AMBASSADOR RAISES TELECOM AND MEDIA ISSUES WITH

UNCLAS SECTION 01 OF 02 SINGAPORE 001205

SIPDIS

SENSITIVE
SIPDIS

STATE FOR AMBASSADOR DAVID GROSS
STATE PASS USTR FOR AUSTR BWEISEL, JJENSEN, AND JMCHALE
COMMERCE FOR JBAKER

E.O. 12958: N/A
TAGS: ECPS ETRD EIND EINV ECON SN
SUBJECT: AMBASSADOR RAISES TELECOM AND MEDIA ISSUES WITH
MICA MINISTER LEE

REFS: A) SINGAPORE 1119 B) SINGAPORE 946


1. (SBU) Summary: Singapore is close to a decision on
local-leased ("last mile") circuit connections for U.S.
and other telecom operators (a significant implementation
issue under our bilateral Free Trade Agreement or FTA),
Minister for Information, Communications and the Arts
(MICA) Dr. LEE Boon Yang told the Ambassador in an April
10 meeting. The regulator's obligation was to the
telecommunications industry and not to SingTel, the
government-linked dominant carrier, he claimed.
Regarding the possibility of more restrictive regulation
of exclusivity agreements between pay television
operators and content providers, the Minister expressed
concern that the early entrant into a market (i.e.,
StarHub Cable Vision) might gather a "stranglehold" on
the most compelling content. He stressed that his
ministry would not stand idly by if the incumbent
attempted to corner the market. End Summary.

Resolving FTA Telecom Commitments
--------------


2. (SBU) Minister Lee asserted that the GOS had every
intention of fulfilling its FTA commitments to offer
local-leased circuit (LLC) connections at "reasonable
(wholesale) rates" using open standard technical
specifications (ref A). He said his office was "close to
a decision" on an appeal made by SingTel late last year
following the Infocomm Development Authority's (IDA) most
recent decision concerning LLC's.


3. (SBU) Minister Lee detailed the long, drawn-out
process associated with implementing these FTA
commitments that commenced in May 2003. Observing that
it was "taking too much time," he said that MICA must
give SingTel the benefit of the law in terms of right of
appeal, but stated that the intent was not to give
SingTel an advantage. He assured the Ambassador that
MICA was "not playing a game."

Lack of Transparency
--------------


4. (SBU) Asked about the lack of transparency in MICA's
appeal process, wherein industry -- in this case SingTel
-- was allowed to make private appeals directly to the
Minister, Minister Lee explained that, according to
current regulation, no provision existed for other
parties to participate. He argued that an open
(transparent) approach "would pose difficulties," in
particular since the private appeals process was designed
to protect commercially-sensitive information. The fact
that the Minister could call for additional information
from any source, including parties not involved in the
appeal, partly opened the otherwise closed-door process,
he said.


5. (SBU) Noting that both IDA and SingTel were government-
linked entities, the Ambassador asked how this common
parentage affected the adjudication process. The
Minister explained that the two organizations operated at
arm's length, and that the government had been successful
in creating firewalls to prevent conflicts of interest.
Minister Lee said that, from time to time, IDA's rulings
were perceived as unfriendly to SingTel, but IDA's
obligation was to the telecommunications industry, not to
SingTel.

Media Exclusivity Agreements
--------------


6. (SBU) Asked whether similar firewalls among government
and government-linked entities existed with regard to
regulating exclusivity arrangements between pay
television operators and content providers, Minister Lee
affirmed that the Media Development Authority (MDA)
sought to ensure a level playing field (ref B). He
explained that, in November 2003, the government had
issued a tender for a second pay television license, but
no one applied. He offered that the timing had not been
ideal, coming right after SARS; Singapore also is at a
disadvantage given that its market is both small and
differentiated, with a multi-racial and multi-lingual
audience.


SINGAPORE 00001205 002 OF 002



7. (SBU) Minister Lee said that MICA would not stand idly
by if the incumbent, StarHub Cable Vision, tried to
corner the market on the best content. He allowed that a
3- or 5-year exclusivity period would give other
companies a chance: "this would allow an insurgent to
enter the market and rise up against the incumbent." In
contrast, a 10-year exclusivity agreement could preclude
competition in the pay sector segment of television. The
Minister said that MICA planned to re-offer a second pay
television licence in the future, and suggested that new
technologies such as distributing television over
internet protocols might prove key to a new entrant in
the market.

Bridging the Digital Divide
--------------


8. (U) Minister Lee noted that he recently had proposed
to Ambassador David Gross that we convene informal
discussions on "How to Bridge the Digital Divide" during
the September IMF/World Bank meetings in Singapore.
Minister Lee explained that his proposal focused on how
countries could catch up in today's high-tech world.

Cultural Ties
--------------


9. (U) The Ambassador and Minister Lee also discussed the
extensive cultural ties between the United States and
Singapore, including the Embassy's American Connection
ties with the National Library Board. The Minister
expressed his hope that more Singaporean artists would be
able to participate in U.S. events, noting that corporate
support was critical.

HERBOLD