SA's newly licensed pay-TV operators could soon face competition from an unlikely source: telecommunications companies that deliver video-on-demand services to people's homes without having to be licensed first by the broadcasting industry regulator.
Two companies, Safika-controlled Goal Technology Solutions (GTS) and Dimension Data's Internet Solutions, have designs on delivering affordable TV services to SA households. Neither will need a pay-TV licence from the Independent Communications Authority of SA (Icasa) as the service, which is delivered on demand, is not technically defined as broadcasting.
GTS is hoping to launch its service in January, ahead of new services from new pay-TV licensees Telkom Media, On Digital Media and WOWtv.
GTS, which is best known for providing Internet and telephone services using power lines, has signed an agreement with a content supplier - an "aggregator" that buys content from international suppliers such as Warner Bros and NBC - and has also identified an international supplier, based in Israel, for its set-top boxes.
Though GTS's network is still tiny - it expects it will have only 8 000 homes connected to its network by January from 1 000 now - CEO Adrian Maguire is confident that the company will see exponential growth in the next few years.
Funding difficulties have held it back. Its principal backer, Rwandan-born telecom billionaire Miko Rwayitare, passed away last year, leaving GTS in financial limbo. But it recently sold a 65% stake to Safika and is proceeding with its network roll-out.
Maguire won't provide details of the cash injection Safika has provided, but says it is not as much as Rwayitare had put on the table. So GTS plans to seek additional financing when it needs to. "Safika has put a good commitment on the table to ensure we can survive and grow sufficiently for quite a while," he says.
GTS's biggest network deployment so far is in Heidelberg in Gauteng, where it is using powerline communications technology to provide residents with telephony and Internet services. It is also busy with a project in East London which will see it running fibre to about 18 000 homes. And it is deploying fibre cables, power line communications technology and wireless systems in the Nelspruit city centre, which is poorly served by telecom companies.
Maguire says GTS's funding problems mean progress has been slow but he is confident the company will pass between 350 000 and 500 000 homes by 2010 - that's homes that are able to connect to GTS. That's down from an initial forecast of reaching 1m homes by then. "We are six months to a year behind schedule."
GTS is promising the country's first true triple-play bundle of broadband, telephony and pay-TV. The video service will have between 600 and 1 000 new movies a month, all of which can be watched on demand - the content will be streamed over cable (either fibre or power lines) from a media server located somewhere in the subscriber's neighbourhood.
The cost of the service will be similar to the price of blockbuster movie rentals at a video store, Maguire says. "It will cost considerably less than DStv but we are not competing with DStv," he says. "We are going to have different content and a different type of viewer. We won't have the latest sport, for example."
Though unable to compete in sport, GTS will give MultiChoice, which operates DStv, a run for its money in other forms of entertainment. Maguire says GTS will have access to the latest US movies the moment they come off the big screen - well before they arrive in video stores in SA, and often times before they even hit the local cinema circuit.
He describes the set-top box GTS will use as a "PVR on steroids", referring to MultiChoice's personal video recorder that allows subscribers to record shows for later playback and pause live TV.
Once GTS subscribers elect to rent a blockbuster movie, they'll have 48 hours in which to watch it before it becomes unavailable again. They will also have the option to purchase it and download it to the hard drive on their set-top boxes.
There will also be a range of older movies available to watch at any time for a fixed monthly subscription fee.
Content will be protected using conditional access and digital rights management techniques - content suppliers insist on this to prevent digital piracy - but Maguire says movies and television shows will be able to be transferred to mobile devices such as PlayStation Portables for personal use.
GTS is promising a wide range of movies, documentaries, series and soaps. The company is also planning to offer adult content, though this will only be available for a premium. "We will have other bouquets available at nominal cost."
No high-definition content is planned at launch, though the set-top box is capable of delivering it. HD content will be available by 2010, Maguire promises.
Its head start in video-on-demand services may be short lived, though. Internet Solutions (IS) is itching to get into the game, but has so far been frustrated by problems with Telkom's network.
Goggle box - More options coming
Unlike GTS, which will provide video over its own network, IS has to use Telkom's infrastructure. Khetan Gajjar, new business development manager at IS, says the company has been looking to provide video on demand for more than two years already. But Telkom, he says, is unable to guarantee a minimum throughput on its lines - it needs a consistent 1,5 Mbit/s.
The quality of the copper in the ground and the distance from its exchanges to people's homes are the biggest problems, Gajjar says.
IS had hoped that Telkom would have addressed the problem given that it is a majority shareholder in Telkom Media, which also plans to offer video-on-demand services. But Telkom's attention has since shifted from pay-TV - it is planning to sell its controlling stake in Telkom Media - to building a wireless network to compete with the mobile operators.
