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Plan to protect pay-TV customers 'may backfire'

Analysts warn of higher prices if there is no penalty for breaking contracts

Published on Mar 18, 2014 9:00 AM

A proposed new rule to better protect consumers by allowing them to break pay-TV contracts without penalty in the event of unfair practices may lead to higher prices instead, warn analysts.

It was announced in Parliament last week that a new rule was being considered to address complaints about pay-TV operators unilaterally removing channels or programmes and imposing higher fees. While some said the change would make for a more competitive market and benefit consumers, others say it might backfire if applied bluntly.

"Getting rid of termination charges wholesale is too blunt a stick," said Maybank Kim Eng analyst Gregory Yap.

"The conditions of business would become too unpredictable and the natural reaction of the sellers would be to raise prices to cover this contingent cost," he said.

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