BARRY COLLINS We’re better off with Monopoly money.
Greater choice very rarely leads to greater competition – just greater expense
Monopolies. Rotten things, aren’t they? We have laws to stop them, commissions to break them up and furious columnists ready to lambast companies who achieve such power. Myself amongst them. But – and keep this under your hat, lest the Corbyn sandal-wearers get wind of this blasphemy – monopolies aren’t always a terrible thing. Especially for consumers.
A little over a decade ago, Sky had an outright monopoly on Premier League football. If you wanted to watch any live televised game in the shiny league, you had to pay Sky £35 a month and wait for a chap called Steve to come and screw a satellite dish to the side of your semi-detached.
Then the EU got involved. Not big fans of monopolies, the EU, as Microsoft and Google will testify. To avoid intervention from the European Commission, the Premier League agreed to split its television rights into six different tranches of games that broadcasters would have to bid for individually.
The final score? A bidding war erupted in which Setanta, then BT Sport, got hold of small packages of games. The Premier League pocketed an enormous hike in TV rights fees, allowing Wayne Rooney to finally pop down to Cash Converters and get the furniture out of hock, and consumers were rewarded with “greater choice”.
Except, we weren’t. Not really. Instead of paying one company to watch all the football, we now had to pay two. And as Sky had paid an arm and a leg to retain the majority of the rights, it didn’t drop its prices – consumers had to pay more to watch pretty much the same thing. It wasn’t as if Sky and BT had the rights to the same games and consumers could choose which to go with. It was like a rail franchise. If you wanted to get from A to B, you had to pay two companies instead of only British Rail.
The Premier League has just repeated this trick with the latest round of rights sales. This time, they threw a couple of extra packages into the mix, letting companies bid for the rights to stream games exclusively over the internet. Not the same games they show on TV, which might actually engender competition, but different games. This time, Amazon decided it wanted a piece of the action, slapping an undisclosed sum on the table for the rights to stream 20 matches from the 2019/20 season, while BT and Sky kept hold of the remaining games.
The Premier League is now laughing all the way to its offshore bank, pocketing more than £5 billion for rights that cost just shy of £2 billion a decade ago. And consumers, blessed with “unparalleled choice”, now have to pay three lots of subscriptions to watch the football. God bless competition.
The same’s happening in the regular television market. When I was growing up, you paid your licence fee, got your four channels and that was that. Then Sky and NTL/Virgin came along and managed to extract another subscription fee from customers for “more choice” – even if that “choice” was often little more than repeats of the stuff on the terrestrial channels and the aforementioned football.
Now, the TV market is splintering even further. Netflix and Amazon Prime are staples in many households, in addition to the Sky/Virgin fees and the mandatory licence fee. (Mandatory in the sense that even if you only want to watch iPlayer you now need a licence, and good luck convincing the terriers from TV Licensing if you don’t.) None of these are getting any cheaper.
Even though the BBC accounts for an ever-decreasing percentage of household viewing, the licence fee continues to rise, irrespective of whether you consider it good value for money or not. Sky and Virgin are the masters of the incremental price hike, discounting only when you ring up and threaten to leave. (Now three years after cancelling my Sky Sports subscription, Sky is willing to send round Rupert Murdoch with a plate of biscuits if I’ll sign up again.) My Netflix subscription fee has risen by 60% since I started subscribing four years ago.
Taking the licence fee and, let’s say, 25% of the Amazon Prime fee into consideration, I’m paying over £550 a year for television services alone, and that’s not to mention the odd downloaded movie or Sky Sports Pass on Now TV. Many will be paying thousands if they have sports and movie channels.
The variety, and arguably quality, of television programming available today is better than it’s ever been, but there are still only so many hours in the day we can spend watching. Are we really better off with this increased “competition”? Not financially.
Monopolies have their downsides, of course they do. But the advantage of paying one, often tightly regulated, fee for an integrated service instead of paying multiple fees to multiple companies for pretty much the same product is undeniable. We’re blinded by choice, but we’d sometimes be better off with no choice at all.
Consumers, blessed with ‘unparalleled choice’, now have to pay three lots of subscriptions to watch the football