New mobile operator set to upset status quo

A new mobile operator called Circles.Life will launch this week.

It can do this ahead of other competitors because it already has a physical mobile network through a leasing deal with local telco M1.

As a mobile virtual network operator (MVNO), it developed the software to provide new offerings. It is stealing a march on its potential competitors by launching now, while the others will have to bid for the fourth mobile licence later this year and take at least 12 months before they can start operations.

The launch of a new telco is a milestone for Singapore. The last mobile operator to launch its services was Virgin Mobile in 2001.

Speculation is rife on the type of products Circles.Life will offer. From its engagement with consumers on Facebook over the past weeks, it is clear that it will focus on data plans.

After all, consumers here consume a lot of data. Figures from the Infocomm Development Authority (IDA) show that Internet users consume a whopping 10 million gigabytes of data each month. If each high-definition video is 13GB, that is certainly a lot of videos watched monthly.

Exciting times are ahead for the mobile consumer. The coming of new mobile operator Circles.Life may lead to better prices, innovative offerings and/or improved customer support. Circles.Life, which will launch this week, has a physical mobile networ
Exciting times are ahead for the mobile consumer. The coming of new mobile operator Circles.Life may lead to better prices, innovative offerings and/or improved customer support. Circles.Life, which will launch this week, has a physical mobile network through a leasing deal with local telco M1. ST PHOTO: NEO XIAOBIN

As a newcomer, Circles.Life has the opportunity to offer innovative product plans as well as introduce new ways of serving consumers.

Expectations are high as consumers will expect to see a slate of never-before-seen offerings.

Senior analyst Clement Teo of research firm Forrester singled out flexible mobile plans and no lock-in period as two areas it can focus on.

"Consumers want to have control. So the ability of a mobile operator to offer me what I need in context of what I'm doing and how I want the service to be provided will be important. Essentially, let me choose the data capacity I want instead of dictating to me what I can have."

Currently the industry players offer fixed data bundles. For example, a mobile operator may offer a 2GB and a 5GB plan, but users have no way of creating a 3GB or 4GB data plan on their own.

So what can consumers expect from Circles.Life?

•Contract free and no bundling with a device. Consumers pay monthly without any lock-in period and without being tied to a device. Handsets can be bought on an instalment plan.

•Customers pay for 1GB, 2GB of data or more. If they run out, they can top up online. Unused data can be rolled over to the next month.

•SIM-only data plans will be offered; bonus data may be given free to celebrate an event like a customer referral or an anniversary.

•Ease of customer support: A customer dashboard to allow customers to tweak their data usage and to top up extra gigabytes when needed.

•Free roaming

•A personalised mobile app to help customers buy new data plans or or to top up data capacity

Circles.Life is the brand of Liberty Wireless, which was set up two years ago. It has a service-based operator licence from IDA.

It has invested a considerable amount of time in setting up the infrastructure of a "thick" MVNO by developing leading-edge software for telco services.

A "thick" MVNO has full control of its product offerings, unlike a "thin" MVNO which is essentially a reseller of mobile services. As a "thick" MVNO, Circles.Life can control call routing, create intelligent billing systems, have real-time billing and the capability to introduce new data plans on the flyalong with other functions.

PRICE WAR IMMINENT

Mr Charles Moon, principal analyst for Asia-Pacific Telecoms for research firm Ovum, said a price war is imminent with the Circles.Life launch.

The newcomer may enter the market with lower prices to attract customers. Then the incumbent telcos are likely to respond.

"Certainly prices are likely to fall, as we've seen in many markets as additional players enter the fray," he said.

Consumers will benefit. However, over time, the fourth player needs to be profitable, said Mr Moon, as its strategy shifts from early-stage customer acquisition to the reality of having to become profitable.

What is interesting is the M1-Circles.Life relationship. M1 is a business partner as well as a competitor. Circles.Life has developed its product independently of M1.

But they are frenemies with a win-win proposition.

Circles.Life is using M1's network to launch its service without having to spend a huge investment and time to build a nationwide mobile wireless network.

M1 benefits because the fees Circles.Life pays for infrastructure go straight to M1's bottom line. Besides, Circles.Life's customers will be counted as part of M1's customer base. This will benefit M1's share price since stock analysts see customer growth as an expansion of its business.

SURMOUNTING THE CHALLENGES

Tough challenges await the newcomer. Its success will depend on convincing potential customers that it has better products and services.

Research director Foong King Yew said changing consumer behaviour will be tough.

"There is customer inertia and apathy in the mobile market. For example, many like the handset subsidy even though they may eventually pay more for the device," said Mr Foong who is with research firm Gartner.

"Consumers are enamoured of new iPhones or Samsung Galaxy. They want the subsidy so that they can own one."

To compete effectively, Circles.Life must have very distinct and differentiated services, he said.

He pointed out that SIM-only plans are already available from the three incumbent telcos. Besides, a few years ago, Singtel had tried the flexible plan, under which customers could tweak their talk time, data and SMS capacity in their mobile bundles.

The adoption for the service was slow, he added.

He suggested that Circles.Life form partnerships with retailers for joint marketing promotions. This way, it could then take a cut of the revenue generated.

Exciting times are ahead for the mobile consumer. Adding a new player may lead to better prices, innovative offerings and/or improved customer support.


Correction note: An earlier version of the story stated that StarHub was the last mobile operator to launch its service in Singapore in 2000. This is incorrect. Virgin Mobile launched its services in 2001. We are sorry for the error. We had also said Singtel had halted its flexible plan Easy Mobile. Singtel has clarified that the plan is still available.

A version of this article appeared in the print edition of The Straits Times on May 03, 2016, with the headline 'New mobile operator set to upset status quo'. Print Edition | Subscribe