Wow, Starhub has decided to unilaterally increase their cable subscription packages. Starhub’s action seriously raises questions on whether Singapore is indeed as economically competitive and free as our government likes to claim.

Starhub is clearly using its position as a monopoly to force the price increase onto Singaporeans. If there was serious competition from a couple of rival companies, or from satellite dishes, I doubt they have the guts to just increase the price. I am of the opinion that Starhub’s action is due to its poor management and it is now making consumers pay for their mistakes.

The sharpest increase is going to come in the sports category, where the monthly subscription is going up by $10. That makes $120 a year. Assuming that there are some 200,000 home subscribers (a very small figure, considering a population of 4 million), Starhub is going to earn another $24 million a year. And, prices for business subscribers are going to increase too, further increasing the amount of revenues Starhub will be raking in. Why does Starhub need such money? Well, according to this source, it is rumoured that Starhub paid $150 million last year to secure the rights of the next 3 seasons of showing English Premier League matches, more than 8 times of what ESPN Star sports paid for the previous 3 seasons.

It’s a rumour of course, but Starhub’s action proves the rumour to be somewhat true that they did indeed pay through the nose to secure the rights, and now they are passing the costs to consumers. Siew Kum Hong wrote about his fears of this scenario, and this is coming true after all (and he wrote about his fears only slightly over a month ago).

I seriously hope that the Singapore government reconsider its position on satellite dishes and the cable TV industry. Starhub SHOULD NOT be allowed to continue as a monopoly. As a country that champions free trade and markets, if we cannot even get our own house in order, we are going to be laughed at by other people. The Competition Commission of Singapore, a statutory board, says on its website that its role is to:

i. maintain and enhance efficient market conduct and promote overall productivity, innovation and competitiveness of markets in Singapore;
ii. eliminate or control practices having adverse effect on competition in Singapore;
iii. promote and sustain competition in markets in Singapore;
iv. promote a strong competitive culture and environment throughout the economy in Singapore;
v. act internationally as the national body representative of Singapore in respect of competition matters; and
vi. advise the Government or other public authority on national needs and policies in respect of competition matters generally.

and

The Commission will have powers to investigate and adjudicate anti-competitive activities. It will also have the powers to impose sanctions.

I will wait and see whether CCS will investigate this matter. I think it is quite clear that Starhub is acting in a monopolistic manner. Singapore has deregulated some industries in recent years, such as the mobile market and Internet, and it has proven that free competition (or at least some competition) causes price to fall (and not rise, like what Starhub is doing). If Starhub was subjected to free competition, I do not believe that it will increase prices. With competition, any company will take steps to ensure prudent bidding for television rights. The CCS is a new statutory board formed only in 2005, and I hope that it will investigate Starhub to show that they mean business. Else, Singapore can be prepared to be laughed at by other countries for saying one thing and doing another.