Even before soccer’s biggest show – the FIFA World Cup – has even started, the public is already divided. The facebook group lobbying for the boycott of Singtel-Starhub world cup packages has gathered storm over the past week and, surely, this is no mere rhetoric because succumbing to the high prices will only prove that Edward Ying is right. He infamously said, Singaporeans have an insatiable appetite for football and will pay the price. Whilst he meant this literally (i.e. subscribers will pay more fees), there is a figurative element to it as, to concur with this increase simply sets the precedent for the escalation of prices in future – unless we rethink our market system. Thus, this unsavoury predicament is no longer just about the 2010 World Cup, but the duopoly market system now lay bare.
So, how did things culminate to this extent in the first place? Why did the conventional wisdom of market liberalisation fail to bring about the benefits of competition for the consumer dollar?
Well, it all began with the bidding for the English Premier League (EPL) broadcasting rights between the two telcos. While Singtel refused to disclose its bid for the rights, the fact that the bidding was concluded within one round can only imply that it must have had a large winning margin. And since Starhub‘s hefty bid was $250 million in 2007, analysts had speculated the 2010 bid by Singtel to be about $300 to $400 million.
Even though Singtel has offered an affordable subscription price of $23 for now, the contracts for this package are only up till 2011. It is rather evident that consumers are likely to shoulder the initial losses Singtel would have incurred for the first year of ‘affordable subscription – by way of an upward revision in prices.
In any case, the governing body of international soccer, Fédération Internationale de Football Association (FIFA), seeing the two teleco giants fight tooth and nail, has exploited their willingness to pay exorbitant prices by jacking up the price so high that neither telecos could in essence pay for it. But as a cosmopolitan self-proclaimed first-world country, the notion of Singapore being relegated to the sidelines in the broadcasting of the 2010 World Cup is preposterous. So, as the ‘kiasu‘ syndrome eventually kicked in, the government decided to act – albeit, very belatedly. At the very least, by preventing exclusive carrier content, the government has forestalled any similar outbidding exercise as with the EPL broadcasting rights.
But there is a pervading question – is Singapore ill-suited for a duopoly system? In fact, the topic of the extent to which market liberalisation should occur has emerged frequently since the middle of 2000′s, and this question is precisely the reason why this World Cup fiasco should be taken seriously.
With regard to the viability of a duopoly – where two companies hold major shares in the market, the first few years when SBS Transit started operating the North-East Line (NEL) and SMRT took on bus routes is telling. The promise of competitive pricing was impeccably fraudulent as while each company diverted resources to secondary markets it was unfamiliar with, it still monopolised its share over its core area. This unique model of duopoly in the public transport system still gave them the free reign over their respective turfs.
In another form of duopoly at work, Starhub used to have exclusivities over the sports channels available but Singtel’s recent coup has led to uncertainties on its pricing for the forthcoming EPL season – which was even before the ridiculous pricing for the world cup packages were revealed. No doubt, the only certainty is that the fight for leverage over certain programs is at its worst right now.
The point though is that by simplifying the market mechanisms without considering the nature of the goods is bound to ultimately victimise the consumers. A duopoly system only works insofar as appropriate government regulation is undertaken as to harness public goods, a free market cannot be left to its own devices. The problems that America’s economy is facing are manifestations of the exigencies of such self-regulating behaviour. In this particular case, the additional actor – FIFA – complicates the situation, and its opportunistic exploitation of the loophole in the system would be the first of many to come – unless appropriate government regulation takes place.
Most unacceptable of all to many is Singtel’s arrogant statement, through its chief of content and media services, Edward Ying, that “it’s only $1, less than 1 cup of coffee, I think they can afford it”. As John Chua, creator of the aforementioned facebook group, says, “Their greed is evident for all to see. Starhub and Singtel are clearly going to recover a lot of whatever amount that they paid for the rights with advertising/sponsorships and the $1888-$28888 that they are charging per TV in public outlets. I certainly don’t see any reason to give in and reward them for these sorts of behaviours since there are plenty of others ways to catch the world cup without signing up.”
One industry analyst from consultancy firm Frost & Sullivan also adds, “The EPL bidding war had a knock-on effect on the costs of the World Cup broadcast rights.” However, the telecos’ image conflates into a deteriorating one of arrogance and greed as they repeatedly deny that the high prices are due to a spill over effect from the EPL outbidding.
For now though, consumers can choose to grit their teeth and burn a hole in their pockets (yet again) but this will be at the risk of the perpetuation of similar blatant exploitation – because it will always be “only $1, less than 1 cup of coffee, Iink they can afford it”. Or, we can, for once, say enough is enough and take the road less travelled (in Singapore, at least) for once – boycott. Surely this is the wiser choice as the losses will not only be Singtel’s and Starhub‘s but for Temasak Holdings as a whole (since it is a major stakeholder in both companies). It is clear that the government has already realised the need to regulate the markets – from the decision to disallow exclusive carrier content in March – but the boycott would nevertheless drill the point through that consumers cannot be held ransom to ridiculous pricing, and that there are limits to abusing the willingness of fans to fork out a premium for their passion.
