Sunday, October 04, 2009

EPL Rights : Bad Competition!

The football fans in my office have been complaining non-stop since SingTel won the rights to broadcast EPL matches. Most Singaporeans have Starhub cable and if they want to watch soccer have to fork out another sum to subscribe to SingTel's mio TV. I have both mio and Starhub because SingTel offered me a free 6 month mio subscription when signed up for their broadband internet. I've not really watched anything on mio TV because my favorite channels are all on Starhub - History, Discovery, National Geographic and E!Entertainment. While I'm not a soccer fan, I'll scream if SingTel buys the rights to Discovery. You usually think that competition is good so how did we end up worse off when it comes to the EPL?....

The reason is both Starhub and SingTel were competing to be a monopoly for EPL broadcast. They were in a bidding war that can only result in a lousy deal for consumers. They will bid the highest possible fees based on how much die-hard soccer fans are willing to pay for their soccer fix. In this case, competition drives up the price because Starhub and SingTel cannot offer the same product since these rights are exclusive. The EPL guys know this is the best way to make the most money. Soccer fans caught in this and cannot afford it either have to give up watching soccer (which I'm told is nearly impossible) or break the law. They can get to watch EPL free if they are willing to resort to piracy. Thanks to the mainland Chinese, many of whom have little respect for copyright, there is software like TVAnts that allows you to watch soccer on your PC. You should always obey the law in Singapore but understand that laws do not always result in fairness and justice - there is ongoing debate whether copyright and patent laws have led to monopolistic profiteering behavior that is harmful for society. The 3rd largest political party in Sweden is the Pirate Party which wants the govt to reform the copyright&patent laws to make them fairer.

In 2007-2008, Temasek sold off our power stations through auctions. It was explained to the public that this is for our own good because it will result in greater competition[Link]. Yet we see our electricity tariffs rising gain[Link]. There will never be real competition to drive down prices because each of these power stations have limited capacity and cannot expand market share by offering lower prices. The power stations were sold to profit seeking foreign entities who offered the highest prices for these stations. They would like to recoup the billions they invested from Singaporean households. That they purchased our power stations, shows that the electricity tariffs Singaporeans pay generate attractive handsome profits for these companies.

Competition is not always real or good especially companies involved cannot offer the same products or when they cannot increase their supply of the product to gain market share by driving down price. This brings me to the bigger topic of housing in Singapore....which is a hot topic given how HDB prices have risen. Land is limited in Singapore. It is sold by URA through auctions. Developers bid for these land parcels very much like how SingTel bidded for the EPL rights. Just like the soccer fan needs his soccer fix, people will need a roof over their heads so the demand is relatively inelastic ....people are willing to pay anywhere between 20-60% of their income - if it goes higher, they will find alternatives like staying with their parents etc. As the population size increases, so does the demand and level of desperation for housing. URA is like the owners of EPL - to maximise revenue from these land sales they more developers to bid so that price of land goes up. If we only have private housing, and no public housing life in Singapore will be miserable - we will all be slaves housing and a large number will be destitute because they cannot afford it....private developers will never build rental or low cost housing. The places where a purely private housing market can work is where the cost of land is so cheap that the cost of a house is roughly the cost of building a house....if you're poor you build your own house which was what some people did in the 60s when the Singapore population was 1.5M and land was plentiful. Public housing exists to stop us from turning into 'slaves'. The more of our income we pay for housing, the more enslaved we become to housing loans and have less of our income on other things in life. For this reason public housing should be priced at a certain level of our income - if income grows by 10%, public housing should go up by 10%....any more translates to a lower quality of life. As long as the price rise roughly reflects the increase in income, linking HDB prices to resale market helps to take care of other things like price differentiation due to location and other intangible factors like jobs security which leads to people willing to take up slightly higher loans. The whole situation deteriorated due to the large influx of people and ballooning of income gap. When you have demand for a scarce but essential resource from a very unequal income distribution, the result is a lot of misery....rising poverty and poorer living conditions for many people. If you can, you fix the income gap and slow the influx of people....but if you can't and don't do that, you have to start supporting the people who have fallen due no fault of their own (the victims of govt policy!) by supplying cheaper housing - something that this govt has failed to do. There is plenty of anger going around as people begin to understand that all that we are seeing the consequences of govt policies and the system they put in place....are we better off today than we were 15 years ago?


Anonymous said...

Mr Tan,

Like you, my favourite channels are the news, discovery, nat geog, history.. We did have the sports (soccer) channel as well as my son and I did watch them on and off.

When Starhub raise the fees for sports channel, we simply GAVE UP the sports channel and cured our sports fix...

Lets all stop the sports channel and teach Singtel a lesson...

