1.
Introduction
Imposition and enforcement of protection
rights to a good that can easily be reproduced is a difficult task. With
passage of time and advancement in technology, goods and services which were once
impossible to reproduce have become reproducible. This is a case for
broadcasting services. With the advancement of the internet broadcasting has
become a reproducible good. Therefore, it has become increasing difficult to
maintain a monopoly in markets of reproducible goods. Broadcasting is one of
such a sector.
A monopoly has traditionally been
defined as a situation in which a firm holds a 100% share of the market.
(Cabral 2000, p. 69). However, this relies on a well-defined market or in some
cases a well-defined sector in which we can identify market players. With the
advances in technology, most markets have overlapped and some may fail to be
addressed by the traditional view of monopoly or sectors. This advance in
technology has also created markets that cut across countries and continents,
especially with the use of the internet.
For simplicity, a monopoly therefore,
can be defined based on Milton Friedman (2009) definition that a monopoly
exists when a specific individual or enterprise has sufficient control over a particular
product or service to determine significantly the terms on which other
individuals shall have access to it. Taking into account the market or sectors
in global scale as highlighted above.
Although for this case, the
traditional definition is sufficient, the later definition is a better way to
address this particular case. This is because nowadays it is possible to define
a market as the whole world when considering sectors like communications in
general and internet in particular. This has made it possible for smaller firms
or individuals to establish themselves and compete with bigger players in one
market at lower costs. Some costs are lower due to circumventing the payment
for property rights to the material they possess and in other cases they operate
anonymously to avoid detection by law enforcement agencies and tax authorities.
This can be through pirating of music, software or other forms of digital media
that includes television broadcasting through the internet. This has enabled
small firms to compete against large media companies that own and operate very
big television stations or record labels. The internet has substantially
reduced costs for these small content sellers as compared to the traditional
brick and mortar businesses. As postulated by Bokos (2001 p. 71) lower search
costs in digital markets will make it easier for buyers to find sellers with
the lowest price which promotes price competition among sellers. The costs are
now so low that even small genuine firms can out compete big and established
businesses.
For this article, the piracy that
will be addressed will be related to digital media and in particular, audio and
video broadcasts. Therefore, the definition of piracy that will be considered
is one from Merriam-Webster dictionary which defines piracy as the act of
illegally making television or radio broadcasts. (Merriam-Webster, 2016).
This paper looks at the effect of a
monopoly protected by property rights and charges high prices on services that
can easily be reproduced. It examines the inefficient allocation of such resources
to the public, in a way that it is then threatened by cheap pirated alternative
goods and services. The next section will look at the current Pay TV in Africa:
History and Current Situation. Section 3 will look at Threats to the Pay-TV
Monopoly. Section 4 will look at monopoly in the subscription based television
services and its cause. Section 5 will then look at the effects of property
rights on competition in the market. Section 6 will address costs to society
from monopolistic market arrangements. Section 7 will make then look at future
aspects and a conclusion.
2.
Pay
TV in Africa: History and Current Situation
The simpler view of the current
subscription based television in Africa would best be understood by taking a
look at how television has evolved over time. From 1939 when RCA televised the
opening of the New York World's Fair and a speech by President Franklin Delano
Roosevelt, who was the first president to appear on television, there have been
many changes in television (Stephens, 2000). Technically, from the early models
of mechanical, electronic, colour, digital, smart and the now 3D television,
all these changes have brought a lot more benefits for consumers of television
services. On the payment front, television has moved from the free broadcast or
free to air (FTA), pay or subscription based television to the pay-per-view
television. In all these stages, competition has been the major driver for
innovation and driven by the profit motive of broadcasters. For this paper,
focus will be on subscription based (pay-tv) and pay-per-view television in
Africa.
To start with, history of
subscription based or pay television in Africa is strongly linked with
MultiChoice, a South African pay-media company which is a subsidiary of Naspers,
which offers the DStv television service. DStv covers the continent of Africa.
Since the launch of MultiChoice’s
DStv platform in 1995, most pay-tv challengers have failed to compete with it.
