PEMRA’s rebuttal following criticism of a policy proposing applying a licensing fee on digital content reveals its limited understanding of digital economy and digital ad-market
On January 8, the Pakistan Electronic Media Regulatory Authority (PEMRA) circulated a draft policy proposing to license and regulate the Over the Top (OTT) Services and Web TV for public feedback.
In media lingo, OTT refers to a specific type of platform where film and video content is delivered over high-speed internet. Examples of popular OTT platforms include Netflix and Amazon Prime. Whereas, Web TV refers to content broadcast over the internet in general. This may also include free streaming services such as YouTube and DailyMotion.
The proposed policy attracted criticism from a wide range of stakeholders due to its unnecessarily broad, somewhat confused nature and impossible logistics. In a joint statement issued by the country’s leading digital media outlets and media experts, the policy was deemed “unacceptable” in its current form and was declared “a poorly disguised attempt to ensure that independent content producers using the digital medium can be brought under a regulatory mechanism focused on creating prior restraint and enabling increased censorship of digital content.”
In the face of public criticism, the PEMRA issued a ‘rebuttal’ insisting that the proposed policy does ‘not’ infringe on any rights, and exists purely to provide a ‘level playing field’ to all the broadcast actors, mainly the linear TV broadcasters.
However, the rebuttal, if anything, was even more confusing than the proposed policy. It went on to demonstrate the PEMRA’s rather limited understanding of digital economy and ad market.
The rebuttal also attempted to justify the proposed licensing policy with impending convergence of mediums, and shielding broadcast players with shift in the ad revenue from linear TV to digital.
For starters, PEMRA’s insistence on the provision of, through this policy, a “level playing field” to the linear TV broadcasters seems to be either utterly misinformed or a cover to increase political control over digital media. There is agreement around the points that the media economy in Pakistan needs a near-total overhaul and that the broadcast players need to be empowered to generate revenue beside that from advertisements. But let’s also take a look at the big picture to understand the real bottlenecks.
First of all, the PEMRA has licensed over 100 linear television channels, excluding the 36 licenses recently auctioned. Linear television content is distributed through local cable operators licensed by the PEMRA. A massive majority of these cable operators is still operating the analog networks and can only relay about 80 channels, by default disenfranchising the others. If there was ever a valid concern about the absence of a “level playing field”, it is the inability of media’s infrastructure to relay all TV channels licensed by the PEMRA in accordance with the law.
A process referred to as the ‘digital switchover’ is a potential solution to this problem. It requires all terrestrial and cable transmissions to be converted to digital, thereby increasing the content-relay capacity manifold. The resulting infrastructure also provides the broadcasters to enable services like Video on Demand and subscription to enable additional revenue on top of advertisement, an ability that could be the elixir of life for Pakistan’s failing media economy. While most regional countries including India have completed this process many years ago, we still haven’t ‘started’ yet.
Additionally, the state television network, Pakistan Television (PTV), is subsidised through a subscription charge added to every electricity bill in the country, an ability which the private broadcasters are completely deprived of, forcing them to generate revenue from commercial ventures and advertisements alone.
Somehow, for the PEMRA, these do not qualify as issues that would impact the existence of a level playing field. Thus, PEMRA’s ambition to overstep its legal mandate to work towards licensing and regulation of digital content, instead of addressing these longstanding massive bottlenecks within its own backyard, is somewhat misplaced and unjustified, and raises red flags all over.
Secondly, the rebuttal argues that this policy is, somehow, in response to the shifting advertising revenue from linear TV to digital mediums which is disempowering the linear TV broadcasters – an absurd argument that has no ground.
Data from Aurora Fact Files suggests that in 2017-18, the total ad-spend of Pakistan was nearly 81.6 billion PKR, of which a massive 38 billion PKR went towards linear television, about half of the pie. The total size of digital-ad revenue pie was a mere 8 billion PKR, with an increase of only 2.5 billion PKR from 2016-17.
If, through some miracle, the PEMRA makes this logistically impossible policy work, Pakistan’s ad-spend will never stop shifting towards digital, a medium which is much more conducive and far more economical for advertising. Hypothetically, even if it does, it makes only a fraction of linear TV ad-revenue and could have little to no effect on our failing media economy.
On the other side, an estimated revenue of Rs60 billion is collected by cable operators in the name of ‘subscription’ without as much as a penny going towards to the actual content creators: the linear TV broadcasters. Thus, a policy framework that allows splitting of this subscription revenue between distributors and broadcasters will go much further in providing a level playing field to linear TV stakeholders.
Finally, the proposed policy makes it abundantly clear that its authors have little to no knowledge of the digital realm, and they intend to apply the age-old policies from the linear TV to the internet.
Unlike the linear TV, the internet is truly universal. A linear TV license, for instance, allows broadcasters to transmit their feeds in the geographical boundaries of Pakistan. The feed can, thus, be discontinued if the license becomes void. Imagine the implementation of the same principle over the internet through the proposed policy. Would, by virtue of this policy, all ‘unlicensed’ web-broadcasts matching the definition of Web TV be blocked if they fail to acquire a licence from the PEMRA?
If yes, do the PEMRA and the PTA have the technology to block and remove specific broadcasts and channels from YouTube and other platforms? In which case, say when we access YouTube in Pakistan, will we be only able to see web-broadcasts that are licensed by the PEMRA?
If not, then what will stop Pakistani content producers, instead of investing millions on a PEMRA license, from setting up media companies in ‘free zones’ located in countries like Dubai for much less?