Real average annual growth in revenues of 12% between 1995 - 2005

• Important market to watch for understanding the impact convergence
• Full range of interactive services will be available soon
• We expect digital terrestrial television in 2000

An important market for observation

Despite the many impressive technological developments taking place in the Singapore market, it should move from being second to Malaysia in smallness of size in 1995, to being second to New Zealand in 2005. We expect that the Singapore television market will grow from an estimated commercial revenue level of S$251 million (US$177 million) in 1995 to S$910 million (US$640 million) in 2005. This translates into a respectable 10-year nominal CAGR of 13.7% (13.7% in US dollar terms). Nevertheless, what make the Singapore market important to the television and telecommunications industries is that it will be the first market in which a wide range of interactive services, including television or video, will compete across networks as well as household interfaces. Within a year we should have some evidence to discuss in relation to the question of PC versus TV.

(S$ Bils)

(S$ Bils)

(S$ Bils)

Real CAGR (%)

Real CAGR(%)

Real CAGR (%)

Gross Television Household Income

Television Industry Commercial

Revenue

121

0.25

184

0.54

266

0.91

6.7

14.2

5.5

9.0

6.1

11.6

(%)

(%)

(%)

CAGR (%)

CAGR (%)

CAGR (%)

Terrestrial Analogue Free TV

Terrestrial Digital Free TV

SMATV-TVRO

Wireless Cable

Wireline Cable

Direct-to-Home Satellite

Terrestrial Digital Pay TV

Telephone VOD

99

0

0

0

1

0

0

0

74

1

0

1

20

0

0

4

58

17

0

1

19

0

0

5

10

NM

NM

NM

95

NM

NM

NM

6

87

NM

5

11

NM

NM

16

8

NM

NM

NM

47

NM

NM

NM

Singapore Commercial Revenue

100

100

100

16

11

14

(%)

(%)

(%)

CAGR (%)

CAGR (%)

CAGR (%)

Advertising

Basic Service

Premium Service

Viewing Fees

99

1

0

0

79

17

1

2

78

17

2

3

11

98

140

NM

11

10

25

17

11

48

73

NM

Singapore Commercial Revenue

100

100

100

16

11

14

Micro & Macro Outlook

Rising consumption a boost for TV

Encouraging news for the television industry in Singapore is the prospect of rising consumption after years of high saving. While we look for nominal GDP to rise at a 10-year nominal CAGR of 8.2% from S$121 billion in 1995 to S$267 billion in 2005, we look for private-sector consumption to rise at a 10-year nominal CAGR of 10.2%. With the average Singapore household enjoying the largest income anywhere in the region, an estimated US$106,000 after translation in 1997, there is much money to spend.

Increased viewing likely to be directed toward pay TV

There may also be much leisure time in which to spend. Singaporeans watch, on average, almost as little television as their neighbouring Malaysians - only 138 minutes per day in 1995. Thus may have a lot to do with the rather narrow choice on free TV. Leaving aside the question of the program genre, each native language is served by at most one channel. While average viewing will probably increase with the deepening penetration of cable, this may lead to more fragmentation of audiences and less significant support for advertising rates as is provided by the general increase in consumption.

Current Services

State-owned broadcaster trying to be commercial

The free-TV sector is dominated by the government-owned Television Corporation of Singapore (TCS). TCS has, over the past few years, been steadily transformed into a more commercially-orientated company. TCS offers four services. Channel 8, the one with the greatest share, is largely Mandarin-language programming. English-language Channel 5 has begun to increase its share of viewship. Prime 12 is TCS’s service in Malay and Tamil while Premier 12 focuses on English-language arts, sports, edutainment and infotainment

Cable hopes to pass almost all of the market by end-1998

Singapore Cablevision (SCV) began as a plan to operate a three-channel UHF pay-TV service, partly owned by the predecessor of TCS. Having migrated the plan to a HFC platform, SCV by July 1997 offered broadband connection to 470,000 homes. SCV hopes to have passed 95% of homes by end-1998. In addition to Singapore’s four free TV channels, SCV offers 17 channels in its basic package, widening viewer choice considerably. SCV also offers various premium channels in a tier, or on a channel by channel basis.

A base for satellite export

Ironically, for a country that does not permit its citizens to receive television signals by satellite, Singapore has striven to become a regional hub satellite production and broadcasting services, Excluding TCS, none foreign satellite broadcasters are based in Singapore and 11 satellite channels, the bulk of which target the Indian market, uplink from the island. These operators are not subject to Singaporean restrictions on content or foreign ownership.

Competition

We do not expect much change in free TV, apart from DTT

While there is spillover programming from neighbouring Malaysia, local free TV is unlikely to witness much change in the short or medium term. Although TCS has been corporatized as a first step to privatisation, the government has not committed to a specific timetable. We believe it is unlikely that TCS will be privatized in the next few years. However, such an event might take place after the advent of DTT which we expect will be rolled out in 2000.

Convergence

Broadband information infrastructure is in place

Singapore has already implemented significant components of a broadband information infrastructure called Singapore ONE (One Network for Everyone). Singapore ONE is actually several networks. At the core is an ATM-based backbone network, 1-Net, which is made up of eight broadband access nodes to local networks. Two of the broadband access nodes are also act as switches to service providers. Connection to the broadband access nodes are Singapore Telecom and SCV, the island’s two local access networks for broadband services. Singapore Telecom will eventually connect to homes using ADSL technology, while SCV will use its HFC architecture to carry the broad bandwidth.

Cable and telco to compete as local providers

Both Singapore Telecom and SCV’s local access networks are open to the delivery of services from competing providers of Internet access, VOD and other interactive services. Singapore’s Internet service providers are now conducting trials for delivery of high-speed Internet access through both SCV’s and Singapore Telecom’s networks.

Singapore Telecom itself will be marketing a range of interactive services under the brand name Magix for delivery to the PC, including VOD, program-on-demand and music-on-demand. User reaction to this service will be scrutinised world-wide. By delivering through the PC and not the TV, Singapore Telecom’s solution utilises the pre-existing PC’s processing power and memory, eliminating the cost of a high-grade set-top box. With Singapore’s high PC penetration of about 30%, the service has a strong selling point.

Cable involvement in telephony might be held up

Singapore is engaged in a notable liberalization of its home telephone market in the hope of attracting foreign investment that can also be directed to developing Singapore as a regional communications hub. It remains unclear, however, whether SCV’s cable network will be issued to offer cable telephony. Ownership of SCV is split between two parties that are also competing for local fixed-line licenses. It is likely that, of the two (possibly more) licenses to be granted by the government, only one will be for an operator with new infrastructure. The others, network lessors, would quite reasonably look at SCV as a local access vehicle. The use of the SCV network for telephony, however, could conceivably be delayed due to infighting among shareholders.