HONG KONG -- Singapore has an almost unique pay TV battle brewing -- a face-off between digital cable and Internet Protocol TV, by implication also digital.

Last week Singapore Telecommunications (SingTel) launched mioTV on broadband Internet with 33 channels and technical and service innovations, including the world preem of two BBC channels.

The very threat of this competition has sent dominant cabler StarHub on a yearlong growth spurt.

StarHub now offers more than 100 channels and has spent lavishly on content for its 490,000 subscribers. Most notably it outbid ESPN-Star Sports for rights to English Premier League to lure soccer-mad locals.

A technical evolution has allowed this rivalry to happen, in a country of 4 million where pay TV penetration is less than 40% of TV households.

Singapore is now one of the most wired countries in the world. But in the 1990s, when telcos first looked at video-on-demand, connections were too slow, compression technology not good enough and set-top decoders too expensive.

"What has happened is the induction of digital delivery platforms that allow new things to be done," Sony Pictures Television Intl.'s exec VP and MD (Asia) Todd Miller says.

Like Hong Kong's world-leading IPTV service, which started life allowing viewers to select only the channels they wanted, mioTV preems with a largely a la carte menu.

IPTV's flexibility allows SPTI to operate three business models on mioTV; a general entertainment channel that is a cousin of its Sony Entertainment Television net in India; a subscription video-on-demand channel that offers unlimited access to some 20 movies per month; and a pay-per-view service.

Company is also experimenting by offering studio movies on PPV simultaneously with their DVD release in Singapore.

StarHub prepared for competition by using digital technology to add services, including a personal video recorder and HubStation, a device that allows consumers to watch, surf and talk simultaneously.

"Hubbing has enabled us to reach out to an increasing number of customers taking on two or more of our services, increasing customer loyalty and reducing churn," says Patrick Lim, StarHub's VP of Cable TV Services.

The rivals claim subtly different competitive edges. StarHub is delivering choice and sports, mioTV is emphasizing movies and technical wizardry.

"Our Barclays Premiere League soccer offering is a good example of 'hubbing.' Starhub customers can enjoy live matches not only on cable TV, but via online and mobile platforms as well," Lim says.

In addition to the a la carte menu, mioTV has a 30-day onscreen guide and a PVR that can be operated remotely via Internet and will soon be accessible by cell phone. Company says it also will offer personalized advertising.

"We had to do something different," says a SingTel spokesman, who adds mioTV had closely observed British Telecom's push into pay TV.

On other fronts there is little to pick between the two. SingTel claims an equivalent of hubbing. "We can now offer everything on one phone line and have 96% household penetration," says a spokesman, who argues this will help mioTV score in the city-state's less affluent heartlands.

To appeal here it will offer more Cantonese nets from Hong Kong and Mandarin-language nets from Taiwan. StarHub hit back by launching its own Malay-language general entertainment channel.

Both services emphasize high-definition programming,reflecting a need for gimmicks as well as the Singapore government's push to develop expertise in HD program production.

Competition between the two turned litigious when SingTel challenged StarHub's right to sign exclusive contracts with content suppliers.

Appeal court judge last week ruled that exclusive deals were not anti-competitive and that the market was big enough for both groups. The decision was widely applauded by foreign media congloms.

"The (Singapore) market is big enough for different platforms and can grow through differentiation," says SPTI's Miller.

Limited market size caused pay TV platform mergers in the U.K., Spain, France and Italy in the past decade.

But this is unlikely in Singapore because IPTV lowers the cost of launching pay platforms. ("We don't make any reference to IPTV in our marketing, we are promoting it as a new TV service," says the SingTel spokesman.)

How many other Asian territories will spawn digital competition depends as much on factors outside the industry as within it.

Taiwan has well entrenched cable operators and regulatory inertia. China's government has spent hundreds of millions building cable networks and may be unwilling to open up to competition just yet, though there are plenty of small companies offering IPTV nets already.

South Korea is expected to be the next big battleground. Its cable platforms have been slow to evolve, but its Internet connections rank among the most dense and fastest on the planet.

© Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

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