For the Pay TV Market in Colombia and Latin America, it is not so easy to look for a substitute channel when there are increases by the provider and it is at this precise moment that nonconformity leads to the union of the guild.By Luis Pinto*
Business abuse, according to the RAE (Royal Spanish Academy) is a prohibited commercial action, which is carried out to the detriment of other companies or consumers, using a situation of advantage. For jurists, it is clear that in Colombia the position of dominance is not proscribed, by itself, in such a way that not all economic activity of a dominant company is abusive, it would be bad, but within the logic of the economic system, an unjustified benefit cannot be applauded to the detriment of the other agents of the market.
When a company becomes dominant, its great responsibility is not only to ensure the behaviors and results produced by its policies within the market it dominates, these extend to the behaviors and results that may have an impact as a result of its actions, among other markets close to the dominated market. It sounds somewhat confusing, but if it were not so, the Superintendence of Industry and Commerce would have no reason to exist, because it is she who must protect us from these predators.
In particular case, for companies that provide cable television service in its different modalities, the issue of abuse by several companies has become recurrent, these companies complain about the high costs in postage payments, in channel transmission rights and in the compensation corresponding to the National Television Authority, ANTV.
Digging a little I found that the Constitutional Court stated in Judgment C-616 of 2001 that: "A company or business organization has a dominant position when it has an economic power or strength that allows it individually to effectively determine market conditions, in relation to prices, quantities, complementary benefits, etc., without regard to the action of other entrepreneurs or consumers of the same good or service. This economic power has the potential to significantly influence the conduct and decisions of other undertakings, and possibly to resolve their participation or exclusion in a given market", it is then referred to as follows: "The dominant undertaking must be able to carry out its normal economic activities on the market in a fair and reasonable manner, such as, for example, improving the quality of its products, its internal and external organization, publicizing its products, adapting them to the demand in their diversity, quality and quantity, reducing costs, setting the sales or purchase policy that it deems correct, etc., although its good work increases its strength in the market. (...) Therefore, within the logic of the system, it is also not considered abusive to take a reasonable and loyal advantage of the dominant position, if there is no unjustified benefit to the detriment of the other market agents."
For the electrifiers throughout the country it seems to be a very lucrative business to rent their poles to the companies that provide the cable television service, very necessary for the laying of their networks, they have the power to set their values almost to their accommodation, the rule that governs this charge is dictated by the Energy and Gas Regulation Commission, CREG, who by Resolution 063 of 2013 establishes the conditions of use and exploitation of the energy structure for the provision of telecommunications services by third parties and in Resolution 4245 of 2013 of the Commission for the Regulation of Communications, CRC, defines the conditions of access, use and remuneration.
From these agreements and resolutions arise during the exercise doubts and nonconformities on the part of many operators, who are affected by the stability of the business by having to make "high" payments to companies that clearly do not revert those revenues in improvements that favor them or another benefit for them or for the user, the collections are based on algebraic formulas where there are no discriminatory factors anywhere, it is the same for all strata, for all models of television with a profit and non-profit motive, for national or international companies, paper holds everything, it is very true, and it is something that is questioned as there are no transparent and open negotiations, it is presumed that the company Claro has preferential rates for being one of the largest service providers, but as we do not know this in reality, it is only a presumption, which would undoubtedly attack the national industry by having several negotiation criteria, said by the businessmen "that look at engineer faces ..."
Another debate arises from knowing that these structures are for obvious reasons in the public space and on many occasions are bought and installed by the communities and the Mayor's Office or the corresponding Governor's Office. The electrification companies do not economically recognize the Use of this public space to the State, but if they profit from it, where do these monies end up? What are they invested in? Who controls them?, the only certain thing is that we know who charges them.
In the opinion of several sources I can contextualize that: Really the social purpose of the electrifiers is to provide the energy service to the population and therefore receives its corresponding payments, the pole is cataloged as a property according to the CREG and in theory, one can not lease a property six times to different people because they would incur a crime, they literally add:
"They must stratify the poles so that in the neighborhoods of stratum one and two the value is lower and has a subsidy the same as the light, or they do not treat the collection of the pole as commercial and everything in stratum six, as they currently do, in addition; the poles where only the cable or fiber that is servitude passes have a very minimal value since it does not present any wear because the reality is that it is not used much. That the poles where we have elements placed as amplifiers, power sources or another element that really if used, do have a lease charge, but as it is by strata and by the television rate, because it is not the same in stratum 6 as in stratum 1 and 2, really the social purpose of the electrifiers is to provide the light service. In that order of ideas the postería can be parameterized by the CREG that currently leaves it to the discretion of each electrifier on the use and abuse in the rates and the only ones who are enriching themselves are them, since the land belongs to everyone and they if they do not pay for use of it to the state. "
On the other hand, content providers make theirs, I mean those who sell the satellite signals of international and national channels, there is a total nonconformity. If we start from the definition of the position of dominance it is very uniform. In Colombia, for example, it is "the possibility of directly or indirectly determining the conditions of a market" (Article 45-3 decree 2153 of 1992).
