The real reason media owners oppose migration

 By James Mbugua

In any other country what is happening with digital migration in this country would have seen criminal charges brought up against the three media houses; Royal Media, NTV and KTN for their continued abuse of their market power to frustrate digital migration in this country.

Instead what we are seeing is an endorsement of their cartel like behavior both by the regulators and the courts.

Sobering numbers: According to an article in The East African, a sister publication to NTV, the three media houses under a consortium they are calling Africa Digital Network, control 90 per cent of the media in the country consisting of "87 per cent market share in TV, 80 per cent in radio and 98 per cent in print."

The article suggests the media houses are loathe to give up any of this dominance and the advertising billions they command and have instead sought protracted court battles to buy themselves time to put in place infrastructure and buy equipment to digitally migrate.

This alone should have the regulators jumping into the fray.

The Kenya Communications Amendment Act for example bars anti-competitive practices amongst licensees of the Communications Authority particularly Section 84 (S) which has such warnings as 

(a) any abuse by an licensee, either independently or with others, of a dominant position which unfairly •excludes or limits competition between such operator and any other party;

(b) entering any agreement or engaging in any concerted practice with any other party, which unfairly prevents, restricts or distorts competition or which;

(i) directly or indirectly fix purchase or selling prices or any other trading

conditions; limit or control production, markets, technical development or

investment;

By this snapshot alone, the CAK cannot claim to be doing its job of ensuring fair competition when a dominant position by a cartel of 3 controlling 90 per cent of the market not only continually frustrates the technical development or investment in digital migration but also unfairly abuses its position to exclude or limit competition.

The marketplace is not the preserve of an exclusive cartel, it is a place where players should enter and leave according to market dynamics.

The law cannot be used to protect the dominant position of three players to the exclusion of hundreds of new investors, this is precisely why fair competition laws exist.

Even the consortium going by the name ADN should be quickly outlawed by the Competition Authority of Kenya.

Where else in the world would the three dominant players in an industry be handed a government license to entrench that position?

In the US, such an arrangement in the oil and steel industries saw the enactment of legislation that broke up Rockefeller's Standard Oil, the grandparent of today's ExxonMobil.

Likewise AT&T was split up into the 7 baby bells (regional telephone companies) such as Pacific Bell, Bell Atlantic, Bell South etc with Ma Bell being left to do long distance calls only.

The Competition Authority and the Communications Authority should bar this consortium from conducting business as presently constituted or face legal action for dereliction of duty by not only encouraging but also fostering monopolistic cartels in the country.

At the outset, when media owners had the opportunity to put together a consortium to bid for one of the signal distribution licenses, they deliberately did a shoddy job so as not to succeed and have the process restarted when each could put in their bid.

When other entities were licensed, they realized their mistake and hence the beginning of all this litigation.

Now that they lost, they have been in court demanding to be granted a license to distribute digital signals as if that is an exclusive preserve of theirs.

It is not the responsibility of government to help market cartels to adapt to a change in operating environment, they have been in business precisely to be able to foresee and prepare themselves for the digital transmission era.

They cannot now expect to bring their 90 per cent monopolistic market in a basket and ask government to make sure it is safeguarded against newer and nimbler competition in the new era.

At the same time it should be inexcusable for them to continue forcing losses on other investors who have been compliant with the changes in regime from the very beginning.

From Multichoice to KBC, independent set top box vendors, producers and installers, too many people have invested money but keep getting their plans disrupted by a cartel that has just refused to recognize the new reality.

And now that June 2015 is the deadline to migrate, this same cartel seems hell bent on dragging us until the final date as they use these delaying tactics to set up their infrastructure.