Prices of Television Services and the Case of a Monopoly

The following are extracts from a draft school project paper (not of an exact title). It looks at monopoly, reproducible product and the case of television in Africa. This is basically for academic purposes and the should not be used without the author's permission in any way. Note: Academic purposes. 

Academic queries and corrections are always welcome. I have used all sources that were used in this paper to ensure that even the extracts fit in with the reference rules. I also expect a lot of errors as this was draft work. 

For personal interest only.

Edit: After the publication of this blog. Major changes came such as the price slash of DSTV services in Uganda. Story is here.

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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 

(http://eazy.dstv.com/en/bw/get-dstv/packages/compare/select/premium )

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Zambia Referendum 2016 Issues

I have been asked on the issues of the Referendum and what issues we should look at. So I took time to look at various websites and the people encouraging the "No" vote. The most important observation is that people have not read it and so have carried what they think into the advise and decision they made. As usual, the problem of people not reading is what leads to many problems in Zambia as people depend on what their "people" advise them. Funny enough, this issue has even people I consider learned enough to read have avoided to read. So here are simple sources of the document in un-edited form. These can be accessed here: 01 (CSPR Zambia), 02 (PDF scanned document), 03 (ECZ Cartoon - Understanding Referendum.

I have avoided picking political party links as they look at the Referendum on the basis of what they want, not exactly what the people should consider.

I also should point out the interest people should take by looking at the old constitution and compare it with the Bill you will be voting for. 

Take note, the National Referendum is on Part III and Article 79. Part III is the famous Bill of Rights. The rights have been enhanced as more have been added compared to what was there. I should point out that "Gay Rights" have not been added as some people have been saying. Please ask them to point to where this is when they tell. Our interest at Kwacha Economics is the addition of the "Economic, Social, Cultural and Environmental Rights". This is a thing that every Zambia should take time to understand and they will be happy with this inclusion. 

The most interesting excuse given to vote "No" is because the constitution has added the "grade 12 clause" which has been promoted by some political parties. I may be incorrect, but I think from the Mvunga commission, there has been a call for this limitation on Members of Parliament (MPs). So I think this has been backed on this need. Our interest on this blog is simple, how do you entrust people to make the law without the basic education? What kind of laws would they make? These are issues we need to address before we look at the Grade 12 requirement. The issue of it being discriminatory is interesting as this is the basic job requirement for MP which we have tried to set for many years.

After reading the Bill I'm sure you will be like me - hoping for a "Yes" vote. After all, a "no" should have something higher than establishing improving on the rights of the people as it will be a rejection of these improvements and going back to the old Bill of Rights. That is the stand. I see no reason anyone would want to vote "No" unless the rights are aimed at being suppressed. 

You are free to engage me on this issue as to why a "no" is promoted.

Zambian Election Issues

It is always interesting to get into an election and evaluate the various issues of importance to voters. Well, if at all there are issues that are being offered. This year's elections have the same things that leave a bad taste in my mouth and I thought I should bring out what I consider to be issues for me to make a good elections for a country among the "longest period of democratic elections in Africa" - Zambia!

There elections come with the bad elements of name calling, ego promoting, terrible coverage of candidates, "busitele" campaign songs (if only our musicians produced such songs for the night clubs - we would groove for sure, and this year something worse was added - violence! We cry for issue based politics, so maybe we have different definitions of issues so I thought I could bring this out as I expect the issues to touch on economy, human development, achievement of national goals, etc. Here are my "issues" which I think would have made me enjoy the campaigns.

Human Rights

This covers all areas of human rights that us as a people should solidify and ensure are protected. They cover not only the rights that are supposed to be given to me through the Bill of Rights in the constitution, but should have all aspects of human development perspective and what the candidates will do to ensure we have these, or not have them. This is more so, with the fact that without knowing who is backing them, and the element of "donors" to impose what they consider should be the rights of Zambians, we need them to spell and commit to what they will do on this angle. It is critical. I don't want to wake up and be given rights that the western world consider rights. We as a people must ensure we decide what these rights are. So what is the stand on this issue is a basis for my vote.

What will be the position on gender based violence, equal employment on basis of gender? What will be the policy for the disabled? What initiatives will be used to achieve equality among citizens of different gender, race or tribe? How can we see you achieve this for us to follow your progress? What policy are you going to employ to achieve this?