The only notable one was GTV which was operated by Gateway Broadcast Services
based in London, England. The main strategy of GTV which aided it to compete
with DStv was to acquire the English Premier League (EPL) broadcast rights and offered
a lower price to win customers from DStv. GTV’s business strategy depended on
two ideas – football and price. Capturing the British Premier League rights, in
a $30 million three-year deal, was the foundation the company aimed to build on
and be dominate in the sector. This is because MultiChoice had used the
football rights to its advantage over the years. It over priced its services
and used the money for more investment in acquiring more rights to content from
different providers. These included television series, more sports and
exclusive rights of local leagues in Africa.
2.1
Broadcast Right Protection
Sport broadcasts have been the major
driver of pay-per-view television and most subscription based television in
Africa and has been dominated by DStv. This has been mainly because DStv has
the rights to broadcast the EPL matches across Africa where there is a large
following. This strategy worked well for DStv and it dominated the African
continent. The high prices it charged enabled it to expand and establish a
strong base. Further investments were done and more football league rights from
other countries were acquired and added to the platform. This strategy was
undertaken by GTV when it started its operations by making sure it acquired the
broadcast rights for the EPL. Entering the pay-tv sector late, GTV managed to
acquire a lot of subscribers who previously were on DStv or those not
subscribers. The reason was the football broadcast rights and a cheaper charge
than DStv. GTV came and shook the market as they had premier league rights and
were charging a fraction of what DSTV was charging. Furthermore, they made it
possible for existing DSTV customers to continue using their old satellite dish
by only requiring them to buy a new decoder (Nairobiwire.Com., 2015), this
reduced the cost of migration from DStv to GTV for the customers, especially
that even the decoder was also well priced compared to the DStv one.
This competitive strategy worked very
well for GTV also and led to the splitting of broadcast rights into three
regions of Africa: - Nigeria, South Africa and the rest of Africa. Each of
these had to be bid separately and a different broadcaster was awarded broadcast
rights for that region. GTV having a share of the largest region dominated the
market and almost led the seemingly end of DStv monopoly with the exception of
South Africa where GTV did not win the bids for the broadcast rights. This was
a very expensive undertaking. At the outset, acquiring the English Premier
League (EPL) rights needed a huge amount of funds. As pointed out by Sunwords.com
(2009), GTV faced an uphill task from the outset, and made some early mistakes
as it was facing a dominant incumbent, Naspers, and its DStv pay-TV network.
Its master stroke was to secure the EPL rights, thereby ensuring it immediately
got a large and fanatical customer base. A mass migration from DSTV to GTV and
thousands of Kenyans became first time Pay TV customers due to the pricing
model of GTV (Nairobiwire.com, 2015). This was witnessed in other parts of
Africa as well which had the GTV television services.
Although, the investment to acquire
the rights paid off and a large customer base was acquired, this did not
translate into profits and good enough returns. It may have been good in the
long-run, but the short-run determined how far the strategy would go. The
short-run needed funds to operate and systematically find a way to pay back the
funds used to acquire the EPL rights in the first place. This should have been
built into the programming and pricing structure in order to ensure they raise
enough money for operational profits. However, the organization’s programming was
built around the EPL and therefore GTV struggled to show that it was anything
other than a one-trick pony – the rest of the channels offered were never really
exciting (Sunwords.com, 2009).
The organization strategy of GTV of
securing and being protected by football rights instantaneously made it succeed
in its sector in the short-run. However, this did not protect it from the costs
associated with huge investments without consideration of one’s financial
capacity in the long-run. Securing the EPL games also set it up for future
problems: it was forced to bid a huge amount to acquire the rights from DStv (Sunwords.com,
2009). The only way was to source further injections of funds for it to
continue to exist. The financial crisis that hit the world in 2008, was the
major stroke in the life of GTV. It could not secure enough funds to continue
operating despite being clearly protected in the market through the broadcast
rights. Things did not go well for GTV.
