The Pay-As-You-Go (PAYG) billing model advocated by Nigerians is not technically and commercially feasible, the Chief Executive Officer of MultiChoice Nigeria, owners of DSTV John Ugbe has stated.
Ugbe, who spoke when he appeared before the House of Representatives Ad Hoc Committee investigating the non-implementation of PAYG subscription model by satellite television operators, said the company does not have the technology to offer pay as you go at the moment.
He explained that Pay-Per-View (PPV) is often confused with PAYG, adding that the PAYG model used in the telecommunications sector is not the right fit for pay television.
According to him, PAYG in telecommunications is a metered service that ensures consumers are billed only for the service they consume and not for a fixed period.
He argued that Pay-As-You-Go is possible in telecommunication sector because it relies on a two-way communication system, which enables operators to determine when a consumer is connected, the service consumed and duration of the connection.
He maintained satellite broadcasters, unlike telecommunications firms, cannot offer pay television services because satellite broadcasting is a one-way system and does not enable broadcasters to determine when a subscriber is connected and/or watching or what channel is being viewed.
He said: “It is only in instances where there is two-way communication between the device at the subscriber’s home and the headend of the pay-tv service provider, which will enable the provider to determine when a subscriber is connected or not, that a billing system could be designed to take into cognizance the subscriber’s behaviour”.
He said the Pay-As-You-Go can only be feasible if there is a total and global remodelling of the satellite broadcasting technical and billing architecture, adding the result will be that consumers will have to much higher tariffs to access the service.
“The economies of scale model employed by broadcasters mean that subscribers pay less.
“We are yet to see a pay-TV business anywhere in the world that does PAYG in the sense intended here. We do not believe the model is technically or commercially feasible,” Ugbe declared.
He maintained that Pay-Per-View, is however different from PAYG and more expensive, as it entails a broadcaster transmitting a single event at the same time to its subscribers who have paid to watch the event.
“A subscriber who wants to watch an event on PPV is required to pay an additional fee besides his subscription.
“A typical example would be the Mayweather and Pacquiao, and Wilder and Fury II boxing bouts which were retailed on PPV in the United States for $100 and $79.99 respectively.
“The Mayweather/Pacquiao bout, which was shown on DStv premium bouquet, would cost N38,000, which would far exceed the cost of any of the DStv bouquets.
“The bouquet or bundling model is an effective and efficient means of providing a large but still manageable variety of choice to satisfy consumer demand for entertainment, at the lowest possible cost to consumers,” he said.
Ugbe also addressed the widespread belief that MultiChoice adjusted tariffs on 1 June, noting that what it did was to implement the new rate of the Value Added Tax (VAT), as required by law, adding the company takes into account many factors like inflation, increasing costs of input costs and technical upgrades, impact on subscribers as well as exchange rate fluctuations to arrive at tariffs.