The new digital gatekeepers could irreversibly change Kenyan politics

What you need to know:

  • The more your viewers, the higher the rate charged per second by broadcasters. Prime-time charges per second are quite lucrative and keep the broadcasters profitable and in business.
  • The plan by the government through the regulator was that broadcasters would continue with content production while leasing channels from other players, the digital distributors.
  • However, one does not need a PhD to wonder whether PANG, though "Chinese-owned", may have some local interest.

We have covered digital migration to the point of exhaustion, including the technical details, legal details, and freedom-of-media concerns.

So, with so much coverage on the issue, why are we stuck on the question of digital migration?

The Supreme Court and the battery of contesting lawyers have done their bit and so have the engineers and the technical analysts.

The broadcasters, the regulator, the entrepreneurs, the government and the politicians have also weighed it on the matter — from their respective perspectives.

Perhaps we need to look at the matter holistically rather than from the silo approach we are all used to.

How do all these interest groups inter-relate? In other words, what is the value chain or the ecosystem behind digital migration? Unravelling this could help us better understand the key actors, their roles and benefits in the new digital ecosystem.

The tables at the end of the blog give a holistic picture of the actors involved in digital migration, their roles, threats and opportunities.

In the analogue ecosystem, the broadcasters controlled the full value chain, which includes content production and the distribution channel to reach their viewers.

The government’s role, through the regulator, was simply to allocate and assign the broadcasters the frequencies to transmit their content to viewers.

Broadcasters made money through advertising revenues. The more your viewers, the higher the rate charged per second by broadcasters. Prime-time charges per second are quite lucrative and keep the broadcasters profitable and in business.

Government money would come in through licensing fees charged for the frequencies as well as tax levied on the broadcasting entity.

The government, the broadcasters, the advertisers and the viewers were all happy with the status quo until now, when digital migration is being implemented in order to conform to global trends and requirements.

ONE-MAN TV STATION

What changes does the digital migration bring to the above analogue ecosystem?

The plan by the government, through the regulator, was that broadcasters would continue with content production while leasing channels from other players, the digital distributors.

On the face of it, nothing is wrong with this approach since it allows for efficient use of frequency spectrum. However, there are two “little facts" that have stalled the whole process and led to many Kenyans staring at blank screens.

The first was the assumption that the incumbent broadcasters would easily formalise agreements with the new digital broadcast distributors, SIGNET and PANG, who would carry their content to the viewers.

For some reasons, this has not happened and the leading broadcasters seem to have deliberately opted not to explore this route, preferring instead to build their own digital distribution channels. Whereas copyright issues have been touted around as one of the main reasons, competition could be the “silent other”.

Imagine a world where the three leading broadcasters are reduced to being clients of the digital distributors, SIGNET and PANG, on equal footing with some “one-man” digital content creators operating from, say, Bungoma, Lamu or the blogosphere.

If his content is timely, reliable and consistent, the “one-man producer” can easily gain viewers and eventually advertisers in equal measure — perhaps at the expense of the leading broadcasters.

Indeed, the leading broadcasters have every right to protect their turf. However, it is not clear if their strategy is sustainable, because it is easy for the regulator to argue that their role is to introduce competition and ensure a level playing field for all broadcasters, which is potentially what digital broadcasting can do.

LOCAL PANG CONNECTION

This brings us to the second “little fact", which incidentally is more important, despite the failure of the leading broadcasters to bring it up in the public debate.

The two designated national digital distributors expected to transmit the content do not exactly have a history of being independent.

SIGNET is owned by KBC, the national broadcaster, whose reporting structure is of course public and leads straight back to the government. PANG on the other hand is publicly known as “Chinese-owned”.

However, one does not need a PhD to wonder whether PANG, though "Chinese-owned", may have some local interest.

In short, by June 2015, the whole of the Kenyan broadcasting sector, will be under two digital network distributors who can be judged to be friendly to the incumbent government. This is not necessarily a bad thing, but it could take quite a different dimension as we approach the next general election in 2017.

This second fact is what Kenyans can relate to, and is perhaps what can give the leading broadcasters a small chance of becoming the third national digital distributor.

Forcefully procuring their own set-top boxes in order to indirectly get the digital distributor licence may simply be seen as anti-competitive behaviour and would gain little public support.

Table 1: Analogue ecosystem

ANALOGUE ECOSYSTEM

Actor

Role

Opportunity

Government

regulator

Allocate frequencies

Charge for frequency

Tax broadcasters

Three leading

broadcasters

Produce content

Own distribution networks

High cost of distribution network leads to market concentration (Dominant Players)

Advertisers

Pay for advertisements

Dominant Players make reaching mass markets easy

Consumers

View content

Information or entertainment

PANG and SIGNET

NONE

NONE

Table 2: Digital Ecosystem

DIGITAL ECOSYSTEM

Actor

Role

Opportunity

Threat

Government

regulator

Allocate frequencies

Charge for frequency and tax broadcasters

More control through PANG or SIGNET

Leading broadcasters decline to transmit via SIGNET or PANG

Three leading

broadcasters

Produce content but

lose distribution networks

(Lease from SIGNET or PANG)

Exclusive focus on content production

Outsourced costs of maintaining distribution network

Loss of Dominant position as new players enter market

Increased shutdown risk from pro-government distributors

Advertisers

Pay for advertisements

More broadcasters mean lower marketing costs

Need to wait for disrupted market to settle before identifying leading players

Consumers

View content

More diverse choices of content

Increased chances of “gutter” broadcasters

PANG and SIGNET

Digital Signal Distributors

Charge all broadcasters transmission fees

New gate-keeper of transmission