CONTENT CROSS-CARRIAGE INITIATIVE FOR PAY TELEVISION

CONTENT CROSS-CARRIAGE INITIATIVE FOR PAY TELEVISION:

(Progress): 12.

Mr Zaqy Mohamad asked the Minister for Information, Communications and the Arts (a) what is the progress of the Ministry's content cross-carriage initiative for pay-television; (b) what are the Ministry's projections on the cost benefits to consumers; (c) whether the Ministry can share how it plans to address the industry's concerns on this initiative going against free trade; and (d) whether the investigations on service providers who inked long-term contracts to avoid cross-carriage regulations in the short term has concluded and, if so, what were the findings.

RAdm [NS] Lui Tuck Yew: Mr Speaker, Sir, I thank the Member of Parliament for his question on Media Development Authority’s cross-carriage initiative. I will first revisit the rationale for introducing this initiative and provide an update on the developments.

The mandatory cross-carriage measure – which I shall refer to as the Measure in short – was effected on 12th March 2010 to address the severe degree of content fragmentation in the Singapore pay TV market, with most pay TV channels signed up on an exclusive basis by pay TV retailers. Such a situation resulted in increased inconvenience and attendant costs for consumers as well as significant barriers to entry for new entrants.

Since 12th March 2010, the Media Development Authority (MDA) has conducted two consultations to seek

Column: 2208

feedback from the industry and to address their concerns on the implementation details of this Measure. In taking due care to address these concerns, MDA will be launching a third round of consultation in early 2011 before implementing active cross carriage by the first half of this year. MDA continues to engage stakeholders on this issue and will carefully consider all feedback in developing its policy and implementation positions for the Measure.

With regard to the benefits from the Measure, consumers can expect to enjoy a wider choice of content without the inconvenience of having to switch set-top boxes and re-wire their TVs each time exclusive content changes hand. Various academics and analysts have expressed their belief that the Measure would positively impact the pay TV market and generate net gains for consumers as well as the industry. MDA has also engaged external consultants to conduct two economic modelling assessments, both of which concluded that content providers and retailers would benefit from a wider distribution of their content. With the Measure in place, we expect to have an even more vibrant pay TV market with more choices and convenience for the consumers.

MDA has been in close contact and consultation with the industry since the announcement of the Measure. Some content providers were concerned that the Measure would force them to sell content to parties that they were not willing to contract with, or in a format that would have compromised their intellectual property rights protection, or a requirement to unbundle their channels. This is a misunderstanding which requires some clarification.

The Measure does not in any way prohibit local pay TV retailers from entering into exclusive arrangements with content providers. Neither does it require

Column: 2209

the exclusive licensee to sub-license or resell the exclusive content to other pay TV retailers. In addition, the Measure is designed to apply to content agreements in a prospective manner, and continues to provide retailers and content providers with the commercial flexibility to bundle or package content in ways that best meet consumer needs. MDA has clarified this in its subsequent consultations, and will continue to do so with the industry as necessary. I would like to assure Members that Singapore is fully committed to its obligations in intellectual property treaties and other international agreements, and that two external legal firms engaged by MDA had both advised that the Measure is not in breach of any of our obligations.

With regard to pay TV retailers who entered into long-term exclusive content arrangements before the Measure was effected, I understand that MDA had examined specific content agreements to assess if there were any evidence of misconduct. Upon careful review of the available information and evidence, MDA has decided that there is insufficient evidence to warrant any formal action. However, the retailers have now received clear warning that MDA will be looking closely at their exclusive arrangements in the future, and that there will be serious consequences if they are found to have flouted the Measure.

We believe the cross-carriage initiative will benefit both consumers and the industry. However, the full benefits will only come about in the longer term, as existing contracts expire and new exclusive contracts, if any, come under this Measure. MDA will work closely with the industry to effect a smooth implementation of the initiative to realise these benefits.

Mr Zaqy Mohamad: May I ask the Minister what is the assessment of the risk that content providers will exit the

Column: 2210

Singapore market, given that we are too small a market to consider for cross carriage? Second supplementary question, what is the Ministry's opinion that cross carriage may discourage media service providers from generating their own content or working with production houses to package and bundle content?

RAdm [NS] Lui Tuck Yew: On the first question on the risk that they will exit the market, we worked with a wide range of companies that have been in the Singapore market for a number of years and even though our market is a very small one, they have decided to operate out of Singapore and have established their regional headquarters here to serve the larger Asian market. The relationship we have with many of them, we believe, is a robust one.

The Member's second question really deals with content arrangements. We believe that with the Measure in place, pay TV retailers in future will compete not on signing exclusive arrangements to package content for their customers only but devote more resources and time to service improvements as well as to creating and packaging more content for their channels.