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
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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