By Tony Akowe and Victor Oluwasegun, Abuja
The Chief Executive Officer of MultiChoice Nigeria, owners of Digital Satellite Television (DStv), John Ugbe has told the House of Representatives that Pay-As-You-Go (PAYG) billing model Nigerians have been yearning for is not technically and commercially feasible in the nation’s broadcast industry.
Ugbe, who spoke on Monday when he appeared before the House of Representatives Ad Hoc Committee probing the non-implementation of PAYG subscription model by satellite television service operators, said the company does not currently have the technology to offer PAYG.
The MultiChoice CEO explained that Pay-Per-View (PPV) is often confused with PAYG, saying the PAYG model used in the telecommunications sector is not 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.
Ugbe argued that PAYG is possible in telecommunication sector 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.
The MultiChoice chief also explained that satellite broadcasters, unlike telecommunications firms, cannot offer pay television services 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 said: “It is only in instances where there is a two-way communication between the device at the subscriber’s home and the head-end 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 cognisance the subscriber’s (viewing) behavior.”
Ugbe said the PAYG can only be feasible if there is a total and global remodelling of the satellite broadcasting technical and billing architecture.
The company chief said this would mean that consumers would have too 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,” he said.
Ugbe maintained that Pay-Per-View (PPV) is different from PAYG and more expensive.
The MultiChoice chief explained that the former 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 bouquet. The bouquet or bundling model is an effective and efficient means of providing a large but still manageable variety of choices to satisfy consumer demand for entertainment at the lowest possible cost to consumers,” he said.
Ugbe also addressed the widespread belief that MultiChoice adjusted tariffs on June 1, 2020, stressing that what the company did was to implement the new rate of the Value Added Tax (VAT), as required by law.
According to him, the company takes into account many factors, like inflation, increasing costs of input costs and technical upgrades, impact on subscribers as well as exchange rate fluctuations to arrive at tariffs.
“Due to the current adverse economic situation, some of these factors have over the years negatively impacted our cost of doing business and have put us under very challenging conditions,” he added.
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