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10/11/2009

Myth 213 - Competition is fictional in monopolistic environment

While my dreary eyes are still half open on a Sunday morning, I have woken up to a new truth. Competition in a market with only two monopolistic players can be good and true to the spirit of bringing better quality of services and goods and lowering cost. This is exactly what is happening in the tussle between SingTel and Starhub. Despite the fact that SingTel is paying $400m or double of what Starhub was paying for the rights to screen EPL, it is charging its customers less. How could this be possible beats me. There must have many things up their sleeves, eg efficiency, more advertisers, more cost cutting measures, or maybe they are doing national service. Whatever, Singaporeans and football lovers have woken up to a pleasant surprise this morning. At least the $23 package to watch EPL will be around for one year. And all the other services provided by SingTel are competitively priced against Starhub, and cheaper. I will strongly recommend that we should have two organisations building public flats for Singaporeans. This will definitely bring the price of flats down. Long live free competition, in the uniquely Singapore way. All the other industries and service providers should follow the example of SingTel to provide better quality services/goods at lower fees. SingTel's CEO Allen Lew deserves an equivalent of the Nobel Prize in Economics if he can pull this through over three years without significantly increasing the subscription fees.

5 comments:

Wally Buffet said...

Don't celebrate too soon.

It may be $23 now but next year?

Reminds me about computer printers that are almost given away at the cheap price but the refill cartridges? You have to pay an arm and a leg for it.

Hope I haven't spoilt your Sunday euphoria.

Anonymous said...

Wally is spot on man.

Free handphones but all else are not free, in fact likely to cost more becos of the so called free phones. The cost of the phones are likely to be factored into the services charges that come with the contracts.

patriot

Anonymous said...

Now they just 'Sing' a nursery rhyme to you to put you to sleep peacefully with such low charges.

Wait till they 'tell' you about rate increases next year, then you will realise you may have lost your pants.

redbean said...

please allow me to be naive and feel good. with the current trend, in 3 years time, starhub will bid for $600m for the rights and they will charge less than $23 for the EPL. this is just being logical.

by paying $200m more, the subscription fees can be lowered. so by paying another $200m more, the subscription fees can be even lower.

Anonymous said...

Great logic and reasoning by Redbean despite his claim of naivety.

patriot