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By Tng Ying Hui
Images courtesy of the facebook group Mass Boycott Starhub/Singtel Overpriced World Cup Package
The group presently counts 18,815 fans and continues to grow exponentially
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Inevitably there will be some idiots or singhub agents coming here to call non-subscribers cheapskate. So let us make it loud and clear from the start that this is not about the money.
We CAN afford it.
But
We REFUSE to be exploited by greedy corporations who beg for consumer support by turn in obscene profits every quarter.
We REFUSE to pay for THEIR mistakes.
We REFUSE to contribute a single cent to the fat salary of people like Edward Ying.
This is a big middle finger to rich corporate elites who think they can continue to screw consumers over.
Nothing more, nothing less.
Its a Wayang btw 2 Telcos -their Main Boss remains the same VERY ONE -n who is the BOSS related to? Daft once ,nvr be called Daft twice. No wonder Dr Goh did not want to get his hands “dirtied”.
For once show these two telcos that football fans mean business by having a mass boycott to teach them a lesson.
See whether they can break even.
Don’t you have anything to say, Mr sport minister?
@Deadmice
“Are you from Al-Jazzera? Sorry, no comments. I only speak to MediaCorpse,” says Mr Sports Minister.
Time to reduce my addiction with soccer.. Spend more time with wife and kids… :)
Hi Ying Hui,
Many thanks for a well written piece that I stronger agree to.
However, I feel the article does not really talk about Fifa stance in this whole incident.
Granted… Fifa did make use a loophole in our system to overcharge us… they themselves are no angels… but I believe they do have their set of agenda and principles.
I am not really sure whether Fifa is practising “income redistribution” or not, but they do provide free World Cup telecast to many African nations for free.
In fact, in Fifa’s own words, they awarded the TV rights to the Nigerian Media Co to ensure that to ensure that “the Nigerian people will have access to free television and radio coverage of the 2010 FIFA World Cup”.
http://www.fifa.com/worldcup/organisation/media/newsid=959168/index.html
On top of that, Aussie only pays 25mil for next 2 WC, US pays 100 mil for the next 2 WC, and where FIFA only earns around 3.74Bil for 200 over countries (avg 15 mil per country).
http://news.ninemsn.com.au/article.aspx?id=112552
http://www.cup2014.info/TVrights/TVrights.html
http://www.foxsports.com.au/story/0,8659,25363444-23215,00.html
There must be some reason why we are forced to pay ransom for the rights, and Fifa should really be more transparent on how they go about charging different nations.
However, the local media has very much painted Fifa in a very bad light as an entity that only care about profiteering which I think it is not the whole truth.
As Ying Hui suggested, the root of the problem lies nearer… our lack of active intervention by the authorities is a more likely reason.
The reality is that sports has become commercial. Complain all anyone wants but that’s a fact. If one thinks its expensive think of what UK people pay.
I already stopped watching years ago but still follow via internet/bbc radio. However, what I think telcos can do is to screen specific matches instead. Not everyone wants to watch all matches.
It is not a failure of duopoly in my view. Competition is good even for a small market like Singapore for things that are not that crucial like football tv. I agree that for public transportation it is completely useless as the race for profits is causing poor standards but that is for another time.
Ultimately it is gonna be supply-demand issue. For alot of people, football is like a passion and they will pay no matter what is the cost.
Broadcasters are first and foremost profit generating entities. So even if they manage to get the rights to broadcast at $1, what do you think they are gonna charge you? $1? Come on….
The fact is that football is an international marketing tool which explains the many sponsors and companies wanting to be associated with the event.
Regardless of it being World Cup, EPL, La Liga or whatever, it is about the money first and sports second. Even FIFA the world governing body is constantly mired with politics and nonsense.
I think we need to understand that football is NOT more important than life….spend time with your families and kicking a ball with your kids is better entertainment.
What I find amusing always is that people can rattle off the matches and players of their favorite teams according to who won the league the year before…
I used to watch football and even before the price hikes and have sice stopped, I have decided that I am never going to be as devoted to the Reds as someone growing up in merseyside. Similarly, when we have programs like footballer’s cribs on tv, just gives you a look at where your hard earned money is going to….the Aston Martin….the 7 bedroom house…whatever….
It is good that the clowns are charging so much money for the World Cup….let’s take the time during the world cup to spend time with family and friends….let’s stop encouraging this madness of bigger and better.
Let the people who bought the rights to the World Cup & EPL and whatever, lose money and let’s go back to simplier pleasures in life.
Only when the mindset and consumption habits of the people change, then will this nonsense stop. Even if it does not stop, it wouldn’t matter to you anymore.
Team up and share a sub. Watching alone is boring. Say have 5 friends. 4 friends pay and 5th provides the place to watch. Drinks nuts share lol.
