There has been a flurry of activity in South Africa's pay television segment, with two separate groups set to launch new services to challenge the decade long monopoly held by Multichoice, operated by M-Net and media conglomerate Nasper's DSTV.
On August 31, telecommunications company Telkom announced it was launching Telkom Media to provide viewers with both satellite and cable pay television. The same day, the public broadcaster, South Africa Broadcasting Corporation (SABC) and broadband internet service provider Sentech issued a statement saying they had formed a joint venture to provide interactive television services to South African audiences. Both have lodged applications with the Independent Communications Authority of South Africa (ICASA) for licenses to operate commercial satellite and cable subscription broadcast services.
While pay television services have been licensed for the past 20 years, there has been little activity in the sector to date, even though Multichoice offers a choice of 55 television and 60 audio channels, with a mix of news, sports, documentaries and entertainment, many of them sourced from overseas.
However, critics point out that market penetration is low as the network's offerings, marketing and subscriptions mainly target those in the higher income bracket. To date, pay television services has had a small appeal to the wider South African audience.
Joining Telkom in its project are Videovision Entertainment, MSG Afrika Media and Women Development Bank Investment Holdings (Pty) Ltd, which together have formed a private company with a 41.5% Black Economic Empowerment (BEE) shareholding.
Initially, Telkom Media plans to offer a choice of seven channels, these taking in a broad entertainment network, a 24 hours news outlet, and channels dedicated to movies, sports, music, home shopping and education.
According to Wally Beelders, Telkom's head of sales and marketing, there is a huge potential waiting to be tapped.
"Our research shows that there is a potential market of over 40% of South African households that are interested in and willing to pay for satellite TV services," he said. "This is a hugely untapped market that is not addressed by current pay-TV services."
Beelders said that the objective of the project was to substantially broaden affordable access to pay television services for the South African population and open the gateway to new convergent services.
Anant Singh, Videovision Entertainment's CEO, said that one of Telkom Media's key aims will be to provide stimulus to the local TV production sector.
"We will establish relationships with the independent television production sector to provide an outlet for both established production companies and new talent. In addition, the promotion of new interactive technologies, such as user-generated content, will provide a much-needed stimulus to the local digital media industry," Singh said during at the public launch of the project.
Like Telkom Media, its soon to be rival also sees opportunities for itself, the community and producers.
Announcing the joint venture between Sentech and SABC, the broadcaster's CEO Dali Mpofu said that the service would offer a wide range of public interest programming and help develop the local production industry.
In the submission put forward by the two companies, Sentech is to provide the technology and infrastructure for the project, with SABC being the content provider.
Sebiletso Mokone-Matabane, the head of Sentech, predicted that the project would expand the existing platform of business television and radio and reach out to wider audiences.
While the SABC-Sentech consortium has yet to announce what programming it will offer, the move does pose a problem for Multichoice, given that it currently carries all of SABC channels on its network.
In addition, the move into broadcasting by Telkom comes at an interesting time, given that its main source of revenue, fixed line communications, is about to come up against competition with the launch of Neotel, South Africa's second network operator. Set to begin operations March 2007, Neotel has been campaigning hard to woe subscribers away from Telkom, prompting the company to diversify its activities.
Even before the August 31 deadline for bids set by the ICASA, Telkom's 50% owned mobile operator Vodacom had already applied for a licence to provide pay television links via cell phones.
With both potential rivals to Multichoice proposing to offer cost effective programming directed at the broader South African audience, the company will have to work hard to preserve its audience share and prop up its earnings, which account for 70% of parent firm Nasper's operating profit.
If as expected the ICASA approved all the license applications, South Africans will be soon able to enjoy the electronic media range and options available in Europe and the US at an affordable cost as broadcasting expands.