Boxed-in

Singapore is the latest to face the problem that is technically referred to as ‘conditional access’, meaning the conditions that apply to allow someone to access their favourite TV show. Free-to-air, no problem. Want a single cable TV or IPTV subscription, no problem, as long as you pay for it. But want both cable TV and IPTV, or two cable TV’s or two IPTVs, big problem. Consumers don’t like having to install and pay for two STBs, especially if they really only want to watch one program on the rival network, such as English Premier League (EPL) soccer.

When SingTel outbid StarHub to grab the exclusive rights to broadcast EPL (or BPL, after its Barclay’s Bank sponsor) they paid through the nose for it. StarHub likely under-estimated how much of a loss-leader SingTel were prepared to gamble on, and has suffered for it. SingTel’s success looks like a winner’s curse though, and has left it with little cash to bid for the rights to broadcast the World Cup – which has threatened to turn into a national embarrassment for Singapore and a major upset for soccer fans.

These are classic dilemmas of a free market, but a regulator has some options to placate public pressure. One solution, never implemented because it is widely perceived as being anti-market and anti-innovation, is to mandate a standard STB, or at least a STB standard so they become inter-operable. Dominant players tend to like the idea, weaker players don’t. Either way, Singapore’s version is in the pipeline.

The alternative that has been widely used in different contexts is a ‘must carry’ rule (or in Singapore’s case, a ‘can carry’ rule) whereby competing networks must (or have the right to) carry certain programs of their rivals. This usually refers to free-to-air programs that must also be offered over cable networks, but in Singapore’s case the MDA has  extended the rule to commercial programmes under exclusive contract –it is not entirely clear whether this applies to all such programming irrespective of the size of the market for a given show -, but not retrospectively.

What this means is that the EPL will remain exclusive to SingTel until 2013; but if SingTel sign a contract to show the World Cup, StarHub or any other network could buy the right to show it as well. if they saw a commercial advantage (or public pressure demanded it). So an EPL fan who prefers the programmes on StarHub’s cable TV will still have to live with two STBs, at least till 2013, after which one of the two networks can be discontinued. Hopefully.

And by 2013 there will be further choices because the NBN will be up and running, and presumably so will other service providers. And there comes the final twist to the story! Nucleus Connect, which will operate the NBN’s wholesale business, are reported to be thinking of their own, single STB through which all their service retailers can provide conditional access – a third-party market solution that would imply service differentiation no longer resides in the network. If content deals are exclusive to service providers, but non-exclusive to access networks, then what is the business model? Will competing service providers be able to turn a ‘bread and crumbs’ model into ‘bread and roses’ one? And for consumers, will conditional access turn into unconditional bliss?  Keep watching, the show is about to begin.

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