The Pakistan Electronic Media Regulatory Authority (PEMRA) has successfully auctioned three licenses of a Direct-to-Home (DTH) satellite transmission service it plans to start in the country from November 2017.
Together, the three licenses will fetch around Rs 14.7 billion for PEMRA.
The companies that won the licenses are: Lahore-based Mag Entertainment and Islamabad-based Shahzad Sky and Startimes Entertainment. According to the PEMRA Technical Wing, Mag Entertainment has stakes in the telecommunications sector and Shahzad Sky in the oil and gas exploration sector. As many as 49% shares in Startimes Entertainment are owned by Chinese investors already involved in DTH satellite transmission.
The bidding that lasted for around 15 hours had started on Wednesday only after the Supreme Court of Pakistan gave a conditional go-ahead for it. The final award of contract to the three successful bidders will rely on the outcome of litigation underway over the issue between the public regulator and the Pakistan Broadcasters’ Association (PBA), a representative body of private media houses including television channels and radio stations, and the Cable Operators Association of Pakistan (COAP), whose membership extends to around 4,000 registered operators in the country.
Meanwhile, the two associations have formed a committee to chalk out a joint strategy on the matter. They have said that media houses registered with the PBA would not let the DTH license holders transmit their channels till concerns raised by broadcasters and cable operators are addressed by the regulator. Thus, their opposition to the issuance of DTH licenses appears to be more strategic than principled.
TR Pakistan spoke to executive members of PBA and COAP to understand their concerns on the issue and to PEMRA for its response on these concerns.
‘Broadcasters weren’t taken on board’
The PBA representative says that broadcasters are a stakeholder but they have not been taken on board by PEMRA about its plan to launch DTH service. “They haven’t told us anything about the order in which our channels will be available through the DTH service,” he says. He also objects to the rules allowing license holders to transmit up to five in-house channels, with content taken from several regular channels and bundled together, and, up to three FM Radio stations. “This will bring them at par with the broadcasters,” he says.
Importantly, the PBA’s petition pending hearing in the LHC has also challenged the PEMRA rule barring broadcasters from participating in the bidding. The legal status of the licenses awarded in the auction that continued over Wednesday and Thursday will depend on the outcome of this petition.
‘Regulator isn’t ensuring a level-playing field’
For COAP, the regulator is not ensuring a level-playing field as it’s moving towards “the era of DTH technology” in the country.
COAP information secretary Niaz Sheikh says the rule allowing in-house channels and FM Radio stations is unfair on financial grounds as well. He says that at around Rs 9 million a year the cost of renewal of DTH licenses will effectively be far cheaper than the cost of renewal of licenses for cable operations, FM Radio and Satellite television.
Besides, he says payment schedule for the DTH licenses is unnecessarily flexible. “PEMRA isn’t getting all of the Rs 14.7 billion immediately. The license holders will be required to pay 15% of the sum in 15 days, the remaining 35% by the time service is launched and the rest in another 10 years,” he says (payment schedule shared by PEMRA does not match with this).
He reiterates a concern raised several times that cable operators have just invested millions of rupees to digitize their systems in at least 12 major cities, as agreed with the regulator. “We are just demanding enough time to tell the end consumer that we can provide an equally better quality service,” he says. “I can assure you that all cable operators in 12 major cities have installed the required infrastructure. But, this does not mean that the subscribers will automatically opt out of the analog service available for Rs 200 a month and move to the digital service available for Rs 400 a month and a one-time cost of the digital receiver.
“Digital service won’t be enough of an incentive for an average cable consumer as long as it comes with the same number of channels available in the analog service,” he says.
Sheikh says that at the moment 128 channels have landing rights in the country. “If you exclude regional language channels that cannot be transmitted all over the country, an average cable service with be left with around 90-odd channels whether it’s digital or analog,” he says.
Cable operators have been pressing PEMRA for sometime to increase the channels with landing rights if it really wanted digital operations to be an attractive option for the end consumer, he adds.
Regulator on DTH, Indian content and crackdown on illegal transmitters
PEMRA technical wing director general Wakeel Khan says that the 12 short-listed companies had deposited 15% of their initial offer (on top of the base price set at Rs 200 million) with the regulator before the auction. Now, he says, the three successful bidders will be given 10 calendar days to deposit 15% of their final bids (Rs 4,898 million). He says once vetting of these companies is completed by various executive agencies they will be given the option to pay the remaining 85% of the license fee upfront or in installments calculated on the basis of the applicable Karachi Inter-Bank Offer Rate (KIBOR).
On COAP’s suggestion that digital operations could be promoted not without giving landing rights to more foreign channels, Khan says there is no restriction on new channels. “Whoever meets our eligibility criteria is free to start transmission in the country,” he says. At the moment, he says, there are 23 foreign-owned and 91 locally-owned private channels available to end consumers on cable network.
Khan says there has been no work done yet on setting a price for the DTH service.
Speaking on condition of anonymity because he isn’t authorized to present the official viewpoint of the regulator, another source in PEMRA dismisses the claim that cable operations “have been digitized entirely in 12 major cities as agreed upon between the regulator and the association”. He says the number of operators providing digital service is between 10%-15%.
“Cable operators have had enough time to digitize their systems. The international regulatory body had set 2015 as the cut off year for all countries to shift operations from analog to digital. Pakistan is the only country in the region lagging behind in meeting this deadline,” he says.
“DTH service won’t affect cable operations. It will come at a relatively higher price and have a completely different market targeting upper-middle income households and remote regions not accessible for cable operators anyway,” he adds.
Regarding Indian channels currently banned in the country, he says DTH license holders will have to abide by the PEMRA rules on the matter. “We want to discourage public demand for Indian content on the basis of the principle of reciprocity. They did it to our channels, we will reciprocate. If cable operators can’t show these channels, the DTH license holders won’t be allowed to either,” he says.
On the flourishing illegal economy of DTH transmission of Indian content, he said a crackdown against such businesses was underway. “There is no specific mechanism governing the crackdown. We’re following the traditional hit-and-trial method. We gather intelligence and conduct raids in coordination with other executive agencies,” he says.