What would it take for Kenya’s three largest TV broadcasters to agree to air their content through the licensed digital signal distributors while they roll out their own digital network? Why are they unwilling to be carried on PANG and SIGNET who have for several years now been carrying the content at no cost to the broadcasters? We shall analyse these and other issues in an attempt to recommend a winning formula for all parties concerned.
To set the stage, the Communications Authority (CA) of Kenya, after consultations with stakeholders in November 2014, laid down the schedule on new analogue TV switch-off dates. On the 13th of February 2015, the Supreme Court of Kenya made a ruling that the schedule be adhered to by all TV broadcasters. The CA enforced the decision of the Supreme Court on 14th February by switching off and retrieving the analogue transmitters after the three media houses failed to switch-off their analogue transmissions. This led the three to withdrawal all content from digital platforms on terrestrial (over land to Set Top Box), satellite (affecting DSTV & Azam TV) and cable systems (such as Zuku TV). Instead, they transmitted a digital broadcast protesting the analogue switch-off and migrated their signal to be accessible only on their respective internet livestreams.
The broadcasters have grievances that have been addressed by the CA though they are still not satisfied with the interventions. For instance, the issue of the Freedom of media was addressed by the Supreme Court and CA by issuance of their self provisioning licence. The self provisioning licence allows the broadcasters to build their own infrastructure (a network of digital transmitters) but since they are Free to Air (FTA) broadcasters, they cannot prevent any set top box/decoder from receiving their content.
The broadcasters have also been subjected to the Must Carry Rule that demands that their signal must be carried by the signal distributors to all decoders at no cost to the broadcasters. Although the Must Carry rule also allows broadcasters to refuse a distributor of PayTV service from carrying their signal, they must file their reasons for refusal with the CA who would ensure the reasons for that refusal are not trivial nor anti-competitive. The Supreme Court addressed this concern when ruling on the copyright issue.
For the PayTV providers such as GoTV and Startimes, the Must Carry rule also applies in that they must seek consent from the broadcasters. This has been one of the most highlighted reasons for the opposition by broadcasters who even ran infomercials against the two PayTV operators. Although the approach by the broadcasters was faulted by the CA and the public, a resolution of the dispute between PayTV operators and the broadcasters may hold the key to a successful digital migration. Broadcasters need to fight for their FTA content to remain free even when viewers do not pay the PayTV subscription fee. There are FTA decoders available from GoTV and Startimes that allow for free access to all FTA channels. However, the CA needs to consider revising the rules so that the FTA content should remain always free even on PayTV decoders. This was one of the decisions arrived at by the Assembly of Broadcasting Operators of EACO (East Africa Communications Organisation) in Arusha, Tanzania in June 2014. The three broadcasters should be willing to lose the battle of the switch off deadline and have this EACO agreement implemented. That way, all decoders in the country would carry their signal on the Must Carry rule, save them costs, and guarantee them viewers.
As we have seen, the broadcasters can safely abandon their request for the return to Analogue TV until 30th May 2015. They can also safely comply with the International Telecommunications Union (ITU) and lose the battle for the postponement of migration by 5 years to 17th June 2020. Kenya does not qualify to apply for an extension. Further, 40 Digital TV channels would lose out if the migration deadline is postponed and the 15-year licenses of existing signal distributors (PANG and SIGNET) would have to be revised, extended while complicating the allocation of a third signal distributor. Kenya would fail to implement the Vision 2030 Broadband4Kenya project anchored in the National Broadband Strategy of 2013 and roll-out of 4G/LTE mobile services due to lack of adequate frequency spectrum.
The greater good therefore lies in charting a way out of the current stalemate without back-peddling to analogue broadcasting or putting the other Digital TV channels and distributors at risk of collapse. This mean broadcasters can request for a clear roadmap on the licencing of the third digital broadcast signal distributor that assures all players on the dates when the open tender will commence so that they may participate.
In the meantime, the broadcasters should reconsider their efforts to question the spectrum allocations made to two licensed Broadcast Signal Distributors (BSD) – PANG and SIGNET. Instead, they should focus on ensuring that the remaining TV broadcasting spectrum is reserved for the third signal distributor to cover the whole country. Their self-provisioning licence does not guarantee spectrum allocation equivalent to that of a full BSD since it is designed to ensure they continue to transmit digital signals in the areas they previously covered using their analogue signals. However, it provides them a competitive edge when they eventually bid for the third BSD licence. They should therefore accept the half-loaf in form of a self-provisioning licence but request for a policy change that lays the roadmap for the licencing of the third BSD. That will ensure they are ready when the tender notice is gazetted.
