Digital Migration; business opportunities

Now that the earlier post has addressed the background of whole digital migration, it is better to explore opportunities. It is good to care about public good but if there is a way to benefit, I say take it.

For background, a digitised signal can allow for up to ten TV channels (standard definition) to be broadcast, and a single analogue channel would require the whole frequency.

So, what are these opportunities?

1. Software development

One of the things that media owners will have to do is provide content in an encoded way and develop algorithms that can provide more space for the content. The developers will have to come up with innovative ways to squeeze more content within a single channel.

Payment of content will be per megabit and therefore the winners will be the companies that can squeeze more content within a smaller space (in simple terms) Western immigrants are probably ready with proposals and it would be nice if Kenyan developers are well versed with this technology and can provide the services. For instance, media owners will be looking for ways to utilize the bandwidth and pay less like in cases where  a TV broadcaster can decide to increase the compression and quality of most of its TV channels for a particular event, so as to make some extra space available for a bandwidth-hungry High Definition  broadcast of that specific occasion.

Because this is business, media owners will be looking for innovative ways to deliver with low operational expenses. If you can deliver this, then you are in business.

2. Content generators/distributors

I have argued in a previous post that content will be the winner. There will be companies whose business is to produce content e.g community theatres, schools, etc You have a choice to either distribute or sell this content or you can give it to another company to distribute it for you, think of the middle men.

For instance, we could decide as a village to produce a cooking show, then sell it to either the media houses or through an intermediary. It will depend on capital outlay and negotiation skills. If your core business is production, you can leave distribution to other companies that have sharks and vulture like characters to maximize the profits.

Remember, CCK says 60% has to be local content, where do you think the media will get this content? Lets get to work 🙂

3. Media personalities, owners etc

If one digital frequency can hold 10 standard channels, think of how many TV personalities and media owners we can have. There will be job opportunities and an expansion of the sector.

Some channels will be regurgitating old content but if you have unique content, you will have advertisers because the content will be hyperlocal and targeted. Even counties will need people to run their stations.

4. Digital Dividend allocations

The analogue frequencies will be allocated and if we are not careful, this will go to the old cartels. It is important to get on board with CCK discussions, yes, they take them to Karen where there are no Matatus but we got to try.

It will be important for CCK to set aside free frequencies for rural services and you will not be allocated if you were never part of it. Remember history is written by the victors and if you are not there, you may never know how allocation was done.

5. Renting old media masts

With digital transmission, media owners will have to decide if to sell the infrastructure as scarp metal or rent it out to others who may find alternative uses. If you can find a way to make use of these masts, start polishing proposals for later on in the year when the dust settles.

 

6. Pay per view services

With the available bandwidth, this would be a chance to target disgruntled DSTV and local TV viewers fed up with repeated content and cheap shows from South America, Asia and India. Yes, there will be still space for them but if you can target livestreaming of movies and TV shows, there is a market.

Look at what Able Wireless has done- they have affordable streaming service. CCK doesn’t require licensing for such services.

 

If you have any other ways to make money with digital migration, please share, those are the only ones I could think about.

 

Digital Migration, the boring details

For the last 15 years, Kenya’s broadcast sector has enjoyed the benefits of liberalization; in the old times, Kenya Broadcasting Corporation had the monopoly but that changed around 1999. Capital Fm was the first Fm station in 1995 or thereabouts but it was not until four years later that the industry blew up.

That was probably the other time that the media aggressively engaged with the Communications Commission of Kenya and the then Kenya Posts and Telecommunication. That engagement resulted in allocations of a wide variety of frequencies, FM, Wimax, etc. This point will come out better in the later arguments in this article.

This recent engagement has had public implication, and has therefore had the public more engaged in knowing who will win the battle of attrition. I think both the media owners and CCK/ government are holding their position to see who will tire faster or who has the ability to go to the last mile. My bet is that the media owners are backed to a corner and they will either have to comply or come to a compromise for more time.

I have had no chance to write on the topic, I have left it to the experts but I think I can also add my voice to it.

First let us get some background.

Why do we need to migrate?

