Hell hath no fury a roof leaked

Today my bunk got flooded by the torrential downpour ---- AGAIN. The first time we were having a long weekend and I didn't manage to see nature unleash its fury, that is until today. My poor bed was in the way of an almighty waterfall. The apparently concrete ceiling proved no defence against the waves and waves of attack by the rainwater. When I saw it, I could only respond in the simplest way I knew --- SIMI LAN JIAO? Somehow I felt glad that I am able to book out and sleep on my dry bed at home.

You know something? As cadets, we can just run off to kbkb to the instructors and you can almost confirm plus chop plus guarantee it will be fixed. Now with the heavy bar on our shoulders, we are expected to settle this kind of stuff by ourselves.

I think I can make it as a telemarketeer if I ever get kicked out of the teaching profession. Over the course of these few weeks I have made calls to random people requesting for this, enquiring about that. Think I have almost eliminated my innate fear of calling people I don't know....

Yeah our boss bringing us on a branch outing tomorrow! Woo hoo! Really do think that I have the best boss among all the PSOs and OCs that I could have been placed under. Just a bit of a shame that my personality doesn't really suit the job scope, but I am not complaining. Life has been pretty good so far...

Anyway just for my records...

From The Straits Times

May 25, 2006
REGULATION OF PAY TV INDUSTRY
MDA should give fuller picture

By Burton Ong
FOR THE STRAITS TIMES

DECISIONS issued by industry regulators responsible for promoting competition in specific sectors of Singapore's economy in response to complaints against dominant market players have never been particularly illuminating.

MDA should give fuller picture

Apart from short press statements outlining the substance of their final decisions, these regulators have not made public complete grounds for their rejection of allegations that market incumbents in the telecommunications and media industries have engaged in anti-competitive behaviour.

Neither have they disclosed the legal analysis which they have employed in each case to arrive at their final decisions, often citing reasons of 'commercial sensitivity', thereby making it difficult for the public to scrutinise the soundness of these decisions.

A recent example of this regulatory obscurity can be found in the Media Development Authority's (MDA) decision to allow the incumbent pay-TV service provider, a monopolist, to continue striking exclusive-content arrangements with cable television channels.

This was in response to a complaint from a potential new market entrant alleging that such practices made it more difficult for it to enter the pay-TV market because it would not have access to popular channels that customers would want to subscribe to.

Under the Media Market Conduct Code (MMCC), which sets out the legal framework for regulating competition in the various segments of the media industry, Paragraph 7.5.6 prohibits 'agreements with providers of Ancillary Media Services which substantially foreclose access to an input, or a channel of distribution, where this would prevent, restrict or distort competition in any Mass Media Services Market'.

Whether or not a foreclosure is 'substantial' or not depends on the percentage of the market foreclosed, the duration of the agreement, whether the agreement has a 'legitimate business purpose' other than foreclosing competitors' access to business inputs, and whether competitors have access to comparable inputs from other suppliers.

Conspicuously absent from this list of considerations is the degree of market dominance possessed by the media service provider engaged in such exclusivity arrangements with providers of these business inputs: A monopolist would be in a much stronger position to lock in upstream suppliers with exclusivity arrangements, and make it more difficult for would-be competitors to gain access to these inputs, compared to a market player with a lesser degree of market power.

Without publishing a full report of its decision, the MDA offered a number of less than convincing reasons for its unpopular decision to allow the incumbent to continue making exclusivity arrangements with various unnamed channels - though speculation has been rife that they include ESPN, the Discovery family of channels and HBO.

Firstly, would-be market entrants were said to be able to secure alternative content (other than these channels) for themselves. Secondly, the duration of these contractual exclusivity arrangements was said to be too short to act as effective barriers to market entry. Thirdly, the scope of these exclusivity arrangements was limited to the cable-TV platform, allowing other operators to gain access to these channels if they utilised other broadcast methods such as the Internet.

It is true that alternative content is available - there are probably hundreds of channels from around the world which other pay-TV operators could have access to, but the real question which needs to be answered is whether these other channels are real substitutes for the 'key content' in respect of which the incumbent has obtained exclusive broadcast rights. No cable-TV subscriber is likely to view a cable channel specialising in non-English arthouse films as a substitute for blockbuster-driven HBO. Neither is a cable channel focused on US college football and baseball games going to be treated as an effective substitute for ESPN.

An even more fundamental question appears to have been glossed over: Before determining whether or not the exclusivity arrangement substantially forecloses the market, how is the relevant market defined to begin with?

There are at least two possible markets which ought to have been investigated - those pay-TV customers who sign up primarily for single channels, and those who sign up for a suite of channels. Even though the incumbent pay-TV operator is a monopolist in both these markets, the substantiality of the foreclosure effects may differ in each case and warrant a more finely tuned response from the competition regulator.

Even if the duration of the exclusivity arrangements is viewed as relatively short, such that potential competitors have a theoretical opportunity to gain access to these channels when they expire, the reality is that the incumbent will have an enormous advantage when renewing their exclusive content with these channels because of its monopolist status and existing subscriber list, which comprises 40 per cent of all households in Singapore.

Exclusivity arrangements involving highly sought-after channels invariably require the pay-TV operator to fork out a premium which will almost always find its way, ultimately, into the cable-TV viewer's subscription bill.

Finally, the fact that newcomers may gain access to these channels by broadcasting them via the Internet or other new technologies does not mean very much if these emerging high-tech content distribution channels are not even in the same market as the established cable-TV market. The picture quality, stability and other product characteristics of the former may not be comparable to those possessed by the latter. The former is likely to have niche appeal only to technologically savvy individuals and not to average television viewers. If these two modes of content delivery are in separate and distinct markets, the emergence of the former does not in any way detract from the anti-competitiveness of exclusivity arrangements being practised in the latter.

