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Subscribers groan under high cost of pay TV in Nigeria

By Hugo Odiogor  Emeka Aginam & Princewill Ekwujuru –
Subscribers to pay television services in Nigeria have expressed dismay over the tariffs charged by the service providers who seem to be exploiting the tax regulation by the authorities.

Scores of subscribers have expressed disgust that the service provider, Multichoice seems  to be exploiting a near monopoly situation in Nigeria to manipulate their tariffs on   the family , the Compact Mini, Compact Mass bouquet as well as the Premium bouquet  which is as high as N10,000.

The tariff for family plan  is N2,800 while Compact Mini which is popular among many middle class  families goes for N4,800.

Among the complaints  also  is the time lost in reconnecting subscribers who are yanked off by the service providers on expiration of their   subscription.

There is also the anger of the credit time lost by subscribers who require attention from customer care unit.

Again, there was also the complaint that subscribers are made to pay for services not rendred to them , particularly during rain falls when DSTV  signals  usually becomes weak and disappears.

However,  Multichoice sources had told Vanguard that the issue of high tariff being complained about by subscribers may not be grounded in comparative terms

According to sources,  there are inflationary push and pull which affects the computation of tariff among countries.

According to the source,  right now,  there is a lot of talk that subscription fee is low in South Africa than in Nigeria which is not true.

If you take the South Africa subscription in dollars, it is about $80 for the premium bouquet, if you compare ours in the new price, it is $66, we are about 20% cheaper.
The source said South Africa has a price structure that increases every year contrary to the situation in Nigeria where the tariff has remained constant for five years.

“We have increased price twice in six years. Nigerian subscribers have argued that the country is a large market and as such, it should be treated with special concessions, the source said, adding that  the market is not  as big as people think as pay TV penetration is about 1.5 million compared to the 10 to 20 million population in that has access to television.

But in South Africa, the percentage of the population that has access to pay_TV, the source said,  is about 5%.

There are other factors that affect price determination, among them is the endemic poverty where about 60-70% of Nigerians live below $1 per day, going by World Bank and United Nation’s statistics.

The source said, this amounts to tremendous lack of capacity. There is also the systematic failures arising from the extra cost paid on generating electricity, provision of security for infrastructure and personnel, all of these add to the unit cost of providing service to a Nigerian subscriber, which is not the same with countries where the rate of inflation is controlled, the supply of power is steady and business culture is less cumbersome.

But Nigerians are not persuaded by the argument of the service providers, whom they accused of all kinds of unethical business practices, which has given them the latitude to operate without any oversight from the regulatory authorities.

The issue of exclusivity  has been put in abeyance, while there is no attempt to look at the quality of service provided. There are also concerns that are limited information on the introduction of the High Definition Services which was meant to curb hacking in the analogue regime, as well as improve on the quality resolution.

The competition from MITV, Startimes and HITV has not matched up with the DSTV, which prides itself as having far more selection of choice than the others.

Source said Nigeria must address the issue of exclusivity if the price must come down. “Exclusivity is the backbone of Pay_TV business. The competition is on which of the Pay_TV stations could offer the best entertainment, sports, music, education etc. While it is believed that the principles of free market should be the norm, the other operators offering lower prices remain weak in their programme bouquet,  source said.

Comparative cost

Just like in other sectors, Pay TV operators face a number of significant cost hurdles including content acquisition, content/service delivery, subscriber acquisition, and customer support.

In Nigeria for instance, DStv access goes for  N1, 500,  Dstv family  N2, 800,  DStv compact is N5, 800, and  Premium which goes for  N10, 000.

Also in  South Africa, an average family, said a Nigerian  pays  200 rands ( about N400,000) per month to get access to a number of channels.

In  the United States and Canada, an average cable television bundle price may cost around $30  a month. In return, you will receive a cable or satellite TV, cable internet and digital phone in one cable service bundle package.

In America for example, there are Comcast, AT & T, Direct TV, COX Cable, DISH Satellite, Time Warner, Verizon, RCN,  and so on including local stations like  WOW and others.
In Germany, many apartment blocks have a house connection (Hausanschluss) to the cable network system. Depending on the region in Germany some English free_to_air channels can be received, including BBC World, BBC Prime, Sky News and CNN.

Cable is relatively easy to connect to, requiring only a digital receiver and a subscription agreement.

On average, according to Okechukwu Okoye who lives in Berlin, Germany,  it cost about 40 euros  per month to have access to cable TV. it could go as high 40 euros.        In the case of a “house connection” it is usually assumed that the new tenant will want a subscription to cable and it is up to the tenant to inform the cable company otherwise. They will then shut off the connection in the apartment and stop invoicing for the subscription charge.

Cable television is also usually supplied with an integrated high-speed Internet connection, which is often cheaper than using a separate Internet provider.

In the United Kingdom and the Crown Dependencies, any household watching or recording live television transmissions is required to purchase a television licence every year.

