As Clear As Mud: Senate’s Grasp Of Pay TV Tariffs, Pay Per View
Posted on October 2, 2022
Six months after the Senate President, Dr Ahmed Lawan constituted an ad-hoc committee of the upper legislative chamber to investigate the hikes in pay television rates and the demand for the adoption of Pay Per View (PPV) subscription model by operators, the committee held a public hearing into both matters on 22 September.
Based on media reports of the hearing, the most evident outcome is the committee’s foggy grasp of the issues it sat to probe. This piece does not aim to diss the Senate but to illuminate the issues and ensure a better understanding by the ad-hoc committee and subscribers. A bold hint of the committee’s meagre grasp of the issues was provided by the committee chairman, Senator Aliyu Sabi Abdullahi, who blamed the National Broadcasting Commission (NBC) for the frequent pay television tariff increases.
“We need to have price regulation. Price increases need to be regulated. NBC, from all intent and purposes, are the problem of the country when it comes to pay TV,” Abdullahi said.
Only one inference is drawable from this: That NBC has the power to regulate prices and has failed to exercise the power, the reason tariffs have kept climbing. But the NBC Act CAP N11 gives the commission no such powers, as stated at the hearing by Anete Onyebuchi, who represented the commission’s Director-General.
“The NBC Act only gives it the power to receive, consider and investigate complaints regarding broadcast content. Nowhere in the Act is the NBC given powers to regulate the prices being charged on their services,” Onyebuchi, NBC’s Deputy Director, Research and Policy, said in his presentation.
Given that the issues being investigated are consumer-centric, it was curious that the Federal Competition and Consumer Protection Commission (FCCPC) was not invited to the session. This is because the FCCPC has the responsibility for the protection of the consumer against exploitation. Its Executive Vice Chairman, Dr Babatunde Irukera, is also on record as having explained that the commission is not empowered to regulate prices.
In an interview published by Premium Times on 18 April 2022, Irukera dispelled the view that his agency is a price regulator. He said the law establishing the commission has a limited provision on price regulation which, if even it allows the government to fix prices, requires the FCCPC to make a recommendation to the President for a limited time of price regulation in a specific sector.
The committee, surprisingly, also seemed indifferent to/unaware of local and global economic conditions responsible for the cost-of-living crisis everywhere. In six years, said Abdullahi, MultiChoice, on which the committee’s guns were trained, has increased its tariff by 55 per cent.
Clearly lost on the committee are conditions that make price hikes of not just pay television, but all goods and services, inevitable. At the hearing, John Ugbe, the MultiChoice CEO, listed such as including rising costs of inputs and technical upgrades as well as the naira’s shrinking value.
“The costs of satellite pay television are massive, ongoing and increase, rather than decrease, with time. Due to the current adverse economic situation, some of these factors have, over the years, negatively impacted our cost of doing business and have put us under very challenging conditions,” explained Ugbe.
Basic. Very basic, I would think. A similar position was canvased by Olushola Peters, Head of Marketing, OurTv, and Tony Iyare, Coordinator, Nigerian Viewers’ Collective (NVC). “Inflation is now over 20 per cent, the highest in 17 years. The content that they (pay television operators) offer is bought in dollars and there has been a geometric drop in the value of the naira to the dollar. Prices of services and consumer goods, including household ones, have risen astronomically and continue to do so in the last three years. Prices of diesel and aviation fuel have leapt. Local and international economic dynamics are responsible,” argued Iyare.
Pay television companies, he stated, are in no way shielded from the inclement economic climate, which has seen even the government raise the pump price of petrol. Iyare also noted that in the event of price regulation in the sector, pay television companies will be forced into reducing the value of their offerings to the subscriber.
Just as the committee started with the apparent belief that price regulation can be declared and decreed into existence, it cockily slid into the second arm of its assignment, PPV. The ground was prepared by Senator Patrick Abba Moro, sponsor of the motion that led to the constitution of the committee in March by the Senate President.
Moro’s view is that PPV will result in the lowering of tariffs, as subscribers will pay only for what they watch. He was right, but still wrong.
As those who presented memoranda, including pay television firms and stakeholders pointed out, PPV allows payment only for what is watched, but not in the manner presumed and is actually more expensive than the fixed subscription model in use.