This being the case, what is your stand on the referendum - in particular the Bill of Right. What is your message on the referendum vote and why? What rights do you hold as priority and why?

Education

What education should be given as compulsory to all children of this country. What is the plan that is setup to ensure this is attainable. Again, I don't want to wake and be told my children who are English speaking at home will have to learn in a language they don't know because someone at the Ministry of education misinterpreted a report on "familiar language" as a base for education or instruction and replaced it with "local language of the area". So imagine what a Child born of two different tribes and leaving in a different area will get when the child brings homework in that area's language! Such policies which did not even attempt to ask parents has to be enforced as policy. Worse still when the world (including China) is aiming at teaching the children English as a critical language for development, we are teaching them local languages and in local languages! What is the use of the child learning a language they will never use at home or in their life? Is this the type of policy that will continue? So what happens to the right for the children to be educated in a universally accepted language or official language? This is an issue I expected to be addressed for early childhood learners - none of the candidates has brought it up. Not a single one!

The introduction of computer and IT education is commendable. We also have had a policy that allows importation of Computers, Phones, Network items, etc without the payment of duty. This is a policy which shows a good planning behind it. We should however expect an improvement and encouraging of IT development skills on a very serious level as it would ensure a great competitive advantage in the world. We can't claim to have a large labour force to compete in the world with the likes of China, but if we educate our children well in IT and ensure competitiveness, we already have an advantage of English to be able to easily enter the world (assuming they this wont be destroyed by the language policy mentioned above). We could have software engineers and software developers which could well do as good and hope it goes into circuit board development - we have the copper! This is the greatest form of employment with the purpose of entering the world. But which candidate or party has such ideas? Who has even taken a leaf on what the world development challenges is the country facing regarding education in IT? We are a small population which can't compete in labour and cheap labour with the likes of Asian countries, however, we can use our highly educated people in IT to take over the bigger portion of the money in IT developement - just research on how much China gets for each iPhone (which is labeled "made in China" compared to the countries that make the software for it). So what is wrong with thinking of sending the hardware to China but developing the software here?

Developing of bursary loans has been on the lips of many for university students. We try to find a way to fund the public institutions and prevent student riots, yet we can't see the importance of such a loan will do. Which student will riot when they know they will be paying very soon for the loan they obtained? Ever wonder why the only ones who complain after a closure of an institution are self-sponsored students? In addition, the loan scheme would also enable the universities meet its obligations of paying lecturers on time and avoid the strikes. It is easy to look in the region of the most successful universities and see what policy has done to ensure they offer the best education and best conditions for its lecturers. We are not an island and we can learn easily.

Media

The time Chanda Chimba and ZNBC went on to create a program on one Micheal Chilufya Sata (MHSRIP), some people where so happy and rejoiced on this. They were happy that they will ensure he won't be voted into power. I don't think this worked, it might have even enhanced his chances of going into being the president of the nation. All the possible "evils" he did were so to speak "exposed", but he got the vote. The problem then, which still is, is that people did not fight to end this. There is no program now (hopefully wont be), but the issues of the "national broadcaster" being a propaganda tool for the government has continued. Now we have people complaining because they are now facing the same thing that Sata faced through Chanda Chimba's program. Should we leave it as that - a tool to be used by any government that comes into power? Has anyone addressed this?

I don't want to address the issue of the Post Newspapers as to me this issue has two wrongs and we can't take one and leave the other. I have said it before in many forums that, if you owe government in any way, you have to make good or something will follow you regardless of how it comes. I have also asked the question, if the Post paid the "owing" would they be in this position today. The law allows one to pay and then seek legal means on the so called "debt". That is an issue for another day.

Apart from hearing the issues of what the law provides for and how one candidate will address the two issues above, I think I have only heard a promise of re-opening the Post - what will be the stand on the debt? Was a law broken in the closure? These are issues we need to hear. I for one would love to hear one look at the issue of protecting government revenue and handling issues of how companies should handle they issues pertaining to government debt and payment of taxes.