In reaching its conclusion that exclusive content agreements in themselves will not prevent new entrants from entering the pay-TV market, but without releasing a full report on how it analysed the issues arising from its interpretation of Paragraph 7.5.6 of the MMCC, the MDA's decision is difficult to justify to the 453,000 cable-TV subscribers in Singapore.

As with some of its earlier decisions in relation to other sectors of the media industry, a shroud of mystery - and cynicism - will envelop this episode until the regulator changes its disclosure policies.

In the meantime, existing cable-TV customers will continue to be deprived of the alternative packages and pricing plans which the would-be competitor may have offered if it had entered the pay-TV market, while potential cable-TV customers unwilling to pay the high subscription fees currently charged by the incumbent monopolist will continue to remain on the sidelines.

The writer is a member of the law faculty at the National University of Singapore.

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From The Straits Times

Singapore politics, from an economist's viewpoint

I REFER to the letter, 'Is politics all about pursuit of party interests?' by Mr Jason Phan Shiaw Hwa (ST, May 16). Mr Phan raised a long-debated issue: 'Is politics ultimately about the pursuit of party interests, with the interests of citizens being incidental?'

In the study of political science, it is generally assumed that formation of policies rests in the hands of elected officials and their appointees, and that these officials form policies to maximise votes and thus remain in office. The result is a bias in the political system towards non-political parties that have strong lobbying power.

As an economist, I have to agree with the above generic assumption to a large extent. History has proven so, and many conspiracy theories have since evolved, about how countries' ruling parties manipulated the economy to gain favour with the electorate. Empirical evidence has also demonstrated that the economic cycle has a strong correlation with the political business cycle. Governments can manipulate the economic cycle by engineering booms and recessions with the use of fiscal and monetary policies to seek favour with the electorate. That is why in many countries, it is not unusual to observe the political business cycle where rapid growth precedes elections, and recessions follow elections. In this way, through tactful economic management, the government can make the economy look good at the time of election.

However, in Singapore, this is not the case. Although critics claim Singapore is a de facto one-party state, to a large extent this has allowed the Government to prioritise long-term growth rather than be concerned with short-term economic boom to win elections. It is always easier and more convenient to manipulate myopic short-term growth using fiscal and monetary tools.

However, in Singapore, the Government practises prudence and adopts supply-side policies such as education, training, investment and economic infrastructure development. This is to increase productive capacity to ensure there is sustainable economic growth. We are always looking out for niche areas to develop in as well, as shown by the number of 'hubs' we are trying to establish, such as 'IT hub', 'life science hub' and 'education hub', so we can always stay ahead in the face of global competition.

That is why I believe the Government truly subscribes to Minister Mentor Lee Kuan Yew's principle that politics is 'not a business of just voting, or not voting. Politics has got to do with your life, your job, your home, your Medicare, your children's future'. This is possible because, in Prime Minister Lee Hsien Loong's words, 'Singapore succeeded because it had a dominant PAP government which could think long term and run the country without being distracted by the opposition'.

In fact, our unique tripartite system, where there are strong ties between labour, management and the Government, is a key element of Singapore's success and an envy of many countries, but their governments cannot simply replicate it due to strong political competition there.

The flexi-wage system also defies the common economic notion that 'wages are rigid downwards', as we allow wages to be pegged to performance. Thus in times of recession, wages can be adjusted downwards without much resistance from the labour force, unlike many other developed countries with strong trade union presence. This helps to keep the economy competitive.

Although I was born post-independence, when Singapore experienced rapid economic growth under then prime minister Lee Kuan Yew and his administration, I have never doubted Singapore's imperative need for political and internal stability, especially in a country which lacks natural resources such as land, water and petroleum and practises multiracialism.

As a small and open economy, we are highly susceptible to external shocks, as evidenced by the Asian financial crisis, 9/11 terror attacks, Sars, and more recently, the world-wide bird flu epidemic. Nonetheless, our strong and capable Government has time and time again steered us through these turbulent times, with speedy economic recovery. In fact, the World Trade Organisation praised us recently for our swift response to the Sars crisis, which allowed the global epidemic to be resolved in a relatively short time.

On the other hand, proponents of the opposition have called for more alternative voices in Parliament to keep a check on the Government. I beg to differ. Like every economist, I believe only with competition comes creation. The theory of contestable markets should be applied to politics as well. The essence of the theory is that what is crucial for consumers' welfare is not whether an industry is actually a monopoly or competitive, but whether there is a real threat of competition. This can actually bring about improvement to consumers' welfare.

The key term here is real 'threat of competition', that is, credibility of competition. As long as the ruling party cannot deter entry of opponents, the incumbent party can still be forced to discipline itself, even without the opponents actually entering the political scene. Thus, as long as the Government can continuously prove itself through sustainable good economic performance, it will still function well even without the opposition keeping a check on it.

Finally, my vision of an ideal political system is one where the ruling party and the opposition party both act sincerely in the best interest of the country. Only then will there be no wasteful political competition (as seen in many countries that supposedly practise democracy) that poses immense opportunity cost on our limited resources. At the moment, Mr Chiam See Tong and Mr Low Thia Khiang have proven themselves to be worthy opposition in the parliament, and hopefully Ms Sylvia Lim will do so as well. Then my vision is not that far away.

Yan Yueling (Miss)