Vodacom takes on DStv
The country’s leading mobile operator by subscriber numbers revealed this week it has been in negotiations with the regulator, the Independent Communications Authority of South Africa (Icasa), to secure the necessary broadcasting licences to compete in this market.
If Vodacom were granted the licences, it could break MultiChoice’s monopoly in pay-TV and revolutionise both the broadcasting and telecommunications industries.
The move could see Vodacom partnering SABC and e.tv to provide local content for its phones.
Icasa declined to comment on Vodacom’s application, but said it had made it clear it wanted to break DStv’s hold and expand the country’s pay-TV market.
Icasa has invited service providers — both audio and TV — to make submissions for a slice of the pay-TV market.
MultiChoice, which has been operating DStv for almost a decade without a licence, broadcasts with 55 channels in more than 50 countries and has 2.4-million subscribers.
Vodacom is considering several new strategies to grow its business in South Africa, where it leads rival MTN.
Recovering from a recent skiing accident in Austria, which left him with an injured leg, Vodacom chief executive Alan Knott-Craig outlined to Business Times the company’s strategy.
“This new [mobile decoder] technology is going to change our lives as much as cellphones did 13 years ago,” he says. “In the not so distant future, consumers will go to one company to buy their TV package, voice, Internet and data as a bundle.”
Mobile television has started to take the world by storm, with countries like Korea setting the pace. All major global handset manufacturers said at the 3GSM World Congress in Spain this month that they are developing phones for mobile broadcasting on high-quality plasma screens.
Vodacom first launched mobile TV in December last year, and now offers customers 13 channels. These include Sky News, E! Entertainment, Fashion TV, TellyTrack, Uefa, HBO, Fox, Ministry of Sound, Chilli TV, Fox and the Yebo channels that provide local content.
The cost for the service ranges from R69 a month for the standard channels, with an additional R10 a day for an added specific channel.
However, this service is limited only to Vodacom Live customers who have 3G cellphones.
Knott-Craig says Vodacom plans to make the service affordable to all South Africa’s 33 million cellphone users.
They will be able to watch pay channels from anywhere in the country, without having to use a satellite dish.
And, by setting up a BlueTooth connection between the cellphone and a television, satellite channels can also be viewed at home on a bigger screen.
“Think about a world without expensive satellite dishes. Imagine sitting in the rural areas watching Bafana Bafana win the World Cup. The possibilities are endless,” says Knott-Craig.
With this technology, Vodacom is also positioning itself to capitalise on the 2010 Soccer World Cup. “It will be a huge hit with soccer fans who cannot afford to buy tickets to the games,” says Knott-Craig.
He says the technology is more stable than satellite, and mobile broadcasting users can expect better picture quality because it will use local area networks.
This brings the signal closer than the current satellite links.
“Also, cellphones are much more intelligent, and have more memory and processing power than current satellite decoders.”
He says customers will have the flexibility to buy pay channels on demand, paying for what they want without having to have a fixed monthly contract. “This will open up the market and bring more people within the pay-TV fold. We currently have some 14 million people who watch free TV, but because they don’t fall within the approved credit-checking system they can’t watch pay-TV.”
But initially, the cost of having a mobile decoder could be more than a DStv monthly subscription.
Knott-Craig concedes that a mobile decoder could be expensive initially, but says if Icasa doesn’t interfere with Vodacom’s business model, the company could subsidise the mobile decoder handsets.
There are also moves by the global cellphone manufacturers to produce cheaper handsets.
He believes as more people use the new technology, costs could come down as much as 90%. “Also, bandwidth is getting cheaper by the moment, and memory is becoming so cheap it’s a joke.”
Two main technologies — DVB-H and MediaFLO — are vying to become the new global standard for mobile TV broadcasting. DVB-H, or digital video broadcasting-handheld, is the European standard and the one likely to be adopted.
Vodacom will have to build a local area broadcast network that will send a TV signal to the handset. Knott-Craig says this could be done within 12 months and would involve putting antennae on existing cellphone networks in addition to placing some technology on the ground.
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