StarHub customers smarting from having to turn to Singapore Telecommunications (SingTel) for the Barclays Premier League (BPL) football matches have been given another incentive to not despatch StarHub’s set-top box from their homes. Just before the Lunar New Year, StarHub launched SuperSports Arena, a free, 24-hour channel focused on local sports content like S.League matches. Interspersed with local programming, StarHub will also broadcast select content — such as tennis, golf, basketball and even wrestling — from its other paid sport channels.

At the launch, StarHub’s chief operating officer Tan Tong Hai said the new channel was meant to support the local sports sector. He also disclosed that discussions on screening the S.League matches had begun long before StarHub found out it had lost the BPL rights. But, Tan acknowledged that SuperSports Arena was part of the company’s game plan to deal with that loss.

With a free sports channel on offer, StarHub subscribers who are die-hard football fans might be less likely to abandon the pay-TV provider altogether, as they turn to SingTel for access to the BPL. Instead, they are thought likely to cancel their subscription to StarHub’s sports package but keep the basic package, which would still provide them with some sports content.

StarHub has been fighting a rearguard battle in the pay-TV space ever since SingTel plunged into the business nearly three years ago. With its deep pockets, SingTel has gone after the rights to some of the most popular TV content in the market that was once the sole preserve of StarHub. In 2008, SingTel won exclusive rights to screen the UEFA Champions League football matches. It also introduced Season Pass, which allows viewers to catch the latest episodes of popular TV serials 24 hours after their US broadcast. Things really came to a head for StarHub last year, when SingTel clinched the three-year rights to the BPL from 2010.

At best, some analysts fear that StarHub faces the prospect of soaring content costs in the future. And, at worst, it could succumb to a cascade of customer defections across all its businesses as its quad-play strategy unravels. The quad-play strategy of bundling mobile, Internet, TV and fixed-line phone services at discount rates has long been a key advantage for the company and central to its strategy.

Yet, StarHub’s pain hasn’t been SingTel’s gain. On the contrary, analysts fear that SingTel won’t be able to recoup what it is spending on content anytime soon. And, it remains to be seen how successful it will be in getting its mio TV set-top box into Singapore’s homes.

In fact, analysts like Alan Kam of Daiwa Institute of Research are steering investors away from shares in both companies for now, primarily owing to the risks posed by their rivalry in the pay-TV space. Kam prefers shares in their smaller competitor MobileOne, which hasn’t yet rolled out a pay-TV service.

Meanwhile, if you think pay-TV customers are better off with two determined competitors falling over each other to win them over, think again. Competition is supposed to provide customers with more content, better services and lower prices. In reality, the battle between SingTel and StarHub has resulted in content costs going up and customers being lumbered with two different set-top boxes. Now, it could even be about to deprive them of the World Cup, the most-watched sporting event in the world.

According to news reports, the Fédération Internationale de Football Association (FIFA), the international governing body of football, is asking for more than either SingTel or StarHub are able to pay for the rights to broadcast the matches, which are due to begin in June. Even a joint bid by the two rivals that they claim would sacrifice “all World Cup margins for both SingTel and StarHub” has reportedly been rejected. In short, if the two companies do bring the World Cup to Singapore, they will both lose money doing so.

On the face of it, FIFA is simply asking for too much money for the broadcast rights. But, some observers say SingTel and StarHub scored an own goal by pushing up the cost of other popular content, notably the rights to the BPL for the next three years, for which SingTel is said to have paid US$400 million (RM1.3 billion). Whatever the case, calls are now growing louder for regulators to intervene and put an end to the destructive competition between the two players. Some consumers want the idea of exclusive content to be phased out. Others want all pay-TV operators to pipe their content into homes through one standard set-top box.

So far, the government has said little. However, the arrival of the National Broadband Network (NBN) will make some of these suggestions feasible. And, with the growing frustration of pay-TV subscribers, some move towards more regulation and less exclusivity of content and network access seems inevitable. The shifting ground could be particularly hazardous for SingTel, which has backed its pay-TV strategy with millions in investment, but has yet to build up a critical mass of subscribers.

On the other hand, StarHub might be heading in the right direction by hunting down cheaper content like the S. League matches and doing what it can to hang on to the pay-TV-subscriber base it has already built up, by offering more free channels like SuperSports Arena.


Joan Ng is senior writer at The Edge Singapore

This article appeared in Corporate page of The Edge Malaysia, Issue 794, Feb 22 – 28, 2010