Astro, a Monopoly- Jack Chan

Astro, a Monopoly
What is a Monopoly? Monopoly is a market structure of which a single firm producing a particular good and service. Just like Astro. Almost all Malaysian knows Astro. Astro provide direct broadcast satellite Pay TV service. (Anon., 2012)The service that Astro provide has no close substitutes. Monopoly always have the market power to control the price. As we can see, Astro keeps raising their price since then. (Sidhu, 2011)

Since Astro always increase their subscription price, why isn't there any new firm enter this industry? It is because Astro has the exclusive license from the government for 20 years which is until 2017. (Tan, 2012) Which is also means Astro hold the rights to offer satellite television broadcasting services in the country. This prevent any firm to provide similar service that Astro provide. Even more, Astro controls the market for pay TV equipment and accessories. (Anon., 2011) The other factor that prevent new firms to enter the industry is that large initial investment. New firms have to purchase satellite, broadcasting rights, marketing expenses and many more. For example, recently Astro has won the bid for broadcasting rights from English Premier League which is a famous football league in England. The bid is near RM1billion for three seasons of broadcasting rights. (Yeap, 2012) New firms will have to collect up to RM1billion just for broadcasting rights for English Premier League, what about other channels?  

Astro is also a natural monopoly.  A natural monopoly is an industry that single-firm production of that good or service is most efficient. It is more cost effective to have only one firm than having more than one firm to compete with one another. The disadvantages of Monopoly is high prices. Malaysian had been paying high price for TV subscriptions compared to other country. In India, there are firms that offer up to 155 channels for only RM9.17. In contrast, the cheapest package that Astro offered is only 50 channels but priced at RM64.61. (Anon., 2011)Besides that, monopoly is lack of incentive to innovate. Malaysians viewer knew that rain fade has been a problem for subscribers. In 2008, Astro was assuring their subscribers that the problem would be reduced by 30% after their migration of satellite from MEASAT 2 to MEASAT 3. (Anon., 2011)Being their subscribers myself, I couldn't see any improvement that Astro stated.

The advantages of monopoly is high profits. Astro enjoys revenue as high as RM3.2billion. (Sidhu, 2012)Astro also enjoy the benefits of economies of scale and other cost advantages. Astro's subscribers is as high as 3.1 million customers. (Sidhu, 2012)This makes Astro to have lower average cost in production.

Works Cited

Anon., 2011. Astro's monopoly has short-changed Malaysian TV viewers. [Online] Available at: http://www.consumer.org.my/index.php/development/private-sector/479-astros-monopoly-has-short-changed-malaysian-tv-viewers [Accessed 14 November 2012].
Anon., 2012. Astro.com.my. [Online] Available at: http://www.astro.com.my/portal/services-2 [Accessed 14 November 2012].
Sidhu, B.K., 2011. Astro To Increase Price. [Online] Available at: http://biz.thestar.com.my/news/story.asp?file=/2011/6/24/business/8963931&sec=business [Accessed 14 November 2012].
Sidhu, B.K., 2012. Astro's game plan. [Online] Available at: http://biz.thestar.com.my/news/story.asp?file=/2012/2/18/business/10754896&sec=business [Accessed 14 November 2012].
Tan, J., 2012. Astro To Continue To Evolve, Be Relevant To Investors. [Online] Available at: http://www.freemalaysiakini2.com/?p=52735 [Accessed 14 November 2012].
Yeap, C., 2012. Exclusive: Astro wins EPL broadcast rights possibly at about RM1b. [Online] Available at: http://www.theedgemalaysia.com/highlights/224974-exclusive-astro-wins-epl-broadcast-rights-possibly-at-about-rm1b.html [Accessed 14 November 2012].