Cell C has argued that Netflix and other so-called “over-the-top” (OTT) services, including its own Black platform, do not pose a significant threat to MultiChoice in the near term.
MultiChoice has argued that Netflix and other streaming services pose a real risk to its business, in part because they do not face the same level of regulation in the South African market.
But Cell C reckons MultiChoice, which owns DStv, is being disingenuous. It argued at hearings arranged by communications regulator Icasa on Wednesday that OTT providers pose no real challenge in the near term to the company’s dominance in pay-television broadcasting.
Digital terrestrial TV, which promises more channels to South African consumers, is still someway off, while OTT players are “not a substitute at this time and won’t constitute a substantial competitive threat to pay TV for the majority of viewers in the near term”, said Cell C chief legal officer Graham Mackinnon at the hearings. “Free-to-air licensees and Cell C’s Black will take years to influence MultiChoice’s market share and growth.”
Cell C pointed out that MultiChoice argues that OTT providers have a “huge” advantage in that they don’t have to pay licence fees or contribute to the Universal Service and Access Fund. However, it said it would like to see an example where such a rival streaming player has dislodged an incumbent like MultiChoice anywhere in the world. “OTTs are good for consumers; South Africa must move with the times,” it said.
Mackinnon said MultiChoice has had a head-start of at least 20 years over prospective rivals, allowing it to entrench its dominance and making it difficult for rivals to emerge. He said Cell C arrived in the South African market just seven years after the licensing of Vodacom and MTN and has found it difficult to catch up to those incumbents.
He claimed that MultiChoice has been unregulated for “almost all” of the years it has been in operation and has built up scale that allows it to “leverage its position in various ways”.