In the early 2000’s or so, there were discussions within the ITU, the oldest UN body, on addressing the shrinking spectrum in developed countries. After discussions, a resolution was reached and the deadline was adopted in 2006 at a meeting referred to as the Regional Radio communications Conference (RRC-06), and agreed by 101 nations in Europe, Africa and the Middle East. This resolution was heavily pushed by EU and North America because they faced the major pressure to free up airwave spectrum but in Africa, we don’t have a  strong consumer electronics industries or consumer markets that would have put such pressure. Remember the argument of spectrum hoarding and the threat by CCK to cancel allocations? Anyway, as happens in many meetings, African countries committed to the 2015 deadline.

Because not all countries are equal, an exception was made, for countries that felt they could not meet the deadline. They had five more years within which to put their house in order. Latin America decided to take 2020 as their deadline, because they had no particular pressure in that sector.

The ITU has already extended the deadline for 34 African countries and you can read a story I did in 2010. Some of those countries are: Algeria, Burkina Faso, Cameroon, Congo, Côte d’Ivoire, Egypt, Gabon, Ghana, Guinea, Mali, Morocco, Mauritania, Nigeria, Chad, Sudan, Togo, and Tunisia. The 2020 cut-off was also agreed for countries not at the 2006 conference: Benin, Central African Republic, Eritrea, Ethiopia, Guinea-Bissau, Equatorial Guinea, Liberia, Madagascar, Niger, Democratic Republic of the Congo, Sao Tome and Principe, Sierra Leone and Somalia.

So why is Kenya stuck to the 2015 deadline?

Kenya has a very big name within the ITU, wants to keep pace with Southern African countries, which have migrated, wants to keep the bragging rights as the ICT capital of Africa and for those who don’t know, the folks at CCK are rated very highly and are frequently elected to top ITU posts, which means good returns in whatever direction. So, in arguing about a 2020 deadline, you can scuttle many career trajectories.

This is also good for our business, which will be argued in part two of this post.

The issue of content interference…..

One of the main arguments by media owners is that their content can be interfered with because Signet is owned  by government and PANG is Chinese, which has exhibited its obsession with controlling what goes out to the public.

But is this the real reason?

Let us agree that if the government wanted to knock any content off air, whether private or public, they have the ability to do so. Read about the Indian government ban on news in community radio stations.

The best practice would have been to go the US way, where the media owners are also content distributors, so there was no change per se in the American case. Kenyan media owners had the chance to apply for a signal distribution license but they self destructed because they could not agree on which media house had to own what percentage, some of the media owners felt they were bigger because they had more money, while others thought they should own a majority shareholding because they had more stations. In the end, there was no desire to put in a winning tender.

Should we blame the CCK for not awarding a license of the basis of a non-compliant tender? We complain about these things but when they are applied to us, it seems unfair. I am not privy to who was in the tender committee, that wasn’t important, bottom-line was that the tender documents were flawed, according to those evaluating.

Why are media owners bitter?

The media owners feel bitter because they have made immense investments and now, they will have to look for other things to do with the passive infrastructure like masts, radios etc. My suggestion is that they should offer broadband services or lease them to companies in those areas that can offer internet services.

Currently, the media owners club is for those with money to pay for frequencies, lay the infrastructure and sustain it. This is a massive investment for the big boys and girls. Digital broadcasting will change all that and allow even people with small money to be media owners. This is not good for media owners, it is good for the rest of us.

Content the new competition

Now that infrastructure and big capital outlay is no longer the main competition point, content will have to be. People will be drawn to stations because they talk to them and address their needs. For instance, during the boycott by Royal Media, Nation and Standard groups, we had to watch K24. My mother is a Citizen fan but she had no idea why they were off air, she switched to the next station; K24. At that time, it was an agricultural show, where farmers share their experiences.

It was the first time that mum shushed us. There was a guy talking about strawberry farming and she wanted to learn one thing; how to deal with the insects and birds that had tormented her and her strawberries. She learnt that the home remedy was to mix charcoal remnants with the soil and put a net to protect the fruits. She was so impressed and said that every week, she will be tuning.

Now, its not a glamorous example but for that day, K24 won a new viewer because the content addressed my mother’s needs. Now, apply this to the many other areas that content has been lacking.

Part two…… Business opportunities.