Explaining PPV to the committee, Ugbe said: “It would appear that this problem is because of some confusion in understanding the basic definitions and distinctions between some of the existing operational business models in telecommunications and pay-TV broadcasting. PPV model allows a subscriber to watch some special one-off events, usually of the high-ticket variety in sports and entertainment, by paying for such events in addition to having an active subscription. Pay-As-You-Go accommodates a metered mode of service, where consumers are billed only for the service they consume and not for a fixed period. The desire by this committee to adopt PPV is further challenged by the non-existence of any technology that can detect and or determine whether the viewers are tuned in per time. Once it is impossible to have this knowledge, billings based on ‘per view’ become difficult if not almost impossible.”
Emeka Mba, former NBC Director-General, and Dr Monday Michaels Ashibogwu, CEO of Billsbox Services, also touched on the misapprehension around PPV. Mba said PPV is not the same as Pay-As-You-Go, as widely assumed. In his submission, Ashibogwu said: “The simple definition of PPV is a system under which a viewer is required to pay a certain fee for viewing special programmes such as live events or sports. The programme is broadcast at the same time to everyone subscribing to the PPV service. The addition of PPV to a package grants viewers access to programmes on a pay-per-view basis. The payment is specifically for a programme, show or event.”
Ashibogwu noted that the type of content broadcast via pay-per-view is typically big-ticket and is not included in the regular line-up of programmes, adding that the cost element is why PPV is used for high-niche events, not mainstream pay television broadcasting.
“These are not sums of money the ordinary Nigerian can afford,” he said with examples.
The epic 2015 boxing bout between America’s Floyd Mayweather and Filipino Manny Pacquiao, he stated, was retailed on PPV at £30 to viewers in the UK and $99.5 in the US respectively. He equally said that if the bout had not lasted the distance, it would have meant that the payment ended at whatever round was the final of the bout. The fight, he recalled, was made available to DStv Premium subscribers at no extra cost. The UFC fight between Khamzat Chimaev and Gilbert Burns, he added, cost $64.99 on PPV in the US.
At this point, dear readers, permit me to bring back Irukera. Responding to a question on PPV and its interchangeability with PAYSG in telecommunications during a July 2020 Channels Television interview, the FCCPC boss said there is confusion between the two models, adding that what obtains in telecommunications is not necessarily applicable in pay television.
“My challenge with what sometimes is the discussion around pay-as-you-go in pay TV is that there is a disconnection. We have conducted some investigations and we have done some surveys in different parts of the world. The pay-as-you-go model in telecommunications is not necessarily applicable and so we confuse it sometimes with pay-per-view. Pay-per-view is not that you pay for what you view from the point of when you turn your television on. It is primarily that there are certain programmes, maybe a boxing match, a soccer match or some movies that are still in the cinemas that some of the pay TV operators have bought and you can literally request instead of going to a stadium or going to a cinema to watch, you can watch it in your home and pay for that view. That is pay-per-view, but we confuse it with pay-as-you-go. What people are asking for in pay-as-you-go is when you turn on your television and you are watching, you pay. When you turn off your television and you are not watching, you don’t pay. It is difficult because the content has been created, what you are paying for is access. Unlike the telephone where the clock starts and the airtime goes down, you have paid for content,” he said in the interview.
What is also not in doubt is that programmes, shows and events broadcast on PPV are high-niche and, therefore, very expensive. They are not a regular broadcast staple. The duo of Dr Bright Echefu, CEO of TStv, and Mr. Tunde Aina, COO of Startimes, also poured cold water on the PPV debate, describing it as one that is not feasible. However, they said their organisations have instituted a daily access model.
“Pay per view is not feasible, but we came up with pay per day. We allow our subscribers to choose the package based on the number of channels they want to watch,” said Echefu.
It will be interesting to see the outcome of the committee investigations, but in the meantime, there is a need to ask a few questions. Why were the Ministry of Information, which supervises the broadcast industry, and FCCPC not invited to the hearing? They were missing from the list of agencies invited. Those invited were Standard Organisation of Nigeria, Federal Inland Revenue Service, Central Bank of Nigeria, Ministry of Communications and Digital Economy and Broadcasting Organisations of Nigeria.
Also, one has to wonder why, at this time, tariffs on pay television services, used by less than five per cent of the population, are above stratospheric prices of goods/ services, dipping naira value, insecurity, protracted university lecturers’ strike and other matters that affect the vast majority? Answers to these are crucial, given that both chambers of the National Assembly have, at one time or the other, travelled this route and returned with nothing beyond blunt resolutions.
As a Twitter user asked on the social networking site, “why are National Assembly members keen on pay per view, but are resistant to the idea of carrying out their legislative functions on a part-time basis and getting paid sitting allowances? That is legislative pay per view na.” Funny, but not exactly untrue.
Akiode, a public affairs analyst, writes from Abuja