Impact of Government's Cross-carriage Measure on Competitiveness of Broadcast and Content Market

Mdm Speaker, I would like to thank Mr Zaqy Mohamad for his question on MDA's cross-carriage measure.

The measure was introduced in August 2011 to address the high degree of content fragmentation in the Singapore pay TV market. If it has been successful, we would expect pay TV content to be less fragmented. This is exactly what has been observed.

More common channels are now available to consumers. There were only seven channels, mainly foreign public service channels, available on both StarHub Cable Vision (SCV) and SingNet mio TV (mio TV) prior to the introduction of the measure. Today, there are over 50 common channels which include general entertainment channels, such as ONE, Celestial Movies and FOX International, as well as sports channels, such as ESPN and STAR Sports. As pre-existing content deals expire and are renegotiated, we expect that the number of common channels will further increase. MDA, Madam, will continue to monitor the number of common channels over time, as it serves as a good indication of the success of the measure.

The measure has also not prevented pay TV operators from acquiring exclusive content. Last year, all consumers, including non-pay TV consumers, were able to purchase from SCV, the Euro 2012 tournament on an a la carte basis for the first time without the need for a basic subscription. Mio TV subscribers were able to subscribe to the tournament and watch it via their Mio TV set-top

Page: 15

box even though SCV was the exclusive rights holder.

On the industry front, pay TV operators are also striving for service differentiation and innovation. For example, besides the option of viewing subscribed content on TV, both SingNet and SCV are now offering their customers value-added services, such as viewing the content over mobile networks and the Internet. This has contributed to a growing and more vibrant pay TV market, as evidenced by the increase in the total number of pay TV subscribers from about 694,000 in 2009 to more than 900,000 last year.

The Member has asked whether the public should expect the cost of pay TV packages to decline. Madam, I would like to emphasise once again that it is not the intent of the measure to lower the cost of pay TV subscriptions. These costs are driven by multiple factors that the measure will not be able to address. One key factor is the cost of acquiring premium content, sports or otherwise, which has been rising across the world, in particular, for the highly popular sports franchises. Members may be aware that in June 2012, the British rights to broadcast the 2013 to 2016 editions of the Barclays Premier League (BPL 2013/16) were acquired exclusively at slightly over £3 billion or $$6 billion, a 71% increase in price. This inevitably will translate into cost increases. In our region, the prices of the Barclays Premier League 2013/16 season and rights sold to various ASEAN countries have, indeed, reportedly seen significant increases.

Nonetheless, the MDA is mindful that consumers are concerned about the rising cost of pay TV subscriptions. We encourage consumers to signal their displeasure to the pay TV operators, so that, over time, the operators will be more responsive to consumer demand. In this way, we make market forces work in the interest of the consumer.

In the past two years, we have seen a growing range of content choices for consumers. Today, pay TV operators, including nationwide TV providers SCV and SingNet and a number of niche pay TV retailers, offer more than 400 channels. This is a significant increase from the 236 channels that were available in 2010. Channels are also offering content that is premiering at the same time, or very soon after premiering in their home market. The industry has thus grown more competitive and vibrant.

Despite the benefits brought about by the measure, we cannot stay stagnant. The industry is continually evolving and the pace of technological changes is rapid. There is a need to regularly review the continued relevance of the measure. MDA will conduct this review as part of the triennial review of the

Page: 16

Media Market Conduct Code later this year.

Madam, I am confident that as we continue to fine-tune the measure with the involvement of our stakeholders, our pay TV landscape will grow in vibrancy and consumers can look forward to better service offerings.

Mdm Speaker, I thank the Minister for his response. The objective of the cross-carriage policy, I suppose, was also to bring more players on board. And I hope that we will see a more competitive market. But I also would like to know from the Minister whether other broadcasters, apart from the two that he has mentioned, have expressed interest. What has been prohibiting other such operators from coming in? What measures does MDA have in place for operators who signed non-exclusive content to declare some of these principles of the contract agreement?

I understand that MDA requires other operators to provide evidence before they take action and, of course, these kinds of commercial arrangement, such as discount structures, length of delays before the next person comes in, are barriers for others to come in. My intent is to ensure that the cross-carriage policy has bite and that the regulatory framework also works.

Lastly, specifically, I think the Minister brought up the BPL issue. I know many Singaporeans are soccer fans. Given the cross-carriage policy, why have no other players come in? I know SingTel has signed on exclusively last October. We have not heard updates since then. There is market talk, but are there other loopholes that have gone into this non-exclusive arrangement that the current framework perhaps could not detect?

Mdm Speaker, I thank the Member for the questions. Let me begin with the one that all of us have common interest in, which is BPL. All I can say is that negotiations are on-going. MDA is monitoring this very, very closely because the Member is right, and this relates to the Member's third question – whatever it is, we have to look at every contract that is agreed upon between the provider and the content owners, and ensure it does not, in any way, violate our cross-carriage measure.

I want to assure the Member and the House that the MDA is on top of the situation. We are looking into this very, very closely to see whether there are any built-in barriers which will bypass the regulator. We are on the side of the consumer. We want to provide as many offerings as possible. At the moment, all we know is that SingTel has signed but we know that other providers are

Page: 17

interested and that they are in negotiations.

To answer the Member's third question, thus far, we have not received any evidence or seen any evidence of circumvention of the measure but, as I have mentioned in my earlier reply, we will continue to review and see whether there may be other loopholes that we have not seen, and see how we can tighten that.

In terms of the market, there is nothing to prevent other providers from coming in. In fact, there are a lot of other niche players that have come into the market. We are an open economy and we offer many factors which are positive to international providers. We have a very conducive business environment; we are English-speaking. And so, apart from the two providers, we have other providers like BBC and Discovery, who have anchored their operations here in Singapore. We are keen to open up the market as much as possible because we believe, by having a vibrant and competitive market, in the end, our consumers will benefit.

Mdm Speaker, it is good that the Minister has answered on the issue of competitiveness and allowing other entrants to enter the market. There was talk initially that MDA was looking into a single set-top box so that it can enable other providers to come in. This has not taken off. I just want to ask the Minister if this is still on-going and would the MDA consider putting this in place to ensure there are lower barriers of entry for other providers.

That is a good question. The Member asked about the idea of the common set-top box, which both MDA and IDA were keen to have. In fact, when we went out for the consultation and put out the call for proposals, we found that none of the proposals submitted was likely to achieve the desired outcomes that we wanted – minimal consumer inconvenience in dealing with multiple set-top boxes. We decided to proceed with a no-award decision.

Having said that, we will continue to engage the industry, to ensure that whatever measures that we put in place will facilitate – as the Member rightly pointed out – a more vibrant and competitive eco-system. Thus far, despite the lack of having a common set-top box, it has not prevented other players from coming into the market, albeit niche players. As to whether other larger players will want to come into the market, it is really for them to make the evaluation.

Page: 18

At this point in time, we do not think there are regulatory hurdles to prevent them from coming in.