The Astro Supremacy

I refer to The Star's article "Astro to Increase Prices.".

If there is one brand we Malaysians are all familiar with for as long as we could remember, it would undeniably be Astro, the classic television broadcasting service we all find relatable to our daily television habits. In fact, I think it is necessary for me to rephrase; Astro is the ONLY television broadcasting service available in Malaysia. Ever faced the scenario where Astro ceased to operate due to the slightest drizzle? You curse, and you swear, and you realize that there's nothing you can do, not even subscribe to any other TV broadcasting service. 

The reason to why the citizens of Malaysia have no choice but to put up with Astro’s incapability is because Astro is the sole firm that dominates the Malaysian broadcasting and media industry, leaving people no choice but to subscribe to Astro for their daily habitual fulfillment. A sole dominating firm is better known as a Monopoly, which normally exists in an imperfectly competitive industry, where change in price would not affect the demand much. A monopoly tend to have legal rights in order for them to stay in control in the industry for a long time, for example the Malaysian authorities’ agreement to hand Astro a definite contract for 20 years, up until the year 2017. This strategic act is infamously known as a barrier to entry, and competing firms should expect more from Astro, such as the ownership of satellites in Malaysia. Monopolies are normally backed by a number of politicians, so that the business will be a profitable one for the government as well. Astro is also a price-setter, where gullible Malaysians just sit and watch Astro increase the subscription charge year by year. Astro can afford to increase their price to as much as they like, even to a ridiculous amount, and yet the demand would not change as much because the price of Astro is inelastic. 

The unreliability and the recent increase in prices of Astro might somehow affect the television and cinema industry. This might be the case when people decide that Astro is not worth watching and that watching movies in cinemas would be more worthy, thus harming the television business while refining the cinema business. The contract the Malaysian government promised Astro might also affect the perception of Malaysian voters about the controlling government, which might also politically affect the Malaysian government. Whether Astro stays as a monopoly or not, I do not think it will bring about any significant effect on the Malaysian economy.

Reference: http://biz.thestar.com.my/news/story.asp?file=/2011/6/24/business/8963931&sec=business