Most critical, Zambia was one of the first countries to hand television, we have nothing to show for it. We are constantly being exploited by foreign companies in pay-tv since the death of CASAT. Does any of them even thing of promoting such business? Why for instance should Zambia which pays a lot on football channels not have a local company to provide the football leagues? We can't even watch our own league on our channels. Yet we wonder why we constantly come out losers in competitions? There is need to promote media and Zambia's own content, not only for adults, but children as well. Our children are being exposed to "pornographic" forms of children programs or ones filled with gay themes. We as parents even pay for this. We read "Tona" cartoon some time back or Kalulu what policy is being taken to bring this back? Imagine having a Maliogo's adventures as a series (I know Banja and such are being produced but I'm talking about free programs for our children with Zambian cultures being exposed to them). I don't think Nickelodeon has any Zambian theme for the children, why should I not ask for Zambian content?

Further, what is the stance on piracy? I know of a song for one party which was "pirated" by another one. I expected this to ignite the debate on what it means to piracy in Zambia. Are our musicians getting their pay for their creation? This is a presidential campaign level that a song is copied and it dies just like that? Really? I serious wanted a stand, we even have musicians standing as MPs, they should be addressing these issues. Every campaign creates an unforgettable song, what happens to the artist after the elections? They will only be remembered when another election comes along? To some, this is a life and only source of living, we need to do something. Why shouldn't Zambian music be exported? We are a small population which can benefit from exporting and making our music "international", we need policy to ensure that. Most importantly I want a party that thinks in that line. 

Foreign Policy

What is the stand on foreign policy (SADC, COMESA, AU and the world)? What is the stand on trade with outside world as a country and not a trading bloc? What are we benefiting from the trade blocs we are in? Are we even gaining anything in SADC apart from being an open market for SADC goods? What is the gain of having the China LDCs PTA for Zambia? What are we doing or plan to do to ensure we benefit from this? What should be our priority? What is the stand on Double taxation agreements or taxation of foreign entities and in that, the expected stand on tax evasion and tax avoidance for foreign companies?

These are issues the presidential candidates are supposed to answer. I see more "South African malls" than local ones. Are we a dumping ground for their "potatoes" for instance? Are they paying the right taxes and declaring profits? We have very little in form of contribution from our own enterprises in consumer goods and media. We seem to be a market for one country than our own companies. It is sad enough we don't own the mines, but what exactly do we own as a country. Even creations made in Zambia are now owned by some Dutch companies who we must pay for use, yet we wonder why we don't make any returns on the companies in this country.

Realistic Perspective

Sadly, following the debates around, I would add "rainfall" under foreign policy as it suits politicians to ignore what is happening and use the opportunity to blame others for low water levels - after months of rejecting and refusing that we had low water in our dams. They still blame the copper and closing of mines on this. I dislike that idea with a passion - it implies they think of me as being so dull that I can't read and analyse the global economy. When issues are so obvious, they say you should have planned for the rainfall and load-shedding! Yes, so should have been all of us when we left the country for 50 years with no improvement on power, mining, roads, rail, infrastructure in general, etc. If you need to blame, pick something within the term of the person. The moment you become unreasonable, I don't think you can help the country much. This is what is leading to what someone calls "over-procurement", there has been nothing, you bring it in the shortest possible time - Kwacha falls and people still want you to bring in other things immediately while this should not affect your current account balance! We should know what will happen when we correct one thing. This will entail a certain reaction in the economy - we need to hear what you would have done differently - that is a basis for a vote. If it was a mistake - explain where/why it was a mistake and what would have been done differently. A mere statement of no planning is what caused this, without an accompanying method of what your plans would be, is bad enough as it indicates you have no idea what you would have done. I don't even know what is worse - knowing the mistake but having no way around it. It may as well mean, you would have done nothing in the first place. Further, if a mistake is made and people point it out to you, you either give us alternative plans you had of which you chose one, or what you would do to ensure this is not repeated through your plans. That way, we know the issues are being addressed with plans you provide to us as voters.

Overall, we need to take stock of what we have, what we don't have and we choose a leader on the basis on what they will bring in. Expecting of miracles should be left for the pulpit. We need people with details of plans of addressing our plight as a people. What I have heard are unrealistic goals which contradict economics which cannot fall in one action - lower taxes, better infrastructure, no borrowing, introduction of incentives. This is not only impossible - its unrealistically not attainable in any economy on this planet. Better infrastructure is only attainable through higher taxes or borrowing. A reduction of expenditure (for infrastructure development) is contraction fiscal policy which would reduce economic activity, but a reduction of taxation is expansionary - so what will be the net result of these activities? How will you bring about better infrastructure development with the combination of lower taxes and no borrowing for example? I have heard of reduction in "unnecessary expenditure", a definition would be good of what is unnecessary and the amounts saved for infrastructure - these are issues, I look for in the statements. What will be my PAYE over your term in net basis?

