The Chief Executive Officer (CEO) of MultiChoice Nigeria, Mr. John Ugbe, has said that Pay-As-You-Go (PAYG) billing model is not technically and commercially feasible in the pay television industry.
Ugbe stated this on Monday while making a presentation to the House of Representatives Ad Hoc Committee investigating the non-implementation of PAYG subscription model by satellite television service operators.
The Multichoice boss pointed out that Pay-Per-View (PPV) was often confused with PAYG, adding that the PAYG model used in the telecommunications sector was not the right fit for pay television.
According to him, PAYG in telecommunications is a metered service that ensures consumers are billed only for the service they consume and not for a fixed period.
He explained further that PAYG was possible in the telecommunications industry because it relies on a two-way communication system, which enables operators to determine when a consumer is connected, the service consumed and duration of connection.
Ugbe stressed that satellite broadcasters, unlike telecommunications firms cannot offer pay television services the same way because satellite broadcasting is a one-way system and does not enable broadcasters to determine when a subscriber is connected and/or watching or what channel is being viewed.
He stated: “It is only in instances where there is a two-way communication between the device at the subscriber’s home and the headend of the pay-tv service provider, which will enable the provider to determine when a subscriber is connected or not, that a billing system could be designed to take into cognizance the subscriber’s behaviour,” said Ugbe.
“For PAYG to be feasible, a total and global remodelling of the satellite broadcasting technical and billing architecture will have to be done. The result will be that consumers will have to much higher tariffs to access the service.
“The economies of scale model employed by broadcasters mean that subscribers pay less. We are yet to see a pay TV business anywhere in the world that does PAYG in the sense intended here. We do not believe the model is technically or commercially feasible,” Ugbe said.
Ugbe stressed that Pay-Per-View was different from PAYG and more expensive, as it entails a broadcaster transmitting a single event at the same time to its subscribers who have paid to watch the event.
“A subscriber who wants to watch an event on PPV is required to pay an additional fee besides his subscription. A typical example would be the Mayweather and Pacquiao, and Wilder and Fury II boxing bouts which were retailed on PPV in the United States for $100 and $79.99 respectively.
“The Mayweather/Pacquiao bout, which was shown on DStv premium bouquet, would cost N38,000, which would far exceed the cost of any of the DStv bouquets. The bouquet or bundling model is an effective and efficient means of providing a large but still manageable variety of choice to satisfy consumer demand for entertainment, at the lowest possible cost to consumers.”
Ugbe explained that contrary to the widespread believe that MultiChoice adjusted tariffs on 1 June, what it did was to implement the new rate of the Value Added Tax (VAT), as required by law.
He said the company also took into account factors like inflation, increasing costs of input costs and technical upgrades, impact on subscribers as well as exchange rate fluctuations to arrive at tariffs.
Earlier, the Chairman of the committee, Hon. Unyime Idem, said there was a clarion call by Nigerians and stakeholders within the broadcast industry for a change in the price regime of all Digital Terrestrial Transmission (DTl) and Direct-To—Home (DTH) providers from the present one bundle system to pay-as-you—go/pay-per-view/pay-per-watch, that is daily, weekly or monthly model.
He noted that it was in this vein that the House had to listen to the plight of Nigerians by living up to its constitutional responsibilities as stipulated in the 1999 constitution as amended for the full implementation of Pay-As-You-Go model across Nigeria by satellite TV operators.
He said, “We are also of the opinion that MultiChoice, the owners of DSTV is not sensitive to the plight of Nigerians at large for increasing the tariff of their various bouquet and anchoring that on VAT increment from 5% to 7.5% where in the real sense most of its bouquet price tariff is more than the 2.5% increment, unlike many other companies both local and international that are providing palliative measures to cushion the effects of the COVID-19 pandemic.”
The Chairman reiterated that the committee was fully committed to the full implementation of the Pay-As- You-Go/Pay per View/pay per watch model in Nigeria.
Idem said that the committee was not against the increment, but it was only against the timing of the increment.
The chairman therefore ruled that Ugbe should go back to the board and think with the management and come back with a positive feedback.