So it’s not JUST about premium sports content?
So says Singapore’s media regulator Media Development Authority (MDA) when it introduced the Cross Carriage Measure (commonly known as the Cross Carriage Rule) back in March 2010 (the rule kicked in only in August 2011 after allowing for extensive consultation and debate).
According to an MDA paper, Consultation on Preliminary Policy Positions, published September 2010, a 2008 survey indicated that “concerns over content fragmentation are not restricted to channels containing premium sports content alone. The survey…indicated that all pay-TV subscribers are sensitive to content fragmentation, not just the sports fans featured in media reports…both sports fans and non-sports fans expressed a similarly strong preference for having all content available on one platform.”
But it’s really about sports content, no?
The same paper also stated that MDA’s intervention “arose as a result of SingTel’s successful bid in March 2008 for the exclusive media rights to the UEFA Champions League and UEFA Cup 2009 – 2012 seasons, and subsequently, a successful bid in October 2009 for the Barclays Premier League (BPL) for three years commencing August 2010.”
Add to that a third incident, where in October 2012, SingTel announced it has renewed broadcast rights to the BPL matches for the next three seasons commencing August 2013, on a non-exclusive basis, and hence not subjected to the cross carriage rule. But StarHub had not acquired BPL rights, which left its subscribers fuming for what is the third time about the need to subscribe to a second set-top box just to catch their favourite football matches – the very situation that the rule had sought to address in the first place.
If we then evaluate the three consumer “uproars” thus far, with no other major consumer objections on other exclusive content, surely it’s fair to conclude that this is really about sports programming?
Can “non-exclusive” be really “exclusive in diguise?”
While there is industry talk and press reports about how SingTel has apparently found a “loophole” and “sidelined” the rule, Elle Todd, Partner at Olswang Asia, reminds us that this isn’t necessarily the case.
“The legislation has not changed,” says Todd. “For SingTel, the position is that the law applies to exclusive deals. So obviously, if an operator does a non-exclusive deal, that’s permitted and not caught by the rule.”
Todd points out, however, that it may be possible for a nonexclusive deal on paper to function much like an exclusive one in practice.
“The issue is, what is a non-exclusive deal? Is it saying on a page ‘this is a non-exclusive deal’, therefore the content owner can also go to the other operator and do a deal with them so the arrangement is not caught? Or is it also about the kind of BEHAVIOUR around a contract which may mean, for example, that an operator has the advantage of being first or may even have potentially taken steps to block competitor content deals in other ways,” explains Todd. “The legislation has not yet been tested to say how far it affects these other factors and the WAY in which negotiations were done.
Elle Todd, I believe, has hit the nail on the head. Case in point, StarHub’s latest attempt at acquiring BPL rights (post SingTel) had apparently been thwarted. “We are surprised that FA Premier League (FAPL) did not conduct a tender for Singapore, departing from all past practice,” asserts StarHub. As of press time, some reports are that the FAPL had declined to negotiate with StarHub, thereby giving SingTel, if you will, an invisible cloak of exclusivity for what is still a non-exclusive deal.
Editor: As at December 10, 2012, MDA has responded to Television Asia Plus with their take on non-exclusive deals with seemingly “exclusive” properties.
“The cross-carriage regulation cannot be circumvented by ‘non-exclusive-but-actually-exclusive’ deals. MDA takes allegations of such
deals very seriously and we will thoroughly investigate all such claims,” Kai Ling Toh, Director for Policy, Media Development Authority.
Cross Carriage Rule:
On October 10, 2012, SingTel, one of two operators in Singapore’s pay-TV duopoly, announced that it has renewed broadcast rights to the Barclays Premier League (BPL) matches for the next three seasons commencing August 2013, repeating its winning streak over rival StarHub who last lost to SingTel in 2009. While the 2009 acquisition was exclusive, SingTel surprised everyone this time by going non-exclusive, paving the way for rival StarHub to secure for itself the much sought-after broadcast rights for its subscribers.
Problem #1: StarHub never had a chance to bid – it claims it was bypassed in the bidding process. At press time, not only has StarHub NOT secured BPL rights, it claimed that FAPL has not yet opened the door for discussions.
Problem #2: Local regulator MDA’s “Cross Carriage Rule”, which compels operators who secure exclusive content to “cross carry” on the competitor’s platform, does not kick in here, and StarHub subscribers are left wondering if they need a second set-top box from SingTel just to catch their favourite football matches – the very situation that the rule had sought to eliminate in the first place.
