March 28, 2006, Manila Philippines — Rampant piracy and restrictive regulatory guidelines inhibit domestic and foreign investment in the Philippine pay-TV industry. These are the findings of a study on the Philippines regulatory environment released today by the Cable and Satellite Broadcasting Association of Asia (CASBAA), a regional industry body of 110 pay-TV companies.
The report, entitled Regulating for Growth: Effective Regulation of the Pay-TV Industry in the Asia-Pacific, was undertaken by CASBAA in association with research firm Media Partners Asia. The results are based on an assessment of regulatory regimes in 11 Asian markets along with two international benchmarks (the United States and the United Kingdom). Effective regulation was measured by evaluating 10 key aspects of the pay-TV regulatory framework: national regulatory body, copyright protection, level playing fields for convergence and competition, program distribution, rate regulation, program packaging, advertising, content, program supply, and non-domestic investment.
The report revealed that the Philippines continues to have underdeveloped pay-TV markets because of piracy and weak regulatory structures. However, it held out hope that if pay-TV policy changes are adopted they should help the Philippines to leapfrog other markets and enjoy substantial benefits within a relatively short period.
In the meantime, enforcement of copyright law remains weak; signal piracy by rogue cable TV operators is theoretically a criminal offense but cases brought by the authorities are rare, the report said. It notes that license suspension or revocation as a sanction for copyright violators has not been effectively applied and this can be directly related to the lack of a clear mandate and resources for the National Telecommunications Commission (NTC).
It (the NTC) issues cable operating licenses without examining whether programming is misappropriated and resold, the report indicated.
Although some features of the Philippine regulatory regime are pro-market – such as an absence of restrictions on tiering of program offerings, advertising, or rate regulation, industry players cannot fully leverage these and make successful investments either in content or technology because the end product C program content C is at risk of being stolen and re-sold while the government appears unable to address the problem.
Interventionist regulatory guidelines such as those prohibiting exclusivity of channel supply and a ban on foreign investment in pay-TV platforms further contribute to the stunted growth of the Philippine pay-TV industry. No foreign ownership is currently permitted in cable TV or DTH (direct-to-home) platforms; only China, where media ownership is controlled for political reasons, equals the Philippines strict ban.
Among the 11 Asian economies evaluated in the report, the Philippines ranked 9th in terms of pay-TV investment.
Annual pay-TV programming investment remains low (US$28.44 million) primarily because programmers are discouraged by the flagrant copyright infringement. The country is likewise lagging behind many other Asian markets in terms of investment in infrastructure and technology (US$49.25 million). This explains why much of the Philippines pay-TV infrastructure remains outdated while many countries are now enjoying the advantages of digital delivery systems and moving toward high-definition television and value-added interactive applications.
The CASBAA report warned that Filipino consumers would not be able to enjoy greater pay-TV choice, improved content and the benefits of new digital technologies unless intellectual property protection is improved.
The results of the study demonstrate a direct relationship between effective regulation and increased investment and sector value, said Simon Twiston Davies, CASBAA CEO.
According to Mr. Twiston Davies, countries with stronger regulatory mechanisms promoting competition have realized rapid increases in investment and industry developments. For example, Japan and Hong Kong, which are commended for having open regimes that promote competition while protecting intellectual property rights, enjoy robust pay-TV investment and growth.
Malaysia is another good example. With strong enforcement of copyright in broadcasting, Malaysia is enjoying rapid industry growth and now boasts Southeast Asias most successful pay-TV operator, with relatively high levels of investment in both content ($108 million) and infrastructure ($167 million).
Mr. Twiston Davies said the pay-TV industry in the Philippines has huge untapped potential to contribute significantly to national income. If the regulatory environment is improved, through legislative efforts and increased attention to intellectual property rights, it will create a business friendly environment characterized by vigorous competition and substantial investment coming from both the domestic and international fronts, he said.
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ABOUT CASBAA
The Cable & Satellite Broadcasting Association of Asia is an industry association dedicated to the promotion of multi-channel television via cable, satellite, broadband and wireless video networks across the Asia-Pacific region. CASBAA represents some 110 Asia-based corporations, which in turn serve more than 3 billion people. Member organizations include ABC Asia Pacific, ABN AMRO, AETN International (History Channel), AsiaSat, ASTRO (Malaysia), Bloomberg Television, Comverse, Discovery Networks Asia, EMC, HBO Asia, IBM, MTV Networks Asia Pacific, Nokia, NOW Broadband TV, PricewaterhouseCoopers, Sony Pictures Television International, STAR Group, Sun Microsystems, Turner International Asia Pacific, UBC (Thailand), Walt Disney Television International, Zone Vision, Asian Food Channel, BBC World, China Entertainment Television, CNBC Asia, Dream, ESPN STAR Sports, Harmonic, Indovision, Kabelvision, SkyCable, TimeWarner, Anytime and TVBI.
CONTACT
Rebecca Kennedy / Katie Wong
Communications, CASBAA
Tel: +852 2854 9913
Fax: +852 2854 9530
Email: pr@casbaa.com