Breaking out of the walled garden created by telcos

Breaking out of the walled garden created by telcos

You'd be forgiven for being confused with the state of the television and content business in Singapore - multiple set-top boxes, complaints over confusing offers bundling mobile, home broadband and TV, and a high-profile battle for sports rights.

Some observers lament that in Singapore, we get the same fare of global big-name news and entertainment channels as TV watchers in other countries, except that there is a lack of unique and compelling local content on traditional TV (outside of state broadcaster MediaCorp). Exasperated market watchers have likened it to being in a strange and curious place not unlike Alice In Wonderland.

We hope to add another perspective to the conversation.

Traditionally in the telecom sector the world over, the network access and content sectors were lumped together because the two were inextricably lashed together by operators which controlled access to the consumer - in a nice and cosy place, sometimes referred to as the "walled garden".

Content owners had a single gateway to the consumer - through the operator's set-top box, which similarly served as the consumer's sole choice for content. Operators would enter into bidding wars to win exclusive content for their set-top box, especially sports content.

In the end, consumers lost out. Either they paid more - or worse, operators cross-subsidised from their access to content businesses - meaning that Internet broadband subscription fees are re-directed to pay for loss-leading content rather than improve the quality of the Internet experience.

The result of strategies that bundle access and content, keeping it within the walled-garden, is a "crowding-out effect".

Incumbent players are reluctant to drive forward new disruptive business models for content creation and distribution which challenge traditional distribution revenue streams.

By overpaying for certain types of content, network operators make it harder for innovative new players to come in and develop standalone ways of monetising content overall.

Dumb pipes, smart move

But then along came the National Broadband Network (NBN), which was launched in Singapore to "separate" the access sector from other sectors "enabled" by access. Which are those other sectors? There are many - applications, business productivity, cloud and, yes, content.

Not only was the move to launch the NBN a smart one (the Singapore NBN is being copied in over 40 countries around the world), but it is part of a massive global industry transformation.

This evolution, which has really just started in earnest and which will play out over the next decade, is seeing the gradual disintermediation of content from content delivery. This separation is seen as a threat by traditional cable and phone companies that sell subscription TV services. They fear becoming "dumb pipes" for other people's programming when consumers (referred to as "cord cutters") plug their Internet connection to the back of the TV set, bypassing the set-top box.

What are some concrete examples of this industry transformation which is now under way?

MediaCorp recently launched Toggle so that anyone with a good Internet connection can stream what they want, when they want.

This service has only recently come off its beta and is a mere toddler in evolving into its full potential as a full-blown Netflix-type service. Watch that space.

And MediaCorp is not alone.

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