Did Rais do a ‘Flip-Flop’?

The Astro subscription price hike notice to its 3 million customers is now a national interest. After being raised by Independent MP for Wangsa Maju Wee Choo Keong in April, it now became an agenda that was discussed in Cabinet. On Friday, Minister in-charge of Information, Communication and Multimedia Dato’ Seri Utama Dr Rais Yatim Ph.D announced that Astro would not able to increase its charges before Malaysian Communication and Multimedia Commission’s explicit approval.

Bernama.com reported:

Saturday July 2, 2011

Cabinet rejects Astro’s rate hike pending MCMC consent

 KUALA LUMPUR: The Cabinet has decided against allowing Astro to raise its rates until the company gets clearance from the Malaysian Communications and Multimedia Commission (MCMC), Datuk Seri Dr Rais Yatim said.

The Information, Communication and Culture Minister said the matter was discussed at yesterday’s Cabinet meeting and members felt it was not appropriate for Astro to raise its rates at this time.

“I agreed that Astro’s rates could only be hiked with MCMC’s approval and that any increase must be reasonable and conform to the law,” he said after chairing his ministry’s post-Cabinet meeting at Angkasapuri here yesterday.

He said Astro had violated MCMC’s regulations by issuing notices on its rate hike to customers without the commission’s clearance.

“As such, I have asked MCMC to take appropriate action and instruct Astro to not continue with the rate hike until a time deemed more suitable.”

Explaining what he meant by “appropriate action”, Dr Rais said this was up to MCMC to determine and that Astro could be fined as allowed under the Communications and Multimedia Act 1998.

Astro recently announced it would be streamlining the packages it was offering, which would take effect on July 11.

According to Astro, following the streamlining exercise, customers could save between RM4 and RM14.95 or pay nominal increases of between RM1 and RM15, depending on the packages chosen.

An Astro spokesman said it viewed the minister’s statement with concern as the price revision was conducted in consultation with MCMC and in accordance with the Communications and Multimedia Act 1998 and licence conditions. — Bernama

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The Cabinet is the highest executive forum for decisions to be made. It is compelled to discuss what the Minister-in-charge had brought it upon them and they decide on the facts and information presented. Ministers rely on the Ministry officials to prepare the ‘Cabinet Paper’. What and how it happened on Friday’s Cabinet is still unclear.

Less than 24 hours later, a lawyer-by-training Dr Rais made this statement instead on affirming the one he made after the Cabinet’s decision on Astro’s intention. He now wants Astro subscribers to decide on the price hike issue, which is due to be implemented in this July.

The Malaysian Insider’s story on the same issue:

Rais tells Astro subscribers to complain over price hike

KUALA LUMPUR, July 2 — A day after saying pay TV operator Astro had failed to secure regulatory approval for a rates hike, Datuk Seri Rais Yatim has now urged subscribers to speak out on the matter.

“I call upon subscribers who oppose the hike to express their concerns to us, but it is clear that Astro wants to stick to their decision for profits without considering the interests of the rural community,” Rais was quoted in a Bernama Online report today.

 Rais yesterday said the price hike was discussed and rejected by the Cabinet, which felt the timing of the hike was inopportune.  

Shortly after the announcement by the information minister yesterday, the satellite TV provider responded by saying it had adhered to the necessary steps before announcing the move.

 “Astro noted the minister’s statement with concern as the price revision was conducted in consultation with the Malaysian Communications and Multimedia Commission (MCMC) and in accordance with the Communications and Multimedia Act (CMA) 1998 and the licence conditions,” an Astro spokesman said in a statement yesterday.

 Astro is planning to streamline its packages effective July 11, after which subscribers will see savings of between RM4 and RM14.95 or pay nominal increases of between RM1 and RM15, depending on packages preferred.

 Rais yesterday said the firm had jumped the gun with the announcement, and told the MCMC to take “appropriate action” against Astro.

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The fact is that, Astro was issued a concession license to do a satelite TV broadcast at the times before MCMC was formed. The merits of the important and fundamental points of the service are still embodied in the current license and still being followed through till now. It was about giving basic service which include free channels (as per available on TV plus a few more) and a premium service which is divided into several packages as options.

Another interesting point to consider is that in the license, there is no mention of a price control mechanism. More interesting to that, in the license too there is no provision for MCMC to impose any control on the price charged to subscribers. Under the Section 198 Communications and Multimedia Act, MCMC was accorded with the power to act against anti-competitive practices or abusing market power.

Astro's logo when it started broadcasting to Malaysians back in 1996

It was said that Astro sent a letter to MCMC of their proposal price hike in early May. They presented their proposal with figures justify to MCMC a little over a month ago. And MCMC did not make any comments on the proposal of the price hike. Then it came to the Minister-in-charge Dr Rais’s attention and he made this statement when answering a question by a member of the press at a FINAS do.

Bernama reported on 15 June 2011:

Astro must get MCMC approval before increasing price – Rais Yatim

2011-06-16 10:49

PETALING JAYA, June 15 (Bernama) — Astro must seek the approval of the Malaysian Communications and Multimedia Commission (MCMC) before raising the price of its paid television channel services, said the Minister of Information Communication and Culture Datuk Seri Dr Rais Yatim.

“The payment for basic services charged by Astro to its subscribers will not be changed. For whatever addition, Astro must discuss first with the MCMC before deciding to increase its service charges,” he said.