Problem #3: The effectiveness of MDA’s Cross Carriage Rule is now called into question.
I’ll like to point out here that in the early days of debate, organisations such as CASBAA had raised its concerns. In a letter to the MDA dated April 2011, CASBAA put it most aptly:
“Non-exclusive” does not mean “effectively available on all platforms,” however, as there is no indication that all relevant platforms really have the desire or the commercial strategy to acquire all content. We warn (as we have from the beginning) that this outcome will not please consumers, who will find themselves told “no, you cannot really get all of Platform A’s content through Platform B’s box.” The risk of unmet expectations and consumer complaints remains very high. – John Medeiros, CASBAA
Simply replace the above words “Platform A” with “SingTel” and “Platform B” with “StarHub” and you’d agree with me that CASBAA had given us a crystal ball way back then.
As of press time, StarHub has declined my request for an interview.
Editor: As at December 5, 2012, StarHub has agreed to issue a statement. Below is a response from Ms Jeannie Ong, Head of Corporate Communications & Investor Relations, StarHub.
“We are in a surreal position where our competitor has circumvented the cross-carriage rule by obtaining exclusive access to speak with the FAPL (rights owner of the BPL) for an unspecified period. Our main concern is our customers – we remain keen to have the content back on our platform at a reasonable price. We are closely monitoring the situation and have raised the matter with the regulatory body.”
A SingTel spokesperson has responded with the following: “When we entered the pay-TV market, we were ready to compete in a market without exclusive contracts.
We rallied the government to review exclusive content arrangements as we felt it gave the incumbent an unfair advantage in the market as incoming players had less in the content basket to choose from. The regulator chose not to intervene at that time. We believe the cross carriage rule has helped to level the playing field and allowed us access to content that can improve and expand the TV experience for our subscribers.”
SingTel’s willingness to go non-exclusive does parallel its latest move, but it might also be indicative that just as a non-exclusive deal can take on “exclusive” qualities, the reverse can also be true, especially so in a scenario of mandatory cross carriage. What then, is the impetus to securing content on an exclusive basis? If there is no such impetus, and exclusive deals are diminished, it remains to how then will the cross carriage rule protect the interests of the consumer with no voluntary take up of non-exclusive deals by both operators.
MDA’s reply to TV ASIA Plus, is an optimistic one, stating that “when judged in terms of its stated objectives (listed below), cross-carriage is achieving its intended outcome.”
One objective was to rectify “the high degree of content fragmentation in the Singapore pay-TV market”, and MDA highlights that:
“More channels are now available to consumers across multiple retailer platforms. Prior to the introduction of the cross-carriage measure in 2010, only seven channels were common to both pay TV platforms. Today, there are 42 common channels. Also, the number of subscribers has also increased from 694,000 in 2009 to more than 900,000, and this is reflective of a growing and more vibrant pay-TV market.”
SingTel and StarHub’s channel offerings are indeed looking more similar than before, but there is little conclusive evidence of that being a direct result of the rule.
Another objective of the rule was to “shift the focus of competition from an exclusivity-centric strategy to other aspects such as service differentiation and competitive packaging.” MDA says:
“We are also starting to see new subscription options from pay-TV operators. For example, all consumers, including non pay-TV consumers, were able to purchase Euro 2012, the first piece of exclusive content acquired under the cross-carriage regime, on an ala carte basis for the first time without the need for a basic subscription. SingTel mio TV subscribers were able to subscribe to the tournament and watch it via their mio set-top box even though StarHub was the exclusive rights holder.”
While the cross carriage rule was indeed a direct deterrent to bundling, hence the option of ala carte deals to the consumers’ benefit, unbundling is not always beneficial. When bundled properly, some channels/ content can be acquired cheaper as a whole than the sum of its parts, thereby benefitting consumers. Pay operators who acquire exclusive content find it daunting to bundle, as the entire group within the bundle must be made available under the cross carriage rule.
“On the industry front, it is also encouraging to see pay-TV operators striving for service differentiation. For example, both SingTel and StarHub are now offering their customers value-added services such as mobile and Internet TV.” – MDA
In an age of multi-screen viewing coupled with a high level of connectivity in Singapore, it’s not unthinkable that the operators’ moves are prompted more by consumer behaviour rather than the regulator’s intervention.
Relooking the cross carriage rule?
While MDA has not indicated a need to amend the rule, it has scheduled to review the Media Market Conduct Code (MMCC) in 2013 of which the cross carriage rule will be addressed.
