Pay TV bid documents made public

Submissions were handed to ICASA on 31 August and, other than communicating the number of bidders and their names, ICASA has kept the details of each bid confidential - until now, that is, with the publication in the ICASA library of all 18 bids. The copies of the applications are now available in CD and hardcopy formats for inspection by any interested persons at the ICASA library, Block D, Pinmill Farm, 164 Katherine Street, Sandton, Johannesburg.

Says Mergan Moodley, a founder of On Digital Media (ODM), which believes it has emerged strongly as an independent contender: "Ironically, two organs of state, the SABC and Telkom, have thrown their hats into the ring. We can honestly say we are truly independent. It is also time that monopolies like MultiChoice encountered some healthy competition.

"We will be objectively analysing each bid to see where our competition lies, but we believe we will compete aggressively as our strategy is supported by extensive research, a detailed financial plan and sheer hard work."

Moodley believes ODM has an additional and significant edge over other tenders in the form of a new concept for subscription television in the SA market.

Aim to offer more

"Because we aim to offer more than is available at present in terms of choice and affordability, we shall expand multi-channel subscription television to a broader segment of the population; one that has not been able to participate in subscription television services previously due largely to the pricing structures of the current offerings."

Heather Kennedy, ODM's other founder with experience in marketing, says: "Even a cursory examination of the All Media Product Survey (AMPS) data shows that the number of television households has doubled over the past 10 years, to over eight million households, while pay TV has only shown very modest growth over the same period."

"Pay TV's market penetration of colour TV households has dropped from 26% to 15% in a growing television market. In global markets, the pay TV penetration is increasing, and we believe that the market in South Africa can be expanded by offering choice and affordability to the viewer.

"We anticipate that the size of the market which ODM will pursue is around 3.5 million households"

Doing better

Kennedy acknowledges that such a target begs the following questions:

• If MultiChoice can only attract just over a million DStv subscribers, why does ODM believe it can do better?
  
• Why is ODM prepared to commit to a sizeable investment in developing its Pay-TV offering?

"The answer," says Kennedy, "lies in choice, quality and price. There has been no competition, so the price has gone up but not necessarily the quality. There are hundreds of Pay TV channels available in the world. South Africa has seen around 50 of them. And it is naïve to believe that these are the best 50 that the world has to offer.

The most recent independent market research has shown that this untapped segment of the SA television audience is ready for a new subscription television offering.

The primary target market for ODM has been defined as upper-LSM 6, LSM 7, LSM 8 and LSM 9: people from these groups who are currently non-subscribers to any subscription television service.

Differentiated service

ODM intends to offer a differentiated multi-channel subscription television service, with a variety of local and international channels that are not currently available in the South African market. These channels will offer choice and relevance to the subscriber.

"Quite simply, with ODM, consumers will have far more choice when it comes to the channels to which they wish to subscribe and will only pay for the services that they choose," says Moodley.

"Our ambition is to offer around 40 channels with very little overlap with what is currently available in the local market. Consumers will have the option of real choice for an affordable monthly fee."

The service will be delivered to households via an encrypted digital signal through a satellite dish and a digital decoder.

State of the art

State-of-the-art satellite and distribution technology (MPEG-4 compared to currently used MPEG-2 compression technology) is at the heart of ODM's strategy, enabling it to use broadcast capacity more efficiently and to introduce high definition television (HDTV) when the market demand arises.

ODM's funding strategy is premised on attracting a balanced spread of shareholders encompassing the historically disadvantaged, broad-based BEE, institutional investors, private equity investors and investors who are able to provide the requisite technical support and transfer of skills to the project.

"We are confident that with the funding that has been secured for the company and the commitment and support of these investors, the involvement of strong technology partners, the differentiated channels that have been identified to match the market needs and the expertise of the management team, the company will deliver a successful multi-channel satellite subscription television offering to South African audiences," concludes Moodley.