In terms of economy, the product market is defined as the totality of the products or services that consumers replace given their characteristics, their intended use and their price. To this substitutability is applied a technical concept that combines the sense of logic with the so-called "monopolist test".
This consists of thinking (theoretically and hypothetically) that a company is the absolute owner and without competitors of the products in question, to which it applies a small but significant and periodic price increase (between 5% and 10%). If the result of this price increase is that demand is transferred to another product, there is the effect of substitutability. This increase is maintained until demand does not shift further. In this way, the most used product in the world is determined.
For the pay TV market in Colombia and Latin America, it is not so easy to look for a substitute channel when these increases are given by the provider and it is at this precise moment that nonconformism leads to the union of the guild and force the so-called market to be more favorable and sustainable over time. In one of the many forums that I have had the opportunity to attend, they openly told me "You do not join the competition because you want to, you do it because it is your turn, we all have to defend ourselves from the abusive policies of the State that does not protect the national industry"
There are several types of abuse or business bullying, such as exclusionary practices and abusive practices.
There are suppliers that would be worth studying further, the case of the Colombian sports channel, WIN SPORT, is one of the ones that presents the greatest discrepancies as it is the only one that has the rights over Colombian Professional Football, FPC, clearly acquiring a dominant position and for many abusive. In the beginning everything was love and peace, they gave the signal to the cable operators at a high cost, with the promise of lowering them at the time that more operators had it.
According to their logical explanation, they partnered with DirecTV so that they would take care of the production and these costs would only be divided by the number of associates, such as the economy of scale model, where the value to be paid per user was determined by a simple mathematical operation where the production costs are the same, divided by the number of associates.
Thus, with the illusion of linking many companies to this sports channel, ComuTV was measured and then jaloneó other small companies, for their part the large operators: Claro, Movistar and UNE, decided not to accept, not to negotiate under those conditions. After time these large operators approach and enter the negotiation under other conditions, which of course the other operators do not know, which initially was something very open to be a state secret and the promise to lower the rates, was never given and they continue to abuse their dominant position in the market by having the exclusive rights over the FPC.
Many claim that DirecTV is part and counter-party to this and much has to do with these decisions, which should not be since it allows it to handle discriminatory policies, discriminating is treating equally those who are in different situations or treating differently those who are in the same situation, the fundamental criterion to establish when a discrimination is abusive or not, it is the existence of a rational economic justification for their behavior. If we were talking about FOX, ESPN, Turner, Discovery, Televisa, etc., it would occupy about two editions of the magazine.
On the table is the debate and I must clarify that I can not reveal any of my sources since such is the degree of intimidation by government institutions and signal providers, who fear to be exposed and suffer reprisals that may come from the Comptroller's Office, Attorney General's Office, Prosecutor's Office, DIAN, ANTV, CRC, SIC, CREG and Alianza, I think they are no more.
Just look at the journalistic coverage achieved by the statements of Natalia Iregui, legal and institutional relations vice president of DirecTV Colombia when accusing small businessmen of under-reporting "the high diversion of resources in community channels" statements given in an interview with the newspaper El Espectador, to which the Colombian cable television industry responded in a statement issued on February 4:
"In response to the requirements made by the Office of the Comptroller General of the Nation to the ANTV and the anti-evasion plan currently being carried out by the DIAN, the representative members of various organizations that are part of this Colombian cable television industry, meeting in the city of Bogotá on February 4, are allowed to inform public opinion that they are committed to the National Government, in the fulfillment of the norms and the Law, as well as with the national sentiment in pursuit of peace and reconciliation".....
..."In this order of ideas and in compliance with this determination, the necessary mechanisms will be implemented to establish self-regulation within the sector to prevent this type of practice from continuing to be carried out by these Colombian closed television companies that affect the general image of the sector, both nationally and internationally."
Many of us hope that this will be discussed in the right scenarios and a happy term will be reached for everyone without significant effects on the industry.
*Luis Pinto is a technical commercial advisor for TVyVideo+Radio magazine. You can contact him through [email protected]
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