2.2
End of GTV Era and Re-emergence of DStv Service
In the end, GTV paid the ultimate
price, it could not mobilize resources to continue operating despite 700
million dollars in investment, GTV pulled the plug and television screens
across the continent lost connection (ICT 4 Entrepreneurship. 2009). The
company had to close down even though it had broadcasting rights protection in
the market. The protection was for a period of more than three years, however,
short-run operating costs made it impossible for the company to sustain its
operations. GTV secured its future with broadcast rights but could not save its
present.
With the going down of GTV, DStv
regained control of English Premier League rights and established its monopoly
once again. This time however, DStv has solidified its presence in the sector
and across the continent. Secondly, competitors can clearly see how GTV
collapsed in an attempt to take over and they cannot take the risk. This has
made it hard for any competitor to challenge them. Consequently, their pricing
structures has been cemented into monopolistic tendencies and even tend to have
discriminatory pricing structure from country to country. Further, it also has
bundled the packages in such a way that you can only get the English Premier
League matches (its most sort after offering), on its most expensive package
and highest package on its service – the premium bouquet. The reaction of the
people in this case has been attempts to boycott its service and threats to
withdraw their subscription. Nigerians and Zambians took it further with petitions
to boycott the service (Techzim, 2015) after the price hike. Complaints may be
right, a closer look at the prices will show that in US Dollar, the prices vary
in interesting ways with no justification apart from the fact that they are a
monopoly facing no competition and can price their services the way they want.
Table 1
|
|
DStv Price – 2016
|
|
|
|
|
|
|
|
|
Country
|
Access (USD)
|
Family (USD)
|
Compact (USD)
|
Compact Plus (USD)
|
Premium (USD)
|
Zimbabwe
|
11
|
21
|
32
|
55
|
81
|
South Africa*
|
6.54
|
14.47
|
22.78
|
30.31
|
50.13
|
Botswana
|
9.94
|
16.01
|
26.52
|
38.82
|
57.77
|
Zambia
|
8.65
|
21.35
|
33.44
|
58.83
|
85.21
|
Namibia
|
7.27
|
11.57
|
21.16
|
|
46.23
|
Kenya
|
10.43
|
21.36
|
37.25
|
63.58
|
93.38
|
Mozambique**
|
|
|
|
|
57.13
|
Nigeria
|
9.05
|
18.09
|
30.15
|
47.34
|
70.25
|
Ghana
|
13.05
|
24.8
|
61.23
|
69.19
|
103.13
|
Tanzania
|
10.75
|
23.32
|
38.64
|
67.21
|
100.14
|
Swaziland
|
7.93
|
13.15
|
21.08
|
31.06
|
46.2
|
Uganda
|
11.44
|
21.97
|
38.52
|
67.71
|
100.51
|
Source: DStv Country specific websites May 2016 prices at May 2016 US Dollar
Exchange rate
* Prices include 2016 price increases in South
Africa
** Different bouquet
types/ names due to Portuguese language
As can be seen from table 1 and
figure 1 (below), the price difference for the “premier bouquet” the lowest
being Swaziland at US $46.20 and the highest being Ghana at US $103.13. The
difference is over 50% (US $56.93). The lowest priced bouquet called “access
bouquet” also sees the lowest price being in South Africa at US $6.54 and the
highest again being in Ghana at US $13.05. The difference is US $6.51 which
makes Ghana slightly less than paying twice for the same bouquet. Considering
that the charges for rights and broadcast through Satellite is the same for the
regions with slight costs of labour and taxes. Taking into account that differences
with broadcast rights for Nigeria and South Africa may be different as they are
bid separately, we would expect the rest of African countries having slightly
less differences. However, with the collapse of GTV, the whole Sub-Sahara
Africa is bid as one therefore, there is a standard cost. Even the satellite
coverage for the three areas – South Africa, Nigeria and Rest of Africa are on
two satellites. In some countries, you can pay for any of the two satellites as
the coverage overlaps in areas, indicating that the costs are ultimately the
same. Being the sole provider for decades in some countries, DSTV finds it easy
to increase prices with little or no objection from consumers (Thenerveafrica.com,
2016). The discrimination pricing is possible as it is impossible or very
costly to buy decoders and pay for the DStv services in another country due to
residence requirements for one to have access or pay for the services in any
country. Consumers have no choice but to buy from their country of residence
where they have the necessary documents to access the services.
