Singapore Cross Carriage Act Update

The Media Development Authority (MDA) introduced a cross-carriage measure back in 2010, mandating that screening rights for all exclusive television content deals be made available to the customers of competitive Pay TV operators.

The act originated from a bidding war between StarHub and SingTel to obtain broadcasting rights for the 2010-2013 English Premier League football season. SingTel Mio TV won contract by paying a heavy price, which would eventually be transferred down to the consumer. In exchange, obtaining this contract helped drive their Mio TV subscriber base nearly 400%, from 117,000 in 2009 to just over 400,000 subscribers in 2013.

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According to Adeel Najam of Frost & Sullivan, SingTel lost money by acquiring EPL broadcast rights. Specifically, it is estimated that they paid $350m to acquire EPL rights, but only brought in $200m throughout the duration of the EPL contract.

  • SingTel’s mio TV service would gain 360,000 subscribers by 2013 and is expected to have a pay TV market share of 46% by that time.
  • Of the 231,000 subscriber additions in 2010 alone, 90,000 will be churned from Starhub (these subscribers will switch from Starhub to SingTel) and 100,000 subscribers will take up mio TV service for sports in addition to keeping their Starhub subscriptions in 2010.
  • The sports content acquisition will enable SingTel to double its ARPU by 2013. SingTel’s mio TV ARPU is expected to reach $45 by 2013 and this will be very close to the current level of Starhub’s pay TV ARPU.
  • Starhub which will now face stiffer competition from SingTel and experience a decline of 68,000 pay TV subscribers in 2010.
  • The key risk for SingTel is that this costly investment will make it more challenging for it to turn its pay TV business profitable. On a conservative basis, with an ARPU of $28 for the EPL content, SingTel will be able to accumulate $164 million in the three years from mio TV. Adding revenues from internet and mobile TV platforms this can reach around $200 million. This is 43% below the estimated bid price of $350 million by SingTel for the EPL content rights. Other risks SingTel might face are consumer backlash and regulatory scrutiny.

The Media Development Authority (MDA)’s cross carriage measure enacted on 12 March 2010, was to address the concerns over the nature of competition in the Singapore pay TV market, to put an end to the fierce bidding frenzy for exclusive content, which only served to drive prices up for both Singaporean TV operators and the public.

In theory, the measure would work as follows… StarHub subscribers who want to watch EPL, can simply pay an additional fee for access to this content. StarHub then pays that additional fee to SingTel, who then provides the channel content back to StarHub for delivery back to their customers. The reality of this measure however has proven different.

Last year, StarHub won a contract for the UEFA Euro 2012 matches. The Cross Carriage measure kicked in for the first time, and SingTel Mio customers were given access to theses live matches on their Mio TV box, so far, so good. The act seemed to be working.

However, soon after, SingTel obtained the exclusive contract for the 2013-2016 season EPL football broadcast rights. StarHub customers tried to pay for access to this content but SingTel refused to provide it, claiming that the contract was non-exclusive. The Straights times explains as follows:

This is the first time the cross-carriage rule is being challenged – ironically by SingTel, which benefited from the rule during the screening of UEFA Euro 2012.

SingTel took the auction for EPL broadcast rights in Singapore off the table last November, forcing StarHub to sit on the bench, while the first round of bidding kicked off all around Asia.

It is unusual not to have an auction. Still, SingTel said its deal with the Football Association Premier League (FAPL) was “non-exclusive”. This meant two things: StarHub was free to negotiate its own EPL screening rights at some point; and the cross-carriage law – which applies only to exclusive deals – could not kick in to force SingTel to share the content with StarHub.

SingTel tried several times to not provide EPL game content, arguing first that the deal wasn’t exclusive. After that argument fell through, they took the position that it is not reasonable to require them to subsidize a competitors subscribers. Straights Times writer Loh Keng Fatt explains:

SingTel had tried to argue that its EPL deal wasn’t exclusive, but the regulator didn’t buy that argument. The telco reacted to the order to share EPL by raising rates, arguing that it could not subsidise its competitor’s subscribers.

The upshot? SingTel’s existing mio TV subscribers will still pay the old rates. But new subscribers and those recontracting will pay from $64.90 a month for a Gold Pack, which includes movies and entertainment. This is substantially more than the $34.90 charged previously for a sports bundle, including EPL.

StarHub viewers will pay $59.90 a month to watch EPL. StarHub has also rolled out packages to entice those in the rival camp as well as encourage its subscribers to stay with it to watch EPL and other content.

But amid the fancy brochures and touted savings dangled by both telcos in playing up their packages, the fact remains that the cost to watch EPL has ballooned – compared to last season’s basic $34.90 deal.

Worst off are probably mio TV subscribers on the old $34.90 basic football deal.

It is no wonder then that the 400,000-plus mio TV subscribers – many of whom probably signed up for the football – may now wonder if the cross-carriage rule, though well-intentioned, has scored an own goal instead.

The current status of cross carriage measure in Singapore can be found at this Straights Times article. Another perspective can be found here. And the Hardware Zone has a good discussion thread about this issue.

Maybe the cross carriage measure will eventually function as it was designed, to keep costs down. Time will tell. But in it’s first iteration, it has essentially served to doubled the price of Pay TV sports packages in Singapore.

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