S'pore cross carriage rule unlikely to lower content costs

Cross carriage regulations requiring pay TV operators in Singapore to carry each other's content may bring more convenience to consumers, but it might not deliver much, if any, cost savings for content, industry observers say.

The rules took effect when the Euro 2012 football tournament kicked off earlier this June, becoming the first program to be subject to the legislation which was passed in July 2011. StarHub won the broadcasting rights to air the competition, but the matches are available to customers of rival SingTel. Its subscribers can request for access by paying the same subscription fee as StarHub customers, but they would be subject to an additional S$10.70 "activation fee" as per new subscribers.

The government enacted the cross carriage rule after SingTel's winning bid for the exclusive broadcast rights for the Barclays Premier League in 2010 drove up subscription costs for local consumers.

When contacted by ZDNet Asia for details on adoption rates by SingTel customers under the cross carriage agreement, StarHub declined to divulge the information "due to commercial sensitivities". However, its vice president of home solutions and content, Iris Wee, said the "subscription rate among mio TV subscribers is within our expectations".

Keen bidding for content to continue
Ng Kian Teck, lead analyst at SIAS Research, says the existing cross carriage rule is unlikely to keep pay TV operators from bidding for exclusive content in the future.

This is because consumers not only take content into consideration when picking their pay TV operators, but they are also looking at their quality of the network and infrastructure and the ability to deliver content across multiple platforms, Ng stated.

As such, operators will still bid for exclusive content to carry but probably at a slightly less aggressive manner. The service providers would also bundle the content across platforms such as mobile devices, but not make it available for customers that did not sign up with them, he added.

StarHub, for example, launched its TV Anywhere service this month to allow subscribers to watch various channels, including Euro 2012 matches, on their smartphones and tablets and these programs are not available for non-StarHub consumers.

Ng noted that the cost for acquiring exclusive content could be passed on to consumers, though.

With the cross carriage rules, service providers have no choice but to find ways to differentiate themselves, said Vidya Nath, global industry manager for digital media practice at Frost & Sullivan.

"Apart from content exclusiveness, operators will up their ante to offer supreme quality of experience and service to their subscribers to stop churn, along with a variety of services," Nath said.

CIMB Research analyst Kelvin Goh said in a research note last month SingTel would likely "bid aggressively" for new content coming out of exclusivity over the next year, as well as retain the rights for the English Premier League to take its customer base "to the next level".

"SingTel sees the need for new applications and content to drive the take-up of fiber services. Hence, it is pursuing 'iconic' content to add to mio TV's offerings," he said. "Without the exclusivity, we feel that SingTel will not be able to differentiate itself from StarHub and adds to the challenge of growing its subscriber base and ARPU (average revenue per user)."
Foong King Yew, research vice president at Gartner, added that it remains to be seen how the cross carriage rules would be received by media content owners. Singapore's small market size mean pay TV operators are vulnerable to "hardball" measures from the content owners.

For example, negotiations for the World Cup 2010 broadcast rights dragged on for more than six months and threatened to collapse, with local pay TV operators unwilling to match the US$30 million fee that governing body FIFA was asking for. StarHub and SingTel eventually agreed on non-exclusive broadcasting rights with FIFA, but did not disclose how much they paid for it.

Missed opportunity
Singapore's recent shelving of plans to develop a universal set-top box, was also a missed opportunity to open up the industry to more competition, said Ng.

The proposal was mainly aimed at lowering barriers of entry for new players in order to create a more competitive ecosystem. However, after two years of industry consultation and evaluation, the authorities concluded that none of the bids they received would achieve the desired outcomes due mainly to cost and technical complications.

On this, Nath said: "The recent shelving does put a temporary roadblock for competition among operators in Singapore."

However, he noted the idea faced many obstacles from the onset. "Perpetrating large-scale deployment of boxes without hassle to the customer requires a number of technical feature sets and content compliance," the analyst said.