This has made it possible for DStv to
charge different prices even when the service is cheaper in a neighbouring
country as the service is not portable and carried to another jurisdiction.
Figure
1.
Source: DStv Country specific websites May 2016
prices at May 2016 US Dollar Exchange rate
* Prices include 2016 price increases in South
Africa
** Different bouquet
types/ names due to Portuguese language
The monopolistic tendencies of DStv
have continued over a period of time leading to a form of abuse of their
position in pricing and services. However, the broadcast rights make it
impossible for DStv to be challenged in any way. All forms of protest or
boycott fail because DStv platform is a private owned company which has been
regarded as a luxury. Therefore, it is illogical for anyone to protest when
they can simply withdraw from their services. As highlighted:
“I find this quite amusing.
People are literally petitioning a private company to reduce the prices
of a luxury item. Yes, I think DStv is a luxury and you have a choice to
subscribe or not. DStv is not the internet, people. It is not electricity! And
the price increases don’t need to make exchange rate sense to customers,
they just need to make profitability sense to shareholders.” (Techzim 2015)
|
This has led to failure of any
protest or any resistance to try and change the status quo and the abuse by
DStv of its customers through pricing. DStv therefore, not only has a control
over the clients in Africa, they also can set any price they want. This is more
so with the fact that DStv is a multinational platform which has used its
spread to make as much profit as possible through the discriminating pricing
based on location or country specific consideration. This has led to people trying
to find a way to deal with this problem through alternatives which may not be
legal. This is due to the social costs imposed on society by DStv through this
inefficient allocation of services.
3.
The Social Costs of Monopoly
As it has been highlighted by many
scholars, monopoly has a social cost because its pricing has allocative
inefficiency. The price set by a monopoly is greater than the marginal cost
(Cabral, 2000 pg. 75). Competition in the sector would achieve efficiency,
however, broadcast rights present a challenge for regulators. This is because
broadcast rights are awarded by a third party – the English Premier League or
The Spanish La Liga for example. Therefore, to encourage competition, there is
need to look at the way broadcast rights are awarded. The rights make it
impossible for fair competition in the sector. They create a monopoly which has
been reduced but not avoided in some developed countries like the United
Kingdom and Belgium. In the UK, from the possible seven bids of the packages of
matches, one firm is not allowed to win more than five of the auctions (Sloman
Economics, 2015). This makes possible for other firms to compete for other
packages available unlike in Africa where all matches are awarded to one
broadcaster. If this mode of bidding could be replicated in Africa, consumers
could benefit.
A critical analysis of the market and
legal challenges would need to be looked at for any regulation to be effected
on DStv platform. This would entail country specific regulation measures, but
these would need cooperation with the broadcast rights organisations. There are
complex mechanics of not only domestic law, but international law and
regulatory intervention. These are needed to reduce losses in welfare due to
the existence of a monopoly. While at the same time, conforming to competition
control laws of domestic markets. This is the only way to protect consumers
from the losses in consumer surplus due to monopoly type of market as shown in
figure 2.
Figure
2. (follow the link)
Source: tutor2u from: http://www.tutor2u.net/economics/blog/unit-3-micro-monopoly-and-economic-welfare
4.
Threats
to the Pay-TV Monopoly
There are many motives to pirate on
the internet and media in particular. Most of these have roots in not only the
way the material is presented, but also the price that is attached to the
media. In the case of DStv, the complaint has been on the pricing that they
have implemented over the region of Africa as highlighted above and figure 3
below. The social cost due to the high cost make people seek alternative ways
to access live broadcasts of mostly live sports which may not be legal. They
may also resort to downloading television series and movies online. The cost to
all this is the subscription to internet service providers. Although illegal,
it is made easier and easier with some applications providing video on demand
and anonymous downloads.
Figure
3.
Source: DStv Country specific websites May 2016
prices at May 2016 US Dollar Exchange rate
* Prices include 2016 price increases in South
Africa
** Different bouquet
types/ names due to Portuguese language
High price has been known to
encourage piracy. As highlighted by Cheng et. (1997 pg.53) a consumer's final
decision on acquiring software or a reproducible good depends on three
variables: the cost of pirating, the price, and his or her reservation price.
