MultiChoice: Decoder row not about pay-TV
25 March 2014, 11:52
Cape Town - The question of who will benefit from the inclusion of encryption in the proposed set top boxes for digital TV has created tension between a broadcaster and the SA government.
The department of communications has mandated that encryption or control be included in the production of set top boxes (STBs) for digital terrestrial television (DTT).
SA was meant to roll out DTT in 2008, but there have been several delays in the process, including changing the specifications of the hardware.
However, Cabinet took a decision in 2008 on the policy on set box control, but MultiChoice questioned the rationale of the decision.
A pay-TV broadcaster depends on encryption because the business model is dependent on the ability of the content provider to switch off viewers who have not paid for the service.
"Digital migration has got nothing to do with pay-TV; it’s about the SABC and e.tv which are free to air broadcasters... Why should they have the ability to switch you on and off?" Imtiaz Patel, CEO of MultiChoice told Fin24.
The department of communications said that the company was more concerned about competition than the plight of people who would not be able to afford DTT boxes.
"MultiChoice has about 98% of the pay-television market and fears competition. It is this that explains its position and its sudden 'concern' about the plight of the consumers and even the poor," said the department.
However, the SABC has said that it does not support encryption on the converter box, and the National Association of Manufacturers in Electronic Components (Namec) has thrown its weight behind dropping the technology.
"Namec and its social partners as alluded above resolved to object to the inclusion of Conditional Access (CA) or any form of encryption in the set top box. This resolution was forwarded to the office of the Minister and the Director General's Office," Namec said.
The organisation said that the government's stated goal - that set top box control would give a boost to black manufacturers would not be achieved.
"The truth is that the process of digital migration will revive local manufacture and create jobs, but not if conditional access is installed in STBs. Conditional access or STB control will harm, rather than help black manufacturers."
The government disputes this point, saying that the inclusion of control would limit the ability of companies to "dump" set top boxes in SA.
"The government's cost for the STB control has to be related to the benefits to the local electronics industry and emerging entrepreneurs and in terms of jobs. The South African government, like most governments, has invested in a variety of ways for industrial returns," said the department.
The government estimates that the investment into STBs to be around R7bn per year.
Patel said that control systems would only benefit a free to air broadcaster which could use the technology to launch a pay-TV with no risk.
"Why should the consumer be burdened with this cost that I've explained to you. Number two: There are certain parties who are supporting this policy of encryption," he said.
"Some of these parties have a pay-TV licence and they have spectrum," Patel added.
Control system technology is a cumbersome process and companies have to be accredited before the hardware will be accepted.
MultiChoice said that established manufacturers will benefit from the mandated inclusion of the technology.
"Nowhere in the world, except for Ukraine... has government mandated the use of set top box control or conditional access and is government paying for it to be in the box. There are other places where it is in the box, but a private operator is paying for it to be in the box," said Patel.
* Fin24 is part of Media24, a subsidiary of Naspers, who owns MultiChoice.
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