Rais said the ministry would discuss with Astro on the issue and the notice issued by Astro to its subscribers was considered invalid as it did not get permission from MCMC beforehand.

He said this to reporters after attending the Film Industry Appreciation Night 2011 organised by the National Film Development Corporation (Finas), here tonight. Also present was Finas Director-General Mohd Mahyidin Mustakim.

Astro recently announced that it would carry out a price adjustment on the packages offered effective July 11 with the subscription based on the subscribers’ package selection.

Some subscribers may be charged an increase of between RM1 and RM15 per month, while some would enjoy a reduction of between RM4 and RM14.95 per month.

Meanwhile, on the development of the national film industry, Rais said the ministry, through Finas, had allocated about RM15 million to boost the production of creative and animated films.

The minister also said that he would consider amending Section 6 of the Finas Act in a bid to boost the industry, but refused to comment further.

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It is unsure whether the Minister-in-charge did thoroughly go through the license that was issued to Astro as a retail satelite broadcaster and reflect on the earlier issued licenses.

However, it was believed that there after, KSU of KPKK Dato’ Kamaruddin Siaraf and MCMC Chairman Tan Sri Khalid Ramli met with Astro to request that the intended price hike should be delayed. They perfectly understood that the proposed price hike is inevitable. It was also said that Astro told them that they cannot simply postpone a commercial decision which will affect third parties including their bankers just to pander on a Minister’s ‘slip-of-the-tongue’, which is more of a ‘face saving for the Minister’.

The basic plan of RM 37.95 is said to remain as is after this price hike. Infact, the Minister-in-charge publicly acknowldged this:

Astro basic packages to stay competitive

Published: 2011/04/06

SATELLITE broadcaster, Astro, will work towards ensuring that subscription fees for basic packages for its future channels will not be increased.

Information, Communication and Arts Minister Datuk Seri Dr Rais Yatim said Astro’s current minimum subscription fee for the basic package was competitive compared to other countries in the region, at RM37.95 for 33 multi-lingual and multi-genre channels.

“The basic package was originally priced at RM49.95 in 2004 but with fewer channels than what’s available now,” he said in a written reply made available to the media at the Dewan Rakyat here today.

He was responding to a query from Wee Choo Keong (Bebas-Wangsa Maju) on the ministry’s move to control what was described as Astro’s “high” monthly charges considering that it had made a net profit of RM689 million last year on the back of 2.911 million subscriptions.

On claims of content monopoly of popular channels on the part of Astro, he said the Malaysian Communications and Multimedia Commission (MCMC) had done a survey on this matter in addition to holding talks with foreign content rights holders such as HBO, Disney and Discovery.

“The MCMC has found that content and broadcast rights procurement was very competitive. As to premium content from abroad, they are sourced in accordance with the terms and conditions stipulated by content rights holders as well as prices offered by broadcast stations,” he said.

The minister said broadcasters were free to negotiate with the relevant parties to secure broadcast rights.

“There’s no monopoly by anybody, including Astro,” he said.

Citing MCMC’s study, Rais said although Astro had asked several content providers to customise certain channels, rival broadcasters could still procure other channels and content.

He said the commission would continue to keep an eye on the industry and act against anti-competitive practices. – BERNAMA

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Astro is also said planning to do a surprise package to its less fortunate consumers, which the expect to launch something at a national level sometime in September at no extra cost to these category. There is also market talk that Astro is planning a special transmission which probably include  the issuance of 50,000 units free digital decoders for the rural folks of Sabah and Sarawak, as their ‘1 Malaysia’ national integration CSR work.

If any of this is true, from a political angle that could be a boon for Barisan Nasional. Sabah and Sarawak are important vote contributing states for BN to remain the ruling party and particularly, having the 2/3 majority in the Dewan Rakyat. If Astro decided to do a reversal of their CSR plan, who would tend to lose the most?

Minister-in-charge of Communications, Information & Culture Dr. Rais Yatim

So, did Dr Rais just do a ‘Flip-Flop’?

If he did, it would be something much to be desired. Despite being very successful, making a handsome profit and have a healthy cash-flow, Astro is a business dependent on the support of its financiers. Six out of ten banks which are supporting Astro are non local institutions. They have to service the hefty commitment Astro is having with these financiers. If it was a ‘Flip-Flop’ decision or even a mere ‘blunder-of-the-tongue’ announcement which looked more like ‘shooting from the hips’, then it must reflect badly in the eyes of these foreign bankers.

This is an example that would impair Prime Minister Dato’ Seri Mohd. Najib Tun Abdul Razak’s hardwork to bring in FDIs, convincing the continuance to re-invest in existing successful corporations and expanding business projects. These six banks would ‘do their market talk’ and eventually reach to the attention of potential investors. Bankers and investors would lose confidence on a market where the government, regulatory bodies or authorities could do a ‘Flip-Flop’.

Especially, pandering so a Minister’s whims.

Then again, is the Minister-in-charge invoking his ultra vires power of Section 199? If he is, the probably she should a public inquiry on it first. KPKK would have to publish the inquiry and get public to respond, probably within 45 days or so. Then the findings must be made public. Regardless, it is a process and we don’t think it has been carried out yet.

Inconsistency is bad. Worse still, ‘Flip-Flop’. Probably Dr Rais could once and for all clear the air with regards to this Astro subscriptions price hike if it is true he blundered in his earlier statements and did a ‘Flip-Flop’  in the past two days, at the journalists award do tomorrow night.

Published in: on July 3, 2011 at 13:11  Comments (19)