Ah yah forget all this ranting abt who to blame. Be pragmatic.
Hi mai cho gang,
thank you for your compliment (:
Firstly, I never did intend to write from the perspective of FIFA and hence my lack of a balanced discussion. Nevertheless, as you have agreed as well, this time round, FIFA did exploit the loophole in the system. But this, by all means, do not suggest that they are the sole culprit of this fiasco.
Secondly, I do not attempt to point fingers at anyone – be it the public, telecos, government or even FIFA. It is futile. this, however, does not mean that any of the actors should not bear responsibility. Simply put, the outcome, where we face the price hike, is a culmination of a) greed of the telecos, b) public’s apathy, c) the lack of intervention on the government’s part – and most likely, vested interest d) FIFA’s exploit.
Thirdly, well yes, the media has done a good job at shifting the blame instead of a call to action.
Hi Ja,
In relativity, the failure of a duopoly in the telecoms sector isn’t as detrimental as in the public transport sector. One could easily argue that public transport is a necessity, a public good that deserves to be regulated stringently, but soccer isn’t.
But the fact of the matter is, in both cases, the promises of cheaper (and better) goods have been made futile – this is where the failure lies. My point is simply, why is this so?
I am not well versed in economics and would like to seek your opinion – or of anyone’s. Thank you (:
No need to complain, we can watch world cup online at http://worldcup.beep.com
The last time Singtel promoter came to my house and promote to me Serie A and Champion League on MIO TV. I said, to watch Serie A and Champion’s League, i have to subscribe to Singtel, EPL and La Liga on Starhub if i did not remember wrongly. Next time M1 comes in, i will need 3 boxes to watch the whole package. Then i was having Starhub SCV, after the contract expired, i return them the box Since then, i will make my way to coffeeshop when my favourite team is playing. So far so good. And if i m feeling lazy, then i will just catch it online, FREE OF CHARGE! I thought competitions is good for consumers? I mean since GST is for the poor. What the hell am i thinking?
I for one am convinced to boycott Singtel/Starhub world cup 2010 subscription.
It is not a matter of affordability.
It is an issue with GREED.
We Singaporeans should not be held ransom by any Telcos or FIFA.
I for one am convinced to boycott Singtel/Starhub world cup 2010 subscription.
It is not a matter of affordability.
It is an issue with GREED.
We Singaporeans should not be held ransom by any Telcos or FIFA.
WC only comes once every 4 yrs.
Lose 1 time every 4 yrs not painful.
Boycott the EPL will have a bigger effect.
U can afford it, Singaporean can afford it, that’s the mantra of PAP. Because you can afford it, they will raise their pay to the point where it just pricks you, and some blood will be drawn, a bit at a time. And it will itch, and you scratch and scratch at it, irritated. And they will leave some with some kind of disease, and some will die.
Like a Mosquito. Blood Sucking Insects.
That’s the PAP.
Boycotting the World Cup? Then we have to boycott the kopitiams too, as i hear rumours that they are gonna increase the price of coffee/drinks in order to earn back the licence fee they are gonna dish out to the telcos in order to air the games in their premises.
My friends in Malaysia are watching World Cup free on RTM channels :). Surely Singapore telcos can use lower charges to promote brand loyalty..
ALTERNATE BIDDER: SG WORLD CUP FOUNDATION
Let’s start a public foundation as a bidder. A few things to do to make this work:
1) Tie up with MediaCorp to broadcast it in return they get a fraction of the advertising revenue.
2) Get payment pledges from Singaporeans and the right to deduct up to some fixed amount by Giro. (Say, with an estimated 200000 viewing households, $50 each for $10M in pledges.)
3) Get advertising pledges. Auction mechanism (2nd price auction with reserve price). Winners are legally obligated to take the slots they in.
How this works is, if there isn’t sufficient popular interest up to a certain amount, no bid is made and the whole thing falls through. (If people are just too cheap…)
If there is enough interest, a bid will be made up to what is made possible by promised advertising revenue.
Note: Singapore paid $21M to FIFA for the 2010, which was an escalation of about 33% in price v.s. the rights for the 2006 WC.
Each match allows 90 min of low key advertising and about 10 min of high key advertising (5min before and 5min during the 15 min halftime). Valuing matches only from the Round of 16 onwards, with a Quarter Final worth twice a Ro16, and having a Semi-Final worth 4 times a QF, and the Final 4 times a SF, we have 640min of high key and 320min of 5760min of low key Ro16 time (these are not actual times, they are value-weighted “time”).
The 640 Ro16 min will be for advertisements and the 5760 Ro16 min will be for one exclusive main sponsor (who may get some special advertisement bidding rights). Again, the amount of advertising will be a lower bound.
However much is raised in advertising, the important thing is that if money is saved, those that pledged to pay will pay less.
Sure, there will be free riders, but if we hold fast to NO PROFIT, we’ll do fine. People will be happy. (… and there will be no charity scandal.)
I think I’ll elaborate more on my blog…