This is because in the case of reproducible consumer product such as computer
software and in this case broadcast signals, consumers have the alternative of
reproducing the product – that is, pirating - the software instead of
purchasing it (Cheng 1997 pg. 53). Considering that broadcast of video and
audio is a reproducible product, pirating has spread rapidly with many websites
and applications for desktop and laptop computers; tablets and phones offering
the broadcasts at minimal or no cost. Such applications and websites have
become very popular in the entire African continent.
Table
1.
Premier League
international rights deals for 2016-19
Territory
|
Rights
holder
|
Australia
|
Optus
|
Brazil
|
ESPN
|
Caribbean
|
Cable
& Wireless
|
Central
America
|
Sky
|
Central
and Eastern Europe
|
IMG
|
Central
Asia
|
IMG
|
Finland/Sweden/Denmark
|
MTG
|
France
& Monaco**
|
Altice
|
Germany/Austria/Liechtenstein
|
Perform
Group
|
Hong
Kong
|
Letv
|
India
|
Star
|
Israel
|
Charlton
|
In-flight,
in-ship
|
IMG
|
Latin
America
|
DIRECTV
|
Malaysia
|
Astro
|
MENA
|
beIN
|
Norway
|
TV 2
|
Poland
|
nc+
|
Singapore
|
Singtel
|
Spain
|
Movistar
|
Sub-Saharan
Africa
|
SuperSport
|
Turkey
|
Saran
|
United
States
|
NBC
Sports*
|
|
Source: premierleague.com
(2016)
Therefore, the only threat that DStv
has, is from illicit provision of their broadcast. Bearing in mind that DStv
has rights to broadcast in sub-Sahara Africa, any broadcast of the football
match by anyone else would be considered pirating. This can be considered the
biggest threat that DStv has at the moment. DStv acquired license for the Sub-Saharan
Africaas shown in table 1 Above. The current license period of three years runs
from 2016 to 2019 for which it paid £
296 million for Sub-Saharan Africa.
4.1
Threat from Illicit Service Providers - Piracy
In view that DStv has broadcast
rights, it is prone to threats from pirated broadcast of its major niche in the
market – the English Premier League. This is because, with the increase and
development of streaming services for audio and video, it is easier for someone
to broadcast the football matches on the internet with minimal costs compared
to satellite and decoder method used by DStv. It is even cheaper for the client
receiving the broadcast as they don’t need extra equipment apart from phones;
tablet, laptop or desktop computer;t or an IPTV Box capable of receiving audio
and video through the internet. The cost of setup therefore, is very low and in
most cases negligible.
Furthermore, the high cost and
complexity of blocking such pirated streams online, makes such attempts of
blocking impossible. As observed by Swains (2015) as the cost of TV rights for
sporting events has escalated apparently without limit, so has the ease by
which conventional broadcast methods can be circumvented or pirated. All this
has been despite the best efforts of global authorities. This has made it
possible for people to access the restricted content easily and cheaply. People
are watching more live sport than ever, whether or not they have paid for it.
The audience of unauthorised streams is estimated in the millions (Swains 2015).
The contention is that broadcasters are holding sport fans to ransom due to the
very high pricing for sports events and the premier league in particular.
However, the illegal streaming has not only affected sports, it has covered all
areas of digital media from music, television series to movies. “Hard-goods
piracy” in the form of DVDs has now all but vanished. Today the main
facilitator of piracy is high-speed internet, with users either downloading or
streaming the content (Morley, 2015).
