Police case puts Consistel's telco dreams in jeopardy

Wireless systems specialist Consistel has made history by becoming the first company to have a police report lodged against it over regulatory matters by the Infocomm Development Authority (IDA).

IDA taking such a drastic step against its licensee is the equivalent of a mother saying her child is beyond parental control and needs disciplining by the legal system.

On Monday, IDA slapped a fine of $300,000 on Consistel, a local firm, for signing an unauthorised agreement to sell the Sports Hub's telecommunications system to another company. IDA also filed a police report against Consistel, alleging that it had deliberately submitted false information when it sought at a later stage IDA's approval of the sale.

The regulator is also convinced that Consistel had intentionally misled it into thinking that the sale agreement had yet to be signed.

IDA slammed Consistel's actions, using strong words like "the most serious instance" of "grave misconduct" by a telecommunica- tions licensee. To be sure, telecommunications licensees have had their fair share of run-ins with IDA but not of this severity.

Last year, Singtel was rebuked by IDA for an online smear campaign against its competitors for which Singtel had apologised twice even before it received a stern warning from IDA. Singtel had encouraged bloggers - via social media agency Gushcloud - to complain about StarHub's and M1's connections and services to drive subscriptions for its own youth mobile plan, and IDA made clear in its warning that it would not tolerate such practices.

The regulator was referring to the Telecom Competition Code, imposed on all telecommunications licensees, which states that a telecommunications licensee "must not engage in unfair methods of competition".

This time, Consistel did not apologise for its alleged misconduct but said it takes IDA's findings seriously and remains committed to providing good service at the Sports Hub.

Consistel is the exclusive host of the Sports Hub's wireless systems, including 3G and 4G equipment. It then leases the use of the equipment to the three local mobile operators: Singtel, StarHub and M1.

Ms Aileen Chia, IDA's director- general of telecoms and post, said on Monday that the Sports Hub is "a building of national significance", having been the venue for key events like the SEA Games last year and the National Day Parade this year. And Consistel's systems are critical to ensuring mobile and wireless connections throughout the 35ha facility, including retail spaces. So IDA has a duty to scrutinise any change of ownership to protect the public's interest.

In October 2013, Consistel entered into an agreement to transfer ownership of its equipment at the national sporting venue to Consistel Sprint, a joint venture with its investor Asia Networks. But it applied for approval from the IDA in June 2014.

The value of the deal has not been disclosed. The reason behind the sale of the asset, and whether it has been transferred to the joint venture are also unclear.

IDA started looking into the case in January this year after receiving a tip-off from directors at Consistel Sprint, but it is not clear why they blew the whistle.

Ownership is everything when it comes to continuity of service at the Sports Hub, which is IDA's main concern. If the new owner does not have the required technical expertise or the money to maintain the systems, service quality will suffer.

Public safety is another major concern. If there is a fire or accident at the Sports Hub, telecommunications connectivity ensures that the public, say, receives instructions to evacuate the premises safely, or continues to communicate with the relevant authorities for rescue purposes.

Moreover, the regulator needs to do its due diligence and watch out for special clauses in the asset transfer documents to ensure that another subsequent sale is not permitted without its prior approval. With so much at stake, it is not surprising then that IDA did what it did.

It also did not help that the alleged fraud followed a separate impasse in 2014, also involving Consistel, that had threatened to leave Sports Hub without any mobile coverage for its June opening that year.

Then, national embarrassment had seemed a possibility after Singtel, StarHub and M1 could not agree for months - since negotiations started in mid-2013 - on a leasing deal with Consistel. The unresolved issues were related to meeting IDA's service standard requirements and costs, among other things.

It is believed that recent proposals to change the Telecommunications Act to give IDA powers to prohibit exclusive tie-ups between building owners and telecommunications licensees are aimed at preventing an impasse of such a nature from recurring and jeopardising Singapore's reputation as a connected nation.

Questions now hang over whether Consistel would qualify to stay in the running to be Singapore's fourth telco as the Sept 1 deadline for such applications approaches. After all, its track record - against which all potential mobile entrants will be judged - is far from glowing.

Nevertheless, Consistel's subsidiary OMGTel is unfazed, saying it is pushing ahead with plans to become the fourth telco. It said it has a broad, international set of investors to help the company deliver "breakthrough subscriber offerings". Its advisory board also includes heavyweights like former Cabinet minister George Yeo and entrepreneur-cum-investor Michael Yap.

But all these will not help its cause if it fails to win IDA's trust.

A version of this article appeared in the print edition of The Straits Times on August 20, 2016, with the headline 'Police case puts Consistel's telco dreams in jeopardy'. Print Edition | Subscribe