Astro is a monopolist in Malaysia’s satellite television industry.
How does Astro set its BARRIERS to prevent new entrants?
Firstly, Astro is price maker but with the scale of demand. It keeps on increasing price but is still having an increase in total revenue because the increase in price has caused a slight decrease in demand but the total revenue is higher than before.
Profit maximizing output (QM)
Secondly, it has a large initial investment. In July 2013, Datuk Rohana (CEO of Astro) invested 6.4m to 18 new transponders by 2019.
Rohana (Astro CEO)
Thirdly, it differentiates its attributes from potential competitors. Malaysians can enjoy free satellite television through a service called NJOI which launched by Malaysia PM, Najib in 2011.
In my view, Astro tend to gain more profits by raising its popularity. NJOI is provided to customers with low-income. Astro targets these audiences and thus, it holds the whole market.
Finally, Astro has the directive of government. It is the only one TV operator given exclusive licence for 20 years.
As a conclusion,
Investments of Astro to restrict new entrants are too high. In order to decrease market price, government should implement reforms to encourage new entrants.
Government reaction to USA Satellite TV market
Direct TV and Dish Network is the only two companies that offer satellite TV in USA.
Dish Network has attempted to buy Direct TV but U.S. regulators blocked the deal in 2002.
Ten years later, Direct TV CEO Micheal White said, “Consolidation could be pro-consumer, perhaps.” Besides, its competitor, Dish Network chairman Charlie Ergen also stated that he would like to merge with Direct TV.
But, till now they still haven’t passed muster with the FCC and antitrust officials.
Based on FCC (Federal Communication Commission) official website, it capitalizes on its competencies in promoting competition, innovation, and investment in broadband services and facilities. This is why a merger between Direct TV and Dish Network can’t be completed.
If only Malaysia government launches the same policy, so we could make our choices.