information.

As far as MultiChoice is concerned, its
business model for now does not
accommodate pay-as-you-watch which the
company has noted is being mistaken for pay-
per-view, as the company wants to be able to
offer affordable services. “Anywhere in the
world, pay per view is materially more
expensive for the person who wants to watch
only that piece of content, than binding all the
content together and spreading over the time
market. It is just a mathematical calculation; it
is not that complicated,” Tim Jacobs, chief
executive officer of Multichoice in an
interview published last October.

However, what Nigerian consumers are asking
for is not a model that charges $99 for
the Manny Pacquiao versus Mayweather fight,
but one that allows consumers subscribe for
the channels they watch. As far as Nigerian
consumers are concerned, whether they will
end up paying much more than they pay now
if they choose the channels they want to pay
for, is a discussion for another time.

While MultiChoice faces the threat posed by
the fast growing Video-on-Demand industry in
Nigeria, especially Netflix whose arrival in the
country is putting providers of similar service
on their toes, it also faces a threat to its
business from the Nigerian Senate which is
firing regulatory bodies up to ensure the
South African company dances to the tunes
they play.

In Empire

http://thenerveafrica.com/4038/the-nigerian-senate-might-be-a-bigger-problem-to-south-africas-dstv-than-netflix/