The problem is that none of these is provided which lead me to believe we are in the same situation of having the exactly the same methods with different people leading the methods - at their benefits. So should we vote on the basis on having different people benefiting with no clear idea of what they will do or how they will do it?

Each candidate should give us the realistic plan and how it will be achieved. This would be a better place to gauge the outcome of who we pick. A realistic perspective is critical to assessment on my part.

Agriculture

The iron law of development says as the economy develops, people involved in agriculture reduces as they enter the secondary and tertiary sectors. So what is the stance on agriculture as it will spell the position of secondary and/or tertiary sectors. 

Africa has been said to have missed the green revolution. What is your stance to ensure Zambia passed it and got the benefits? Are we utilizing the land to the fullest possible gain for output? What is the stand on GMO - in so doing, what is the stand on organic farming we have. Have we taken advantage of this? Do we know the demand for organic agricultural output? Can we gain from exporting and promoting of organic output to the world. Stopping GMO but not fully gaining from such a move is a loss on our part as we can gain from this. What are we doing?

Marijuana has been legalized in some countries and one presidential candidate has clearly indicated out advantage in growing it. So what is your stand? Will you address the issue and aim at legalizing it, or exporting it while it is still banned in the country? Will you just continue with current policy?

These are issues that stand to be addressed in agriculture. They need to be spelled out and explained to the voters so we know what to expect from you and judge you on that basis for the vote.

Industry

What is the stand on industry. Are we aiming at still being an agriculture focused country? Are we aiming at looking at the secondary or tertiary sectors? What will be priority on each of these sectors and where do you see Zambia after your term? 

What is your stand on tax incentive and role of ZDA in industrialization. What will be of the State companies through industrial cooperation? Especially that this institution is under the presidency. We need to know what you will do. Should we expect an economy pushed and directed through state companies? What role will state companies if any, would plan in knowledge acquisition and meeting social obligations?

Employment

How will you ensure employment for the youths? What policies do you have which will bring about employment?

Which areas are more related to employing youths in Zambia. How will you help the youths in employment. Is there any promotion of self-employment? Are they tax incentives for companies or individuals who bring about employment? What are the thresholds for these incentives if they are part of your plans? Is there a direct policy of employing youths by government? What of social security system if any? 

What is your policy on statistical data for such plans on employment? How will you track the unemployed and employed? What is the policy on street vending and revenue for government considering that shops that pay taxes have to compete with street vendors both for space and customers. In this line, what of cleanness of the cities with street vendors. What plans have been put in place?

Taxation

Much as it has been mentioned above, what is the overall direction of the taxation policy in the country. Local or international taxation. What will be tax incentive and what will motivate that "incentive". What gains should we expect from compliance or the penalties from non-compliance? How will non-profit organisation be treated for tax purposes? What of those organisation that are under non-profit but are merely abusing the system?

What will be my PAYE before, during and after your term. Are you realistically implying a reduction in your promise?

Social

What is your plan on social security, Health, and all issues that relate to social elements? What are your plans on citizen empower programs? How will you ensure you will avoid policy that promotes tribalism, nepotism, etc?

What is your plan for political cadres and violence that is related to it? What will you do on the existence of political party cadres? How can we track your progress on this?

Overall, how will you unit all these policies to ensure there is a linkage and no contraction of policy? How will they work together to achieve your objectives as a political direction of the country.

As you ask for my vote as an employee, you need to prove your worthy to that office and how you will deliver what you have promised. If I feel you fail to achieve some of these or I see your plans failing short of proving you can do it, why should I vote for that particular candidate? 

These are issues I expected to hear and read about. Not words which mean nothing on how one will govern. I need to be convinced, not entertained on the basis on what happens on the street today and you change your mind on it tomorrow. Or worse, giving me a list of what this one promised without your list of promises and how you will ensure they are delivered. 

My interest is economics - your plan should make economic sense and practically achievable.