Cable TV guys give side

J. Manuel Z. Dabao, president of the Philippine Cable Television Association (PCTA), wrote to deny that they threatened to boycott STAR TV as an offshoot of its current problems with Destiny Cable. Well, I talked to our reporter and she stands by her story. Manila Standard also had a report that said as much.

In any case, Mr. Dabao also said he agrees with our observation that the current controversy has deeper roots. The divide and conquer approach of program suppliers is successful only because Pinoy operators allow it. Also, the traditional business model of cable television at a time of surplus carriage capacity assures that content providers have the upper hand. Cable TV operators have to re-invent themselves in this new environment in order to survive and flourish.

Here is Mr. Dabao’s e-mail, which presents for the first time in local media, a good explanation of what ails the local cable industry.

Your observations hit it right on the mark. Allow me to go back on a little history. Cable TV in the Philippines started off on the wrong foot. I put the blame on the colonial mentality of the cable TV operators themselves.

The program menu of SkyCable if given in the U.S.A. would easily cost subscribers US$60.00. Here it is a mere US$15.00. We use the same infrastructure as the cable companies there. So it costs us more to set up things here because we buy the hardware abroad, ship it here, and after taxes, comes up to almost double the cost. Add breakage because of trial and error and it nearly becomes a horror story. And we haven’t even started yet.

When it’s time to operate, the operator scrounges around for content. Cable Operators or Owners, being well heeled and well travelled, SHOP FOR CONTENT THEY WANT - NOT WHAT THE MARKET WAS CAPABLE OF ABSORBING. The fashionable program, of course, is HBO. It is also the most expensive.

The rivalry of Sky and Home in the past, degenerated into who had the most programs, without considering that there was no corresponding increase in monthly subscription rates. So, how did everyone manage to survive? By playing around with subscriber declarations. This enabled the players to keep the existing subscriber rates even while continuing to gobble up more programs.

In the beginning, it was quite easy to balance cash flow figures because the growth rates were tremendous. Additional subscribers came in droves every month and did not have to be reported right away. Reality check came when there was no more room for growth. The whole area of operation has been cabled and everyone who wanted cable tv service already had it. This was when the shit hit the fan. Add the Asian crisis when the peso slid from P27 to P50 = US$1. As you know, programming is paid in US dollars. If we go by the rate card cost per program, using Sky as an example, the total peso cost would be around P600 per subscriber. See the problem?

Now, the players who came in later in the game, (like Destiny), will have to compete for the existing subscribers of Sky and Home. The program providers paid them token attention and allowed them to declare smaller numbers assuming they were small anyway. The new players did not learn from the mistakes of the older players. With their lower price, they ate up into the existing market without getting the attention of the programmers.

It was only when their inroads became substantial that the older players began to notice. This was actually felt when the STAR / Beyond Cable issue went out of hand. Subscribers migrated and of course, the numbers lost from one were assumed to have gone to the other. Now, Destiny and the other new players have to face the same music everyone has been dancing to.

This is true all over. I have visited almost every cabled area in the Philippines and the situation is worse in the provinces. In some parts of Bicol and Central Luzon, cable systems offer more channels than Sky at only P250/month. Our Association has initiated an education program to rationalize program menu vis-a-vis monthly subscription rate.

The sins of the program providers are just as bad. The distribution method in the Philippines is partly to blame for our ills in the Industry. We shall expound on that later.

Unless we learn to do business the right way, we will all end up in the wastebasket. But then, Boo, isn’t this the same everywhere now? The Filipino businessman seems to have developed a different mindset. I am almost afraid to describe it.

Backlash

There was a special report on television over the weekend (I think it was on CNN) that focused on a growing anti-foreign backlash in the United States because of the increasing unemployment rate. It is easy for some Americans to blame foreigners for the job losses. Congress is being pressured to pass a law that will drastically reduce the number of work visas that could be issued.

In fact, the number of foreigners using the work visas has declined in recent years because of the dot com collapse and the continuing job cuts of American corporations. But as one expert interviewed pointed out, hiring foreigners for top jobs, specially those that are technical, couldn’t be helped.

About half of the graduate students in engineering, mathematics and related technical fields are foreigners and they are usually among the best and many end up being hired. Should Americans deny themselves of the added value these capable foreigners can bring to their economy?

Americans must realize they have a serious problem just in the matter of functional literacy. In a recent issue of Newsweek, a senior UN diplomat wrote that "In the richest country on earth, 23 per cent of adult Americans–44 million men and women–are functionally illiterate." Shashi Tharoor, a senior UN diplomat in New York, laments that the situation is worse than those statistics suggest, "because 50 million more Americans cannot read or comprehend above an eighth-grade level."

To appreciate what that means, you need ninth-grade comprehension to understand the instructions for an antidote on an ordinary can of cockroach poison in your kitchen, 10th-grade to follow a federal income-tax return, 12th-grade competence to read a life-insurance form. All told, a staggering percentage of America’s adults are, in effect, unequipped for life in modern society.

It is not surprising there is this anti-foreign sentiment. It is, however, unfortunate if this anti-foreign sentiment spreads. It is unfortunate not just for foreigners who dream of the good life in America, but more specially for the future of America itself. This generation of Americans should not forget that America is a country built up by immigrants and immigrants continue to introduce new and vibrant blood to America’s economy and society.

Hopefully, this is just a passing thing arising from fears of terrorism and the economic slowdown. But it is something America must quickly get over with for its own sake. As Prime Minister Mahathir commented, it is their country and they can do what they want with it... if only they don’t drag us into their troubles too. Their influence on the fate of the world is so overwhelming, we have a right to tell them off when they are acting as if they are the only ones who matter.

Doing a better job

Grandpa and granddaugher were sitting talking when she asked, "Did God make you, Grandpa?"

"Yes, God made me," the grandfather answered.

A few minutes later, the little girl asked him, "Did God make me too?"

"Yes, He did," the older man answered.

For a few minutes, the little girl seemed to be studying her grandpa, as well as her own reflection in the mirror, while her grandfather wondered what was running through her mind.

At last she spoke up. "You know, Grandpa," she said, "God’s doing a lot better job lately."

(Boo Chanco’s e-mail address is [email protected])