MEDIA CONTENT EXCLUSIVITY: MINISTRY RULES AGAINST

UNCLAS SINGAPORE 000946 SIPDIS SENSITIVE SIPDIS STATE PASS USTR FOR AUSTR BWEISEL, EBRYAN, AND JMCHALE E.O. 12958: N/A TAGS: ECPS EIND EINV ETRD SN SUBJECT: MEDIA CONTENT EXCLUSIVITY: MINISTRY RULES AGAINST REGULATOR ¶1. (U) Singapore officials informed us on March 23 that they had decided to set aside a proposed ex-ante amendment of exclusive carriage agreements between media content/channel providers and Singapore's sole Pay-TV operator, SCV StarHub Cable Vision. This represents a modest, and perhaps temporary, victory for U.S. content providers. ¶2. (U) The Media Development Authority (MDA),a statutory board under Ministry of Information, Communication, and the Arts (MICA),amended StarHub's licenses in late 2005, stipulating that contracting parties were no longer permitted to include exclusive terms without prior MDA approval; StarHub appealed the decision to MICA Minister Lee Boon Yang, who upheld it earlier this week. ¶3. (SBU) According to industry sources, MICA overruled MDA on procedural grounds. Despite initial optimism, they remain concerned that MICA has left the door open for MDA to try and regulate exclusivity in some other way. In his decision, the Minister reportedly noted that exclusivity restrictions in Pay-TV operator licenses could be introduced "if MDA follows correct processes." ¶4. (SBU) MICA apparently took issue with MDA's attempt to apply one set of regulations to different licenses that in fact required different procedures. MDA is permitted to amend a Pay- TV operator's license as it deems appropriate when it is up for renewal; different, more complicated procedures are required, however, if MDA intends to amend an existing license. Specifically, StarHub's analog television license was about to expire when MDA issued its amended renewal late last year (permissible under existing regulations); the problem arose, however, when MDA also introduced exclusivity restrictions into StarHub's digital television license, which does not expire until ¶2013. ¶5. (SBU) Industry sources noted that, in assisting MICA with its decision, the Attorney General's Chamber was "fairly critical" of MDA, reportedly speculating that StarHub would have succeeded even in a judicial review (something the GOS is believed to strongly discourage) had it pursued this in lieu of an direct appeal to the MICA minister. Sources have told us that Minister Lee was especially unhappy with the attention this issue had received from the USG, content providers such as Discovery, Disney, STAR and TimeWarner, and the U.S.-ASEAN Business Council, especially our criticism concerning the lack of transparency in this process. MDA solicited industry comment in June 2003, but has ignored subsequent industry appeals for further consultation, except on a private, unsolicited basis. ¶6. (U) Few competitive markets -- Hong Kong, Australia, and the United States among them -- impose ex-ante regulations. Business representatives and the USG have argued that MDA's decision constituted unnecessary regulatory intervention in an industry which relies on exclusivity arrangements to enhance the ability of content creators and distributors to invest in new and innovative programming. Comment -------------- ¶7. (SBU) USTR has included the issue of Pay-TV transparency in rule-making on its agenda for the upcoming second annual review of our bilateral Free Trade Agreement to be convened in Washington on March 30. While we are encouraged by MICA's decision, we also recommend that USTR continue to press Singapore on the issue of transparency in the regulatory and rule making process, something that that we have raised with Singapore, not just as it pertains to media, but also to other sectors such as telecommunications. HERBOLD