Anonymous said...

I have been watching Switzerland travel videos (wanted to see what I was promised years ago) and was aghast at the difference. PAP has not fulfilled any of its electoral promises. What we have now is a government is seems incapable of surviving and making profits out there in the world. Instead it turns inward to leech singaporeans to pay for everything (their huge losses, multi-million salaries, F1 even votes to suck up to foreigners, muscling into proftable sector and edging out private entrepeurship etc). Complete manipulation of the press to twist facts, deceptive statistics and a "not my problem" and "I don't have to account to you" attitude. They continue to self proclaim themselves talent when actually going by their performance, they are as trashy as the FTs that they import. They go as far as to dilute the local population in order to garner more votes from 3rd world foreign imports turned singaporeans. Honestly I am aghast to see what singapore has become. The human engineering here is almost the scale of Auschwitz. Singaporeans are being suffocated and drowned into oblivion and silenced by the lack of news coverage and truthful reporting. We are a nation, sorry company that is sinking day by day. I think in the end, like all cities that thrive, we will fall under PAP. Our economical model is non-existent, our manufacturing sector is dying, we obtain surreal profits by inwards speculating and our cultural identity is lost. Any one can build buildings. But to have a soul as a people is what attracts people to live and make a better life here. In the end we may end up becoming a shell, a facade, a seven-eleven for the world and as hollow as the words that PAP says.

DanielXX said...

Very good insight on the housing situation and illuminating comparison on EPL and URA -- both monopoly suppliers of a critical resource.

And when the people controlling this resource decide to squeeze their customers, the result will be passed down the line to the end customer, especially if demand is inelastic.

I can do without EPL, and I don't plan to subscribe to Singtel mio just for it. I think those two idiot companies have just shown how Singapore GLCs simply don't have the acumen to compete overseas (look how they get squeezed by EPL in a red ocean strategy) and can only thrive in a domestic protected market.

But housing is far more important and strategic. If ppl cannot get affordable housing, there's a host of social problems like delayed marriages, financial difficulties due to overcommitment etc. In my view, the best way to stop a bubble is to crush it and overdo the crushing so that one generation of speculators remember it for life. Another way is to separate the true homebuyers (who will stay in it) from the "investors" (buy for investment). The demand from the latter is more elastic, and should be controlled using price-related measures such as capital gain taxes and rental taxes.

Anonymous said...

fake compeitions, left hand vs right hand.

they would definitely want to max out their profit and the only loser will be the consumer.

I am not a subscriber of both of them, because the day mio was launch, i already know that they will split up the channels to make sure you will end up subsribing to both.

Anonymous said...

This is a good write up on public housing which is why I felt that our efforts here will come to waste as they hold the ultimate trump card - HDB flats.

Think about it, with high HDB flats, even before recent price hikes, can only be sold higher when people retire more than 20 years later, when there are more people around.

Simple supply and demand concepts will tells you that without 6.5 millions "foreign talents and PRs", prices of HDB flats are going to drop decades from now, especially now is unlike 20 years ago, when price is only 8 times annual salary but many times.

It takes time from real and nominal wages of average Singaporeans to go up.

Assets enhancements may well be what they intended and not a mistake, so that they can use HDB flats to hold us ransom to votes.

When you vote opposition, NO 6.5 millions "foreign talents and PRs", no one or many is going to buy your HDB flats when you retire.

But when you vote PAP, fuck things as mentioned here in this and other social-political blogs will continue.

Not to mention reverse mortgage, the recent ongoing court case shows that it is very depend on market prices, hence, those senior citizens who subscribe to it will have to vote for "6.5 millions foreign talents and PRs" in order to sustain the high prices. Like that can also buy votes from senior citizens.

Extending the idea of estate upgrading.

Parka said...

This is a classic case of a Prisoner's Dilemma at work, in Economics.

I posted similar writeup few days ago, with a drawn up chart.

Singtel Starhub EPL Prisoner's Dilemma

Anonymous said...

I only interesting in surfing internet and blogs, no interest in EPL, sports, discovery, movies etc.

So I am not affected by all this and also don't feel deprived.

Anonymous said...

If you ask me, the problem really come about because of HDB cut the supply of HDB flat so drastically while the spore govt flood spore with FTs.

Anonymous said...

I would like to think that the government did not foresee the problems beyond the bend on their effort to charge up the local economy. Asset enhancements, as their argument goes, will not make our lives better. We need a home to go back to at the end of a day at work. It wont matter if my 5 room HDB is now worth 550k, as I have no intention of selling it off. Well, if I ever do, it will because I plan to leave my own country for another. But in the process of a squeeze on the pricing of the basic needs, the social cost to our future is devastating.