In Africa, high-speed internet was
the only obstacle to DStv’s monopoly, however, the increased penetration of
high-speed/ broadband internet in Africa will present a major threat as this
will enable piracy to spread with the penetration of broadband internet. This
is because one merely has to have high-speed internet and they can access
online streaming sites for football, series, music and movies. This will hurt
DStv and shake its monopoly grip in the live sports broadcast sector. Further,
the fact that most streams originate from outside Africa, it will be hard to
enforce the copyright infringement in other continents. The costs will be very
high and the task an impossibility. Further, the open software community is
constantly developing ways in which streams can be organised and accessed as
well as developments to reduce costs of broadcasting. These developments are
used by people who are pirating to ensure they deliver pirated content cheaply
to consumers. Just like the ability to share files has developed so much. It is
worth noting that these developments are meant for legal means but are used by
illegal sharing communities due to the demand for the content. For instance,
Kodi, which has been used for piracy through software add-ons, made by illegal
providers, came out to issue a statement after being blocked by apple store that
there was a wave of sellers who decided to make a quick buck modifying Kodi,
installing broken piracy add-ons, advertising that Kodi lets you watch free
movies and TV (Kodi, 2016). This however, could not be stopped as an add-on
provider may offer services for free and make their money through advertising
on the application.
4.2
Threat from Other Service Providers
The potential market for Pay-TV is
sub-Sahara Africa has meant several options for would be competitors in the
market. Several service providers have come up taking into account the lessons
learnt from the fall of GTV. In particular, ZUKU a Mauritius registered company
has operations in Eastern, Central and Southern Africa; TopTV, a South Africa
based company; and StarTimes , a Chinese owned Pay-TV which has covered
Eastern, Central and Southern Africa have launched services in the past two
years to rival MultiChoice’s DStv platform (Mark, 2014).
The increased number of service
providers will entail the further splitting of the regions for broadcast rights
if the providers provide a strong enough force for DStv and if particular
countries are willing to regulate the granting of rights to their countries to
encourage competition. Such a situation would be good for consumers as the
competition will entail better service, lower prices and a customer care which
a monopoly would not provide.
Additionally, StarTimes has the money
to bid for the English Premier league as it has already established base with
the much needed Africa related content through programs produced by the
company. It is also believed to have the needed funds to mount a chance at
broadcast rights as it acquired TopTV (Advanced-television.com, 2013) and
trades as StarSat in South Africa and other countries. It has now become a real
threat to MuiltiChoice and DStv. This is the first legitimate strong
competition to DStv since the collapse of GTV. The Chinese owned company is
believed to be preparing to break DSTV monopoly and will bid in the next round
of bidding for the EPL. President of StarTimes, Pang Xinxing is quoted to have
said it was not fair and it was abnormal the lack of premium sports content on
affordable subscription TV packages in South Africa (Vermeulen, 2013).
The other credible competition is
from Netflix, a United States based online content provider. This threat is not
of the EPL and live sports events, it is a threat in video-on-demand services
that are offered by MultiChoice. Netflix has a niche in this area. MultiChoice
faces the threat posed by the fast growing Video-On-Demand industry in Nigeria,
especially Netflix, this is because the online provider has a huge collection
of media which is easier to provide through internet (thenerveafrica.com.,
2016). It is expected that Netflix will capture a large market once the
internet problems have been resolved and ecommerce takes shape. Ecommerce in
Africa is very low, current ecommerce figure of US $10bn is expected to
increase to US $75bn in 2025 (Bright, 2016). This is shown in figure 2. At that
point, it is expected that more profits will be earned in Africa. This is why Netflix
has strategically invested in Africa even when internet speeds are still low.
The strategy is to get returns when the internet and ecommerce in particular
develops in Africa for the current investment.
Figure
2.
5.
Conclusion
The MultiChoice/ DStv issue in Africa
illustrates the complexities in industrial organization for multinational
companies and the issues of property rights and monopoly. The company will
ensure it maximizes profits and use all forms that can help it from price
discrimination based on location, use of exchange rates to any other form that
will reap the most profits. In so doing, many people will be unable to enjoy
the products and alternative services will be provided in form of pirated
signal and broadcasts. This creates a threat especially at the time that
pirating broadcasts over high-speed internet has become so cheap and so easy.
