Tan Kin Lian's Blog: Wasteful competition

Monday, October 05, 2009

Wasteful competition

Read this excellent article by Conrad Raj in Today paper. It tells about the wasteful competition that increases cost for the public. The example quoted is the bid by SingTel and Starhub to broadcast the EPL football matches for the next three years.

I have written a separate article that competition should be in the delivery of content and that the cable infrastructure should be a regulated monopoly. The same arguments goes for public transport - i.e. the bus and taxi services should be regulated and the individual operators can compete to provide the services on the agreed routes. Read my views here.

I hope that the government will review the current model of "leave it to the market". We need a different approach towards competition, rather than the wasteful competition model that is now being practiced.

Tan Kin Lian

12 comments:

Anonymous said...: Mr Tan,

Competition should result in more effecient services to consumers.

However in the case od EPL, it is not happening.
This is because this is not real competition. Starhub and singtel are only competing on their bids for the EPL but NOT competing on their pricing to the consumers.

This is where a 'regulated competitive approach' comes in.

Both starhub and singtel should submit their bids for review to a regulator. Their bids should include how much they intend to bid for the EPL and how much they intend to charge their consumers. The main consideration of the regulator should be on the pricing to the consumers.Prima facie, the allowable bid should charge the consumers the lowest prices. After all, the regulator's duty is to the people of singapore and not to the rights holder of the EPL. Only after through this vetting process by the regulator should the bid be allowed.

No point if the winning bid is $400 mil but the consumers are held ransom by the operator because this then become a monopoly.

I myself gave up EPL many years ago because I could see this coming where consumers are put in a 'difficult' position. I did not die. The sun still comes up every morning.

Han; October 05, 2009 9:26 AM
Vincent Teo said...: EPL bidding is a bit tricky here.

While MDA can regulate the bidding amount for Starhub and Singtel, they are unable to regulate the bidding amount for ESPN. If Singtel and Starhub lose the bidding to ESPN, then everything will be back to square one.; October 05, 2009 10:22 AM
Anonymous said...: Hello to all football fans.

Get organised and go up to JB.
Abandon both Singtel & Starhub. They do not need you. and you do not need them.

You and I are trapped on this island that attracts flies.

Earn enough $$$ and get out.. once out, stay out! Its ok. you can get laksa and mee pok elsewhere.. with better ingredients and served by genuine clans man. Leave the island for the flies.; October 05, 2009 10:41 AM
Anonymous said...: MDA should seriously look into whether there is monopolistic tendency by either Telcos. As it is Singtel will have monopoly of soccer games as it has already clinched the Champions League & now the EPL. Consumers can teach both Telcos a lesson by boycotting them. We must not allowed them to take the consumers for granted. Singtel bit may not be lucrative after all if all consumers show their power by boycotting it altogether.; October 05, 2009 10:58 AM
Anonymous said...: There is another possible "market" solution.

That is for Singaporeans to make a decision that their "quality" time is better spent with their loved ones here in Singapore, in face-to-face chats.

Rather than wasting their time cheering for their "home team" that is based in England.

If Singaporeans were to make such a decision, the price will very rapidly drop from $400 million.

Well, we can hope can't we? That Singaporeans will do the right things in life .....; October 05, 2009 1:50 PM
Vincent Sear said...: The UEFA Champions League is not that important to Singapore fans, because it's always schdeduled midweek at around 3am Singapore time. Neither is the World Cup, it could be held in any timezone and comes along for 1 month in every 4 years only.

The Barclays Premier League is more important for most football fans here. It's always schedule on weekend at around 10pm. With the favorable timezoning and past colonial tradition of Singapore football fans following, little wonder this is big issue.; October 05, 2009 5:29 PM
Parka said...: This is what in economics we call a Prisoner's dilemma.

I've written about it few days ago and drawn a chart as well.

Singtel Starhub EPL Prisoner's Dilemma

Basically, they care more about making money for themselves, than for creating value for consumers.; October 05, 2009 5:52 PM
Tan Kin Lian said...: I hope that consumers will give up EPL, or go and watch it at the pub or at a friend's place. This will bring down the subscription for EPL. I will give up the subscription.; October 05, 2009 6:24 PM
Anonymous said...: Yes! give up your decoders! do not renew.. for once, please, let us unite and display true market forces at work.
Abandon ship!!!; October 05, 2009 7:47 PM
hongjun said...: To give up is quite difficult for soccer fans. Erm.. To watch in pubs may end up more ex! Need to take cab home, buy drinks, etc.; October 05, 2009 11:47 PM
Anonymous said...: Yeah .. absolutely agree with Parka. The consumers are the real losers. Both Telcos are there to make money ... get real! I intend to terminate the sports channel. Just go without it for a while and soon you get used to it.; October 05, 2009 11:52 PM
Vincent Sear said...: I recall that the whole thing started with the conversion of all residential antennae points to cable points by Starhub for all households in Singapore.

For that, Starhub was awarded the premium cable TV monopoly over and above regular free channels that Starhub is obliged to carry and deliever, and football became part of that premium package.

Then, SingTel came up with MIO TV via phonelines, which doesn't breach the Starhub cable privilege. In any case, still silly for 2 companies to outbid each other for international program rights, paying more and more in order to deprive even more.

The regulators should focus on regulating international program bidding. It's a senseless waste and drain of money from Singapore with less and less benefits for Singapore citizens and residents included. Singapore should have a single bid (not competing bids) for programs like that, then settle the domestic program carrier rights among our ourselves.; October 07, 2009 7:56 PM