Pay-TV services in Singapore to be governed by enhanced code

The Media Development Authority of Singapore (MDA) announced the changes (17-page / 544KB PDF) after a period of consultation with industry and other stakeholders.

Under the new code, pay-TV companies will be required to waive early termination charges if customers elect to exit fixed term contracts before they are due to expire if the companies have made "unilateral changes" to the terms of the contract that are to subscribers' detriment.

The MDA has defined narrow circumstances in which unilateral changes pay-TV providers make would be considered to sufficiently detrimental to customers that it would trigger their right to exit the contract without charge.

Early termination charges will not apply if pay-TV providers increase the subscription fee, remove material channels or material sports content from a channel or there has been at least a 20% reduction in the total number of channels they offer as part of their package since the point of subscription.

Customers will have 30 days from the date of change to exit pay-TV contracts without charge, although operators will be able to apply early termination charges (ETCs) "for equipment that are not essential to the provision of the pay TV service, should the exit option be exercised".

"Operators should also ensure that the ETCs are commensurate with the retail price of the equipment, the discount provided, and the remaining contract duration," the MDA said.

Technology, media and telecoms law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint law venture partner of Pinsent Masons, the law firm behind Out-Law.com said: "The changes attempt to answer the big question brought about by the constant changes to programming and attempts to strike a balance between the operators and customers. The further question to be answered is what happens if a consumer views an affected channel as a must-have but the change overall does not meet the qualitative threshold for dropped channels?"

The MDA's reforms to rules on unilateral changes made by pay-TV are narrower than had been initially proposed. It said that to balance the changes it will require pay-TV providers to offer customers the chance to take out shorter length contracts.

"MDA had initially proposed to allow consumers to exit without ETCs when any channel or material content is removed," the regulator said. "This proposal was refined as MDA recognises the need to provide the industry with some flexibility to innovate in their content offerings, while safeguarding consumers against detriment arising from unilateral contract changes."

"In view of the narrowed scope, MDA introduced a new requirement for pay-TV operators to provide options of 12-month or shorter contract term for all packages or bundles. This will give consumers the option of going for shorter contracts if they are uncomfortable with entering into a long term commitment. MDA had also initially proposed to allow pay-TV operators to charge ETCs if they take mitigating actions such as reducing subscription fees when channels or content is removed.  MDA will not proceed with this recommendation following feedback from both the consumers and industry players that they do not find such mitigating factors effective or practical to implement," it said.

The revised media market conduct code will also prohibit pay-TV providers from "leveraging a subscriber’s pay TV contract to impose changes on a non-pay TV contract that the subscriber has from the same retailer". Businesses in the telecoms and media markets often package different services together, including all or some of broadband and phone connectivity, pay-TV services and mobile network subscription services.

New disclosure obligations will also be imposed on pay-TV providers under the new code. This is aimed at "ensuring consumers are better informed on the terms and conditions of their pay-TV contracts", the MDA said.