This threat of piracy will make price
increases hurt the monopolist. At the same time, it makes it expensive to enforce
the property rights as infringement is spread across the entire world. Someone
pirating a signal they legally paid for in Australia to other parts of the
world will be difficult to block and almost impossible to be handled by one
company or one law agency. Even with the united content right holders, the cost
of trying to eliminate such pirates would be cheaper with a reduced price for
the service than hunting for live broadcast pirates across the world on the
internet. This would encourage more legal subscription and economies of scale
from the number of people that legally subscribe. As it has shown in countries
where many providers have emerged, price wars have resulted in lower prices in
the services provided. When Kenyan telco Safaricom entered the pay-TV fray
earlier this year with its 4G-enabled Big Box decoder, East African rival Zuku
— spurred on by the region’s heated price wars — chose the moment to take a
swipe at the competition (Vourlias, 2015).
In addition, a monopoly will more or
less open the door to competition when it makes super normal profits. These
competitors may come up with value added services which would kill the monopoly
when the competition gets fierce. As shown by the collapse of GTV, it is
possible for a company to collapse even when it is protected from competition
through the property rights that are granted. MultiChoice/ DStv is therefore
not protected from collapse just because it has rights. It is enjoying
over-charging its consumers while at the same time opening doors for them to
seek alternatives. Piracy of football games can cause it to have great losses
and enable competitors to increase subscription numbers leading to its lose of
its market share. After all, if people can source for other alternatives, they
would not pay DStv.
In the time of high-speed internet, a
strategy for a monopolist is to ensure it makes enough profits in such a way
that it prevents an attack on its power and market share. This is through reasonable
prices and customer care that would make it hard for competitors to enter the
market, even when they don’t pay for broadcast rights. Prices that would be
good enough to prevent a mass exodus in search of alternatives or illegal
options. After all, broadcasting is a reproducible good.
Social costs of a monopoly call for
regulation from the state as it is associated with allocative inefficiency. For
a sector which is affected by many cross border activities, regulation may take
time, but once the legal challenges have been dealt with, regulation may open
up competition for totally unprepared companies which have been monopolies for
a long time. These may fail to compete favourably.
The coming of the Chinese company –
StarTimes (also trading as StarSat in some countries) on the African market is
expected to improve the services offered and overall African Pay-TV. This is
because StartTimes has the ability to challenge DStv. This competition is
needed to improve services for the whole continent. Efforts to ensure competition
in the sector has therefore intensified and consumers will not be abused with
high prices in the long-run. For the past few months, DStv has introduced a
channel of football on its low-end bouquets due to the competition that has
been mounted by cheaper bouquets from StartTimes and Zuku. This is in a bid to
fight competition but also to maintain market power with a large customer base.
This case of DStv in Africa clearly shows the various
issues that result in industrial organisation in the face of monopoly,
discriminatory pricing and competition in the real world. Ultimately the
companies will take any advantage to maximize profits. It is therefore
important that regulations are up to the task of ensuring there is competition
but at the same time give rights for innovators of technology in order to
encourage innovation. However, in the case of more rights not attached to an
innovation, it is important to encourage competition and prevent abuse of
consumers. For DStv, there is no innovation protection but mere rights to prevent
access a service and charge a high price. There is no “property” created by
DStv but just restriction to broadcast and charging more for access.
This type of protection is merely
granted to businesses that want to profit from a natural monopoly arrangement
as a private company when they have not created or developed anything.
Competition in such a sector should be encouraged.
Of interest to country specific DSTV websites, these are not included in the references but can easily be followed from DSTV website as follows: e.g Botswana
6.
REFERENCES
Cabral,
L. M., (2000). Introduction to industrial organization. MIT press.
Cheng,
H.K., Sims, R.R. and Teegen, H., 1997. To purchase or to pirate software: an
empirical study. Journal of Management Information Systems, 13(4), pp.49-60.
Hsing
K. Cheng, Ronald R. Sims & Hildy Teegen., 1997. To Purchase or to Pirate
Software: An Empirical Study, Journal of Management Information Systems, 13:4,
49-60, DOI: 10.1080/07421222.1997.11518142.
Bakos,
Y., 2001., "The Emerging Landscape for Retail E-Commerce." Journal of
Economic Perspectives, 15(1): 69-80.
Friedman,
M., 2009. Capitalism and freedom. University of Chicago press.
Stephens,
M., 2000. History of television. Grolier Multimedia Encyclopedia.