According to Frank Morrison, a Nigerian based in the UK in a chat on facebook, it cost about 30 pounds in London to at least get access to appreciable number of channels.
While responding to the operating environment, the Zonal Director of National Broadcasting Commission, (NBC) Olufemi Olumide  in interaction with Vanguard on Tuesday in Lagos  said that there was need for  local languages in programs like African magic.
According to him, if Nigerian local languages were not encouraged in these programs, the country may be left behind in local content.

Piracy remains the challenge:

Looking at Nigerian other markets, the issue of pirating  broadcast signals has remained a challenge even  in the face of legislation.

Piracy in the form of counterfeit DVD and Blu Ray discs or the hacking of smartcard_based conditional access systems (CASs) is common in countries with below_average income levels.
Responding on the issue of hacking, the NBC spokesperson  said that with migration from analogue to digital television, the issue of getting free signal from hacking was no more possible.

“Hacking on operator’s signals about 5 years  was rather unfortunate as the operators complained that  subscriptions were not coming. Some smart radio or television technicians were hacking by modifying  video machines  tunnel by inserting IC and panels that enable them to receive free signal. But  when the NBC  enforced its digitalization  march 2007, the moment all stations went digital, no operator has  complained again. The issue of  some people hacking has been defeated by digital  migration. No  station has complained of hacking again. There is sanity now, at least” he said.

Reacting to high cost of subscribing to pay TV in the country, he said that since deregulation of TV stations, every customer was free to sign in to any operator.
“We have not received any complaint  from subscribers on high subscription rate. The NBC will investigate if there is such complain from customers. NBC will  intervene if there is official  complaint  from the subscribers. This is where  NBC will come in and call the operators  to order. But remember, pay Tv operators are not  father Christmas. It is not like terrestrial  TV that is free” he said.

Similarly, the Director, Public Affairs of the Nigerian Copyright Commission, Mr. Charles Olisaeloka Obi in a telephone interview with our reporter noted that the Commission was committed to ensuring that broadcast signals were not pirated.

“In the past three weeks, we  raided many houses  in Akwa Ibom, Rivers, Bayelsa, Lagos among others who were involved in pirating broadcast signals. We  will continue to do that to ensure hat sanity is restored in the system” he said.

By next week according to him,  NCC will be rolling out Copyright Marshals as part of its piracy campaign.

For the multiChoice Managing Director, John Ugbe, cost of content keeps increasing by the day. “Cost of content acquisition is the greatest challenge pay TV  operators are faced with  globally.

People are getting more aware and enlightened  about cable television, thus, the demand is on the increase. Especially with the introduction of local contents such as Tinsel, Big Brother Africa, 53 extra, Jara to mention but a few provided by Mnet on the platform of Dstv” he said.

According to him, power was a major  challenge. I believe this is one challenge everyone faces so we don’t think it is peculiar to our business anymore. In general, there are infrastructure challenges which every business operating in the country faces” he explained.

Responding to the issue  monopoly, he said,  “First,  let me correct one impression here, we have never been a monopoly because there have always been a competitor. What is our secret, well it is the way we do business, it is our people and we have come to also realize that it is a long term business.

“We are not in for the short run; we are not a company that invests today and wants to reap tomorrow. We have spent a lot of money in the local leagues contents that we are putting up. We are patient and continuously try to see and find out what our customers want and we try to provide such contents or improve on them” he said.

To also find out what obtains in other markets  especially , United States of America   which is said to have the largest pay TV viewers, Vanguard also spoke to  Nigerian citizens residing in America.

For Miss Juanita Chioma Amakihe, Managing Director of Brainstorm Global JCA  LLC. Virtual Service Solutions, Atlanta, Georgia, United States of America who is currently in Nigeria for Christmas holidays,  the question  of who is getting more for their money, citizens of Nigeria or those in the diaspora really depends on who you ask and how you look at it.

“ For instance, the average cable bill in Atlanta Georgia for a single family home is significantly cheaper than that of its’ Lagos equivalent, but a notable difference would be consistence , uninterrupted feed, which I noticed seems to happen quite a lot in Nigeria.
“ The instances of such occurring in the States would be during bad weather; i.e. thunderstorms, snowstorms etc. Also there are inspections and regulations in place to protect the American consumer, companies have to perform mandatory safety inspections to avoid any random hazardous lightening strikes from a poorly grounded dish.

“There are also several companies to choose from thereby eliminating the chance of a monopoly as well as giving  consumers the ability to select dish service or underground digital cable.  The positive side to the Nigerian cable market as well as Africa as a whole is that it is still getting better and in no time it will be in par with its peers”, Mrs. Amakihe said.

Also speaking, Stella Kassim, a Nigerian who  has been living in Atlanta Georgia, for the past 30 years said  that , cable users in the  country have unlimited operators to chose thereby making the cost affordable.

She said that two years ago, people were paying about $13.99 to subscribe for one month, adding that currently, it has gone up to $29.99 with up t 40  channels while $39.99 can give users  up to 70 channels.  With $49.99, she said that users can get up to 200 channels as well. But tax is added, it can be up to $55 in this case, she said.

