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Pricing review sets stage for pay-TV market shake-up

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The pay-TV market is likely to experience a shake-up after the Competition Authority of Kenya (CAK) reviews uncompetitive pricing in the market.

The CAK seeks to establish whether any dominant player in the segment is abusing its position to over-charge subscribers, which has been the source of complaints from Kenyans who feel that they pay too much for pay-TV services, the Business Daily reports. Consumers will be hoping that the results propose a downward revision of pay-TV rates.

Although regulation of content is out of CAK’s jurisdiction, the authority will look at exclusive agreements that the providers have signed with content providers to see whether they have placed them at an unfair advantage in the market.

“The study will focus on the agreements in existence, and on consumer protection. This is in terms of transparency in terms of billing, looking at how much a provider is charging if at all they are dominant. We will also look at whether there are issues or practices that curtail entry into the market in this segment,” said CAK director-general Francis Wang’ombe.

“This is a relatively new industry that is growing fast, and we need to come in and guide it in terms of competitiveness now otherwise it could prove problematic and use a lot of resources to do so in future.”

He added that CAK will collaborate with the Communications Authority of Kenya (CA) on the study.

Unfair pricing in the sector could come in two ways. Holders of exclusive content could ride on this to raise subscription prices in the knowledge that consumers would not have a choice, while deep pocketed players may also undercut rivals through low pricing to drive them out of the market.

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The Kenyan pay-TV market is dominated by South African provider DStv, whose grip is aided mainly by its broadcast of English Premier League (EPL) football and other exclusive content.

Such content is, however, expensive to acquire, and has been cited as one of the reasons for the higher subscription prices charged by providers around the globe.

Other players in the pay-TV space include Chinese firm StarTimes Media and Wananchi Group’s Zuku.
The latest CA data on the sector, dated February 2015, put DStv’s subscribers in Kenya at 600,000 and those of StarTimes at 272,594.

Two years ago, Wananchi Group had asked the competition watchdog to impose a financial penalty on DStv for refusing to re-sell some of its exclusive content — such as the EPL — to its rivals.

Wananchi further accused DStv of abusing its dominance and curbing the growth of other pay-TV operators in the country, especially denying them a chance to gain a slice of the premium market segment.

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