Pay TV – BT

Greater freedom for pay TV viewers from March 2012

MDA has put out guidelines that cap early termination charges

The battle for the pay television dollar will soon intensify with a new guideline that makes it easier for dissatisfied subscribers to vote with their feet.

The Media Development Authority (MDA) has put out guidelines that cap the early termination charges (ETCs) that viewers have to pay if they cut short a pay TV contract with an operator.

From March 1, 2012, operators may charge ETCs made up only of the unfulfilled value of the subscription contract less any avoidable costs. Avoidable costs are expenses that the operator does not have to incur as a result of the contract termination. This guideline applies to contracts that are at least three months long.

A cap of 24 months will also be placed on any pay TV subscription contract so that consumers are not unreasonably tied down.

While such consumer rights are already alluded to in the Media Market Conduct Code, MDA is now spelling them out for the operators in response to consumer complaints and increasing competition.

‘In recent years, MDA has received feedback from subscribers of pay TV services that they are unfairly disadvantaged by having to pay ETCs due to unilateral changes initiated by the pay TV retailers on the channel line-up or pricing of their subscription packages,’ MDA said.

Even as disgruntled viewers clamour for redress, pay TV incumbents will have to contend with upstart competitors. The Next Generation Nationwide Broadband Network (Next Gen NBN) could mean an influx of new entrants in the pay TV field.

The response from the three main operators – StarHub, SingTel, and M1 – has been divided along the lines of who stands to gain or lose from the new guidelines.

There are more than 857,000 subscribers today, the bulk of which belong to StarHub. M1 is the newest on the pay TV scene with its 1box service which is run on a broadband network. SingTel, with its mioTV service launched in 2007, is somewhere in between.

‘SingTel’s current ETC policy already takes into account the interests of customers. We believe that there is no market failure to warrant new guidelines,’ a SingTel spokesman said.

‘Whilst we will review the new ETC guidelines . . . we are concerned that the guidelines may result in limiting consumers’ choices and deprive them of the opportunity to obtain attractive premiums.’

While StarHub said that it would ‘consider the feasibility of any new recommendations’, it suggested that alternative ETC structures be allowed to co-exist with the one laid down by the MDA in its feedback to the agency. StarHub told BT that the percentage of customers opting for early termination is ‘very small’.

M1, on the other hand, has embraced the idea of subscribers having more freedom to switch operators. ‘This will ensure that customers will not be unduly restricted or hampered should they wish to switch or terminate a pay TV service,’ it told BT.

It suggested to MDA that it go one better and allow subscribers to switch to the Next Generation Interactive Multimedia, Applications, and Services (NIMS) platform without having to pay ETCs at all for a period of time.

The NIMS platform will give consumers access to pay TV content over a broadband network.

MDA has decided against the suggestion. ‘This is something best left to commercial considerations of the pay TV retailers,’ said Toh Kai Ling, MDA’s policy director.

Operators, however, will have to toe the new line come March, or risk being ‘taken to task accordingly’, MDA said.

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