Thanks once again for a compelling argument.

Astro said...

I lived in malaysia, and its a good thing we only got one cable channel provider - Astro, so no worries about switching from one company to another due to changes in broadcasting rights. Furthermore, Astro charge reasonable & affordable price for their channels.

Anonymous said...

To Anon 4/10/09 09:44

I have to agree with you and all that Lucky is emphasizing. The truth is that there is no "competition" despite having 2 or more companies offering similar services. At the end of the day, all they want is to milk Singaporeans as much as they can bear. So the middle-class bears the brunt of this policy and the lower middle-class do without whilst the poor has to suffer more. There is actually no such thing as a healthy competition and has anyone observed Singtel or Starhub ever been in the red?

As for the other anons, if you analyse this article it is not so much about being deprived watching TV programs. It is more about the obscenity of making profits from residents based on false premises that competition exists amongst telcos, power supply companies etc.

Anonymous said...

Ten years ago I was sitting in my HDB wondering with most families financing HDB purchases out of CPF coupled with an ageing population, how is anyone going to cash out his HDB for retirement. Given the current HDB prices and average income for most families, most will have near zero CPF ordinary account balance and a fully paid up (hopefully) HDB at retirement. With an ageing population there will be more sellers than buyers then. Those planning to cash out their HDBs will not get back as much as they think they will.

Little that I know that our highly talented government had it all figured out. Bring in hordes of foreigners to prop up the HDB values. So those of you looking to retire in the next ten year, please look at you CPF ordinary account balance and other liquid assets. If you don't have much, then the influx of foreigners is probably your blessing in disguise.

Of course every course of action has its consequences and this is where the million dollar salaries we pay the ministers come in. At the moment I don't see my taxes being put to work. Either they have no solution (long term) or they are holding their cards close to their chests. I hope it's the latter.

Anonymous said...

i read from ah neh (foreign "talent") in State Times telling soccer fans to "bite the bullet" & pay up. He even provide the Singtel's telephone nos. to subscribe...sigh

Even the Sport Hub - their editor wrote that nobody is to be blame for the current delay...sigh

WL said...

Government should decide what starhub and singtel could provide and in this case, Singapore would ultimately benefit. That is the role of Government.

Anonymous said...

be careful what you wish for... remember we used to have channel 8 and channel u. then ah goh came along and said that singapore is too small to have both media companies and forced a merger.

well well well, for all you know this epl might be an engineered precursor to the merger of both telco. then singaporeans will really yin xiao shi dai.

i vote that we'll simply bite the bullet and refrain from watching epl. that will teach singtel a lesson that they had miscalculated on the elasticity of the demand.

Anonymous said...

This brings me back to 2006 just before the FIFA World Cup finals. All of a sudden, tv signals from Malaysian free-to-air channels were blocked. Then Starhub jacked up the subs for Sports channels. There were many people who were upset but in the end they were simply "forced" to sign up to Starhub to watch the matches. This latest change of event is simply karma. Unfortunately, the losers are the football fans. Personally, I think Singapore Pools which made so much money from football betting should sponsor all the betted games for free! Only in my dreams I guess.

Anonymous said...

>>Thanks to the mainland Chinese, many of whom have little respect for copyright, there is software like TVAnts that allows you to watch soccer on your PC.<<

Though I enjoy reading what you wrote, but I have to point out that it is wrong to only single out TVAnts because they are from China, as there are other P2P broadcast like SOPCast, PPLive, TVUPlayer.. and streaming broadcast site like UStream, and thanks to them, I do not have to be done in by our local MONOPOLY disguising as competition.

Anonymous said...

Hey Ah Kong says they will intervene rite?

Come on lah ... erection coming and the folks need their opium.

Stanley Yang said...

Don't really understand what is the fuss about.

The state controlled media such as THE NEW PAPER sells 'soccer' to its readers in order to depoliticize them and distract them from issues that matters.

The state controlled telco Singtel then monopolizes this 'soccer' and jacks up the price.

Come on, my dear EPL fans. Start paying attention to issues that matter. Even Nor Alam Shah is sick of the S-League and has since left.

Are you not disgusted that the state controlled media and the thought police manipulates your passion? You will be socially engineered to be a 'soccer analyst' and when some one asks you about local issues, you utter words such as "Theater of Dreams" or "YOu will never walk alone"

reene said...

Don't forget... Both Starhub & Singtel belong to Temasek Holdings. All same umbrella la. No difference. Money still goes back to the same pocket.

Anonymous said...



















喝酒 said...

Quite worthwhile info, thank you for the article.

sexshop said...

Quite effective info, thank you for the post.