On the issue of BPL rights, MDA prefers to allow commercial dealings to run their course, stating that “content acquisition decisions are left to the business considerations of the pay-TV operators. Likewise, MDA does not interfere with pay-TV operators’ existing channel bundling strategies. Pay-TV operators can decide on the best commercial model and price points…”
CASBAA, back in its April 2011 letter, had already given us another “crystal ball” moment when it said “MDA has left it to the pay-TV platform operators to sort out the mess, and this is what it means when it says ‘Industry players are free to decide on the commercial model…’”
An “Open Access” system?
In the early stages of consultation and debate, CASBAA has proposed what it calls an “Open Access” system as a possible alternative, where cross carriage is by regulation permitted across platforms but not mandatory as in the case of the current rule. CASBAA says that “the key to any such system is that it is consensual – a content owner and/or supplying platform would have to consent to crosscarriage – and they would have an incentive to do so from the additional audience that could be accessed.”
MDA’s reply: “We studied several approaches back in 2009 but eventually decided that the cross-carriage measure best addressed the content fragmentation in the local pay- TV sector. Then, we had viewed that the Open Access approach, in isolation, would not address MDA’s concerns on content fragmentation, nor meet the policy objectives. Given the existing market dynamics, it is doubtful that pay TV retailers would voluntarily take up such an option to cross-carry exclusive content.”
Still, the same argument arises for the current cross carriage rule also does not guarantee voluntary take up of premium content just because they’ve been made nonexclusive.
Some “realities” to consider:
1. The Singaporean consumer is still asking about whether he/ she has to acquire a new pay subscription and the cumbersome set-top box should a similar situation arise.
2. Consumers question if the increased licence fee paid for premium sports content would be passed to them.
3. Consumers in Singapore recognise the availability of alternative sources of premium content (legitimate or otherwise); this reality very likely to draw consumers away from both operators. I raise this in light of Singapore having one of the highest content piracy rates in Asia as well as the known fact that FTA signals have been known to “spill over” from neighbouring territories.
Tilted Playing Field?
On the issue of more choices, CASBAA, in its October 2012 entitled A Tilted Playing Field, highlights the OTT phenomenon that can potentially provide consumers with alternatives to premium content, but with a major dichotomy:
“A video stream, delivered over a traditional, regulated pay-TV network, is subject to numerous constraints, burdens and requirements – many of which are holdovers from legacy ‘broadcasting’ regulatory approaches – while the identical video stream, delivered ‘over-the-top’, is much more lightly regulated. Lower taxation, lighter content regulation, fewer constraints on business models (eg. advertising), and of course weak or non-existent intellectual property protection are all features of the OTT video environment in most Asian markets,” and CASBAA is not even talking about the illegitimate online providers!
Todd from Olswang Asia agrees.
“There is some criticism over the precise wording used in the Cross Carriage Rule (which leaves some debate over its scope) but MDA’s intention was that it did not apply to mobile or internet platforms. So that’s an issue,” says Todd. “If you’re an online provider you could do an exclusive deal and therefore still block consumers from obtaining the content from others.’ This tilted playing field that CASBAA has highlighted means the regulatory environment is harder on domestic cable and IPTV providers than OTT providers and leaves them at a competitive disadvantage.”
It should be noted that CASBAA has not singled out any territory within Asia; many if not all share the same phenomenon, but in Singapore, surely the problem has been compounded by the existence of the cross carriage rule. Cord-shaving, or cord-cutting then, currently thought of as not a huge threat as previously perceived, might potentially become a problem here.
Media regulation – does the consumer care?
Unfortunately, the truth is, few Singaporeans know about how sports content deals work, nor care. Not many appreciate that licence fees for broadcast rights of live sports events are increasing year on year. For a very demanding nation plague with rising costs, the reality that prices for live sports events will increase simply does not and will not draw any sympathy from the consumer. All eyes are on StarHub now and how it might move to secure BPL rights to appease consumers. All eyes are also on MDA and what its next move holds for the future of cross-carriage in Singapore.
TV ASIA Plus thanks Ms. Kai Ling Toh, Director for Policy, Media Development Authority, for her responses on behalf of MDA; Elle Todd for her legal perspective; as well as Tricia Lee, Senior Manager – Corporate Comms – SG Business, for coordinating the responses on behalf of SingTel; and Ms Jeannie Ong, Head of Corporate Communications & Investor Relations, StarHub for providing additional quotes on December 5, 2012.