ICASA's award of pay-TV licences to be challenged

ITweb reports today that Black Earth Communications (BEC) will be challenging the ICASA decision not to grant it a licence for pay-TV services in SA. Apparently represented by Cape Town ICT attorneys Michalsons, BEC was one of ten applicants not to receive a licence. Since the technology for pay-TV does not require the use of any scarce resource, one can presume that the decision to deny licences is based on non-compliance with one of the raft of mom-and-apple-pie (or should that be, umama-and-melktert?) provisions of the relevant legislation, or on ICASA engaging in an anti-competitive carve-up of the market. Which legal grounds it would have for the latter is unclear to me but why should an organ of state be picking winners in the marketplace, especially for a totally non-essential service?

One of the firms awarded a licence, e-Sat, has already announced that it no longer intends to run a pay-TV service but has got into bed with the incumbent monopoly provider, Multichoice. That leaves four firms with licences, one of which is Multichoice (and another... Telkom). In economics, the four-firm concentration ratio is often used to gauge how competitive a market is. In this case, the concentration ratio will be 100% - a situation that many people will regard as a full oligopoly. Furthermore, the barrier to entry is very high and I would not be surprised if the situation turns into a Multichoice/Telkom duopoly rather quickly, with very little benefit for the consumer.