Some cable TV users in Lagos  who also spoke to Vanguard noted that compared to other markets, Nigerians pay more even with  limited channels.

“You have to look at per capital income in this country. The purchasing power of naira here is very weak. We are paying a lot of money without actually getting the value for it. Tell me why I should pay N2,800 per month after which I receive few channels .  Reception caused by weather is another issue. The regulator has to  call the operators  to order otherwise  we will continue to suffer while the operators and the bank smile with our hard earned money” Sunday Okorie, a business man based in Lagos, said.

According to him, an average American pays about $30  for monthly subscription and still gets many channel unlike in Nigeria where  customers are  limited to only few channels pay up to N10,000.00.

For Emmnual Okolie, a business man  in Lagos, the pay TV operators have not been concerned about   time lost in reconnecting.  “Thee is also serious issue of credit time lost by subscribers who require attention from customer care unit. The service providers have also ignored  interference of reception by weather. As a result of this,  subscribers are made to pay for the disruption of services during such weather induced interference” the pay TV service providers must be responsive to all these otherwise the customers will keep on suffering it” he said.

Also speaking, Amaka Isuchie, a civil servant based in Lagos, pay TV customers have been forced to pay for the disruption of services during such weather induced interference.
According to her, the operators should find a way of paying back to the customers even in the face of high tariff considering per capital income of Nigerians.

Evolution of pay TV in Nigeria

Prior to 1994 when South African-owned Multi Choice launched its DStv, little was known about pay TV in this part of sub-Sahara Africa,  except for some few  unreliable free to air cables that thrived in the early 90s.

In March, 2004, Frontage Satellite Television (FSTV), an extinct brand, became the first indigenous company to operate pay TV in Nigeria as 25-channel Direct to Home Service operating in partnership with UK company Kingston Inmedia.

As  the first Nigerian_owned pay TV company in the country, Barrister Reuben Ilenoboye Famuyibo_led company which started with about  20,000 subscriber base may have been rested as a result of poor market share that greeted its operation.

Some years after Multi Choice Nigeria first made its grand entry, about  six other indigenous companies have followed to play in the digital television landscape.
Because of operating environment and competition, few are still on the  ground  while  others merely exist, even as the rest packed up.

With this development, a close monitoring of market has shown that  most pay_TV operators appear stuck in a self-perpetuating cycle of servicing a limited premium customer base, while free-to-air and pirated content caters for the majority of middle and lower income consumers.

Multi Choice’s Dstv being the pioneer pay television operator  in the country may have revolutionised the business in the country  and capitalised on early bird advantage to be the biggest high flyers in the market at present.

With an estimated 675,000 subscribing to different viewing bouquets on the platform of the digital television network at the end of last financial year, Dstv has the largest market share of pay TV subscribers in the country.

Astute businessman and lawyer, Toyin Subair, threw a formidable challenged at Multi Choice domination of the pay  TV market when in 2007  HiTV was launched.

By 2009, the company has managed to grow its subscribers’ base to a flattering 200,000. HiTV was able to achieve the feat partly due to the exclusive broadcast rights of the English Premiership League (EPL) which it won from DStv that year and also due to its subscription rate that is relatively low in the market.

But because of fierce competition, HiTV  fortunes later  dwindled  and lost a significant percentage of its market share after DStv regained the exclusive broadcast rights of the EPL in 2010.

Just recently, the company may have rested as a result of money  issue with Guarantee Trust Bank, (GTB)

Given the untapped pay TV market in the country, another thriving brand of pay TV, StarTimes, was introduced into the market by the Nigerian Television Authority (NTA) as a form of collaboration between NTA and some Chinese partners in 2010.

For one thing,  unlike other pay TV services in Nigeria, subscribing to the NTA Star TV Networks service requires no satellite dishes, and of course no installation cost.
Featuring about  50 channels. StarTimes monthly subscription rate of N1,000 has helped removed the status symbol associated with owning a pay TV in Nigeria and the company is gradually penetrating into the market even in the face of competition.

Owned by Raymond Dokpesi, DAAR Communications came up in 2008 with DAARSAT, another indigenous pay TV in the country with the compression technology Mpeg4, which gave  it the capability to introduce high-definition programming to Nigeria.

It aired  the country’s first HD broadcast content as part of its programme offerings.
Despite good outing  of the company to give DStv and HiTV a run for their money, DAARSAT as a brand may have been clipped by Dstv and HiTV.

Similarly, another  existing  brand is Infinity TV which made came into the untapped market in 2010.

Although Tony Ikeokwu, the Managing Director of the company  had earlier  promised to make the brand Infinity TV a household name.,  presently, according to available statistics is still struggling to survive in the market including Lagos  where the office is domiciled.

But be that as it may be, what is needed now is for the regulator to issue more licences in the market so that the customers will have unlimited choice. In so doing, subscription cost will be relatively cheaper for an average Nigerians.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.