CASBAA, the association for digital multichannel TV, content, platforms, advertising and video delivery in Asia-Pacifi c, is not one to pull its punches when it comes to commenting on the region’s PayTV environment. The latest report Regulating for Growth, the fi rst since 2008, is no exception.
As John Medeiros, CASBAA’s Deputy CEO and Director of Regulatory Affairs, pointed out during a recent media briefi ng detailing the report, “We’re at a point where governments really need to start thinking in a forward-moving sense…Policies in some markets are getting better, in a few they are unfortunately getting worse and in others they are stagnant. The hard truth is that nobody is doing a good job of regulating PayTV”.
One example of a market on the up is Korea, which has made big strides in recent times, diversifying its programming, opening up its market and seeing the benefi ts of strong competition across both Free-To-Air and PayTV platforms. Competition from telcos and IPTV delivery systems has also given cable networks the push to improve and develop.
Indonesia too has improved some aspects of its regulatory system – increasing efforts to curtail piracy and ensuring steadiness and cooperation among the main regulators. However, the study notes that regulators still have their work cut out for them if they are to develop the PayTV landscape further.
Some territories, however, are in “negative development”, becoming more regulated and controlled than before, stated the report.
Singapore is highlighted as a prime example of regressive growth in the sector. Unlike Korea and Indonesia, which improved their ranks in the region, Singapore suffered greatly, falling 11.7 percentage points from 81.7 % in 2008 to 70 % in 2011.
The report attributed Singapore’s steep decline to the Media Development Authority’s decision to implement cross-carriage measures this year – whereby content from providers is not exclusive to any one operator and should instead be made available to all parties, according to legal requirements.
It posited that the new requirements placed “restrictions on content owners’ use of their programming”, going on to add that the most harmful impact of the new regime was “its extension to cover all forms of TV programming, rather than any areas where specifi c competition problems could be identifi ed.”
Singapore’s scenario is unique as it represents one of only two PayTV markets belonging in the healthier half of the report’s rankings that actually fell in index points. Australia, being the other country, fell fi ve per cent to 80% from 85% in the last report.
This is due to the Australian Communications and Media Authority’s extension of its antisiphoning list in late 2010, introducing a two-tier list of sporting events which must be shown on Free-To-Air TV, effectively preventing PayTV operators from “siphoning off” such content.
CASBAA’s report states that both rulings – Singapore’s crosscarriage measures and Australia’s anti-siphoning list – represented a high level of state involvement and interference in their television landscapes, a degree of regulation that the association deems to lack neutrality and instead enforces “outdated and unnecessary constraints”, which results in what it terms, “less effective regulation”.
Marcel Fenez, Chairman, CASBAA, believes that despite the good intentions of the legislations, they are nevertheless unfairly tampering with market forces. “When governments respond to advances in technology by tightening bureaucratic controls, they threaten growth of all kinds,” he said, adding that Asia already has clear and distinct examples of countries with ineffective regulation and systems.
The countries he is referring to are India, China, Vietnam and Taiwan. The four territories occupy the bottom most ranks in the Regulatory Regime Index table.
Unsurprisingly, China remains the lowest ranked market in the index at 38 per cent because it continues to be closed off to outside participation. However, the situation is improving, slightly, with an increasing amount of localized foreign PayTV content, such as this year’s local debut of BBC’s Top Gear format.
For India, near industry-wide regulation remains a big problem, as it did in the last study. CASBAA’s study found that regulation of the Indian PayTV industry is now the most restrictive in the region. It stated that almost every aspect of the industry is controlled, from channel availability, retail and wholesale rates and advertising to even the commercial and technical arrangements between different levels of the supply chain.
Vietnam too suffers from overregulation. In March this year, the Vietnamese government approved a new set of regulations for the PayTV industry resulting in a substantial increase in operating costs for international providers and a likely reduction in revenue.One such new ruling requires all “television advertisements to be made in Vietnam”.
Medeiros said that Vietnam’s heavyhanded role in the country’s PayTV landscape is such a disincentive that up to as many as half the channels and operators could pull out of the country early next year.
Unlike India and Vietnam, which suffer from overregulation, and China, which suffers from a non-inclusive, anticompetitive structure, Taiwan is low in the rankings because of lax protection of intellectual property (IP) in broadcasting of TV content. The report said the Taiwanese government treats signal theft as a minor misdemeanour, which has lead to a rise in mass piracy.
Coupled with this, is the country’s low rate of digital penetration. According to Medeiros, although Taiwan has one of the highest rates of PayTV penetration in Asia, it also has the dubious distinction of having the “lowest digital penetration of any sizeable market in Asia”. The study found that the country’s strict and uneconomic rate regulations (which mandate delivery of a large, fi xed analogue bouquet for an ever-declining monthly payment) have played a central role in constraining the country’s digital development. “The situation has been stagnant for seven or eight years”, Medeiros added.
At the other end of the spectrum are markets performing well, despite their size. Top ranking examples are New Zealand and Hong Kong, considered to be favourable regulatory environments.
Medeiros explained that both work due to regulators using a “light touch” approach. They have created a free market that allows for active competition and leaves decisions on programme distribution, content choice, packaging, retail and wholesale rates and reliance on advertising, to their respective market forces.
He added that a free market is benefi cial because, “Evenhanded, neutral and consistent market-friendly regulation results in economic stimulus, provides consumers benefi t and supports creative industries.”
Hong Kong’s PayTV industry is one of the freest in Asia, according to the index. The policies, which the study states has been a rousing success, have led to a growth in consumer choice and declining industry-average ARPUs (Average Revenue Per Unit). A decreasing ARPU is good because it shows that “consumers are getting more content and paying less for it,” said Medeiros.
Thailand has also set in motion initiatives to stimulate and support its PayTV market. According to the study, the country has provided convincing evidence of “light touch” regulation. The country, which previously imposed a total ban on PayTV advertising – leaving the industry little room to grow – relaxed this ban in 2008. Since then business has increased. PayTV is now in close to 50 per cent of homes in the Kingdom and seen the proliferation of more than 100 new Thai TV channels.
“The more investment that goes into the industry, the more growth, more jobs and better content there are for the consumers,” said Marcel Fenez.
CASBAA’s goal for the next few years is to “support an industry that shapes its own competitive business model without undue government intrusion, such as wholesale and consumer rate regulation and constraints on the development of compelling programming, the greatest strength of pay-TV”, stated the report.
