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Elephant in room as TV plug-off nears

FINANCIAL STANDARD
By Jackson Okoth | April 22nd 2014
By Jackson Okoth | April 22nd 2014
FINANCIAL STANDARD

By Jackson Okoth

Kenya: If the analogue switch off were to happen today, a huge chunk of Kenya’s television audience would be left out, throwing the advertising business into a tailspin.

Although the global TV market is planning to transition from an analogue to digital platform by June 2015, Kenya has brought this deadline forward.

This has led to a court dispute between leading broadcasters and the Communications Commission of Kenya (CCK).

Now, with the clock ticking towards the September 30, 2014 deadline, the market is still holding its breath as only a small fraction of TV owners have purchased the digital set top boxes that will allow them to migrate.

“An estimated 50-55 per cent of TV audiences will disappear with TV advertising business. The biggest beneficiary will be radio, where most advertisers will move to as they consider their alternatives,” said Mr Lenny Ng’ang’a, Saracen Media’s managing director.

However, if the two signals, analogue and digital, run concurrently as is happening at the moment, nothing much will change.

It costs approximately $2 million (Sh172 million) to set up a fully fledged TV station. This includes the cost of putting up broadcast transmission equipment as well as studios.

“When the TV signals move from the analogue to digital platform, the number of channels that viewers can access will increase exponentially. There will be new products coming into this market such as video-on-demand, allowing subscribers to pay for them using mobile money transfer platforms,” said Mr Ng’ang’a.

Also, when the migration is complete, there will be no need for broadcasters to invest in masts, which could see an increase in the number of content providers.

Premium digital TV providers have also been on intense marketing campaigns to sell their technology and cash in on the opportunities the migration offers.

Artificial shortage?

The other issue is the cost of the digital set top boxes.

“We are not opposed to the migration process, but we would like consumers to have access to both analogue and digital signals until the end of this year,” Consumers Federation of Kenya (Cofek) Secretary General Stephen Mutoro told Business Beat.

It is still unclear how many viewers have migrated, with CCK figures putting them at 700,000 against the 300,000 given by the consumer watchdog Cofek.

The number of digital boxes in the market is insufficient, with industry players expressing fears that there may be an attempt to create an artificial shortage and push up prices.

“Most consumers are still unable to afford the digital boxes. A move by the Government to set up the Kenya Consumer Protection Advisory Committee is a step in the right direction,” said Mr Mutoro.

“Migration is a process and not an event, and it will give consumers more choices.”

As matters stand, consumers are not being given all the relevant information regarding the technologies and services that digital broadcasting brings.

“With the clock ticking towards the global June 2015 deadline, dealers and manufacturers of set top boxes worldwide appear to have cornered the market, pushing up prices of their equipment,” said Ng’ang’a.

The lack of clarity has led to some consumers feeling uncertain about what to purchase to continue receiving their favourite programmes on digital platforms.

The Government has already warned that consumers are being misled into buying pay TV set top boxes when what they actually want are free-to-air set top boxes for digital terrestrial TV.

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