Where does this leave the set top boxes that the Consortium of three broadcasters announced they intend to import? The Consortium would need their own decoders if they intend to encrypt their content so that their content is not available on any other decoders. However, since theirs are FTA channels, it would not be possible for them to scramble their Free-to-Air content. They would either have to change the licences of Citizen TV, NTV, KTV and QTV to PayTV (subscription broadcast service) or surrender their attempts to import PayTV decoders that work only on their self-provisioning network. The middle ground would be for them to only scramble new PayTV channels but keep their current channels available to all decoders as FTA. This means their request to have a postponement of the switchoff dates is not valid since it does not affect availability of their FTA channels.
If the three broadcasters are to have their content on the two BSD, we need to understand how the ownership of PANG or SIGNET affects them. Some commentators have stated that the BSD can switch off the signals of the broadcasters and that the risk amounts to limitations of Freedom of the Media. It is important to note that, of the three broadcasters, only Citizen TV has its own infrastructure and is not hosted by third parties. In most locations in the country, KTN, QTV and NTV are hosted on analogue transmission sites belonging to companies such as Mast Rental Limited, KBC and other service providers. SIGNET also leases transmission sites belonging to other companies in the spirit of infrastructure sharing that has rules to protect the broadcasters from interference with their signal. This negates the argument that broadcasters cannot use or have never used third parties to house and maintain their transmitters.
The broadcasters have however made the case that infrastructure sharing with their current service providers is different because PANG is a owned by shareholders of Chinese extraction while SIGNET is the subsidiary of the government-ran KBC. The broadcasters recently revealed that there is a shadowy Kenyan shareholder in PANG who owns around 7% of the company. However, they did not reveal that PANG is required by law – and as highlighted in their licence obligations – to offload and make public atleast 20% Kenyan shareholding. The Kenyan shareholders were to be named by the end of the PANG’s third year of operation in October 2014. This was made clear in the 2011 open tender for a second BSD and when the matter was brought to the attention of the Public Procurement Review Board. There is therefore no sinister motive in having a Kenyan shareholder in PANG. What the broadcasters should demand is that the shareholding must be atleast 20% and must be made public according to the law.
Having addressed the concerns of the broadcasters, the recommendation would be that they consider the quickest way to guarantee themselves a BSD licence and win the migration war. The quickest way to achieve this should also eliminate the risk that an existing BSD would be manipulated against them and interfere with their content. That solution lies in acquiring significant shareholding in the existing signal distributor – PANG – that has the largest network and that they believe is favored by decisions of the regulator. PANG is required by law to surrender atleast 20% shareholding to Kenyan investors and make the shareholding public. Since PANG is already in breach of the licence obligations, the acquisition by local broadcasters should be welcome by the Chinese shareholders. However, the broadcasters would require a controlling stake so as to drive their agenda through PANG – who have reportedly made an offer to local broadcasters. For most business people, this would seem quite attractive given that the network is established and customer base is guaranteed. The broadcasters have also claimed that regulations favor PANG and should therefore see the silver lining in losing some control by co-owning a company with the foreign inventors while saving time and acquiring value that would take longer to generate if they build their own network.
The recommendation seems plausible at first but there may be fundamental issues yet to be revealed that make it improbable that the broadcasters may buy into PANG. If that were to be the case, then they can demand that SIGNET be converted into a public-private partnership as a joint venture between KBC and the Kenyan private broadcasters. According to senior officials at SIGNET, this is a proposition they would support since KBC is unable to finance the rapid roll-out of SIGNET and a partners would be readily welcome. The Cabinet would therefore decision to turn SIGNET into a public-private partnership – as was originally proposed to the local broadcasters in 2008 – and the Cabinet Secretary, through the National Communications Secretariat (NCS), would gazette the decision that would guarantee the three broadcasters control of one or both BSD. The CA would implement regulation in recognition of the joint venture.
It is therefore possible for Kenyan broadcasters to lose the switch-off battle and win the migration war.