NOISE on a possible fourth mobile operator here has reached a fever pitch.
An impending response to a consultation paper on the possibility of a fourth operator is expected from the Infocomm Development Authority (IDA) soon.
Attention so far has been trained on two contenders - wireless expert Consistel and My Republic, a fibre broadband retailer - which have publicly indicated their interest in the fourth operator licence. But hang on, there are other contenders which may not need physical networks to offer wireless and mobile services.
These are asset-light telco operators which buy airwaves (data and voice capacity) in bulk and re-sell them to consumers. They need less capital and can get going in months instead of the 15 to 24 months needed to roll out an islandwide mobile network.
Last year, the IDA called for new entrants - physical and virtual operators - to roll out more mobile services here. For the last 13 years, IDA had been open to the idea of a fourth telco to inject more competition, but there were no takers because the barrier to entry is prohibitive.
This has not changed today. Installing a mobile network and acquiring the airwaves will set back any mobile operator licensee by about $1 billion.
For a virtual operator like Singapore start-up Liberty Wireless, it believes there is an opportunity to grab market share because of its software-driven model.
Liberty is among 17 virtual operators or mobile virtual network operators (MVNO) here. They are mainly re-packaging airwaves to sell niche services including call-back, which is a method of making low-cost international calls via a third country where call charges are considerably lower. Or the MVNOs differentiate themselves from the telcos by offering special voice, text and data packages aimed at specific groups like Filipinos.
Liberty based its model on search giant Google which is also an MVNO providing wireless and mobile services in California. Google owns no infrastructure. It buys airwaves from T-Mobile and Sprint and aims to connect users to the best wireless hot spot and mobile networks.
Users making a call on a wireless network can switch seamlessly to cellular service in the car or train and back to wireless again when they enter a building. It is also making the service more transparent and as easy to understand as possible.
For example, it costs US$20 (S$26.67) a month for the basic features of voice, text, Wi-Fi and international coverage in 120 countries and a flat US$10 per GB for cellular data in the United States and abroad.
Google controls all of this through software. Its algorithms can "sense" when a user is moving out of Wi-Fi range into a cellular signal and so switches the customer from one to another seamlessly without any drop in the call.
It can track up-to-the minute data usage and offer live billing to customers. Users will be alerted through a text message to top up their data capacity, for example, when they are running low. This can be provisioned by software in minutes.
Liberty Wireless, which received its MVNO licence last year, is following the Google approach. It is breaking out of the traditional model of MVNO by offering wireless and mobile services to mass consumers.
It wants to provide innovative new services to customers who want to pay for what they want and when they want it, offerings which are not available today. It has secured airwaves from a local telco and expects to roll out its wireless and mobile services soon.
Its biggest advantage over the contenders for the mobile networks is capital: It needs only tens of million dollars to get started because it does not need to pay for physical infrastructure and it does not need to pay for airwaves.
The bulk of its operations including turning a customer subscription on and support will be done through the Internet, which reduces headcount and is also faster and more convenient.
Its toughest challenge, though, is acquiring customers. The MVNOs also face an uphill challenge as unknown brands with no retail experience.
The three telcos retain and attract new customers by a variety of means - offering subsidised handsets for popular brands, like the iPhone, is one.
But the telcos have deep pockets to provide the subsidy. Besides, they lock in the customer for 24 months to recover the cost.
To change the game, Liberty and any other MVNO wanting to provide wireless and mobile services will have to think of more innovative ways.
For example, there is no need to offer new handsets. Users can just buy SIM cards with data plans from the MVNOs to use on their phones. For example, giffgaff, an MVNO in Britain, offers 3G and 4G SIM cards for different surfing speeds and data capacity.
Critics also say MVNOs have no control over the network and its performance. This, however, can be solved by contractual agreements to ensure the wholesaler telco provides a high level of performance.
A low start-up cost means MVNOs do not need a big market share to be profitable. If they can snag a single-digit market share from 2 per cent to 5 per cent in the first two years, they will already be profitable.
Liberty and other MVNOs are eyeing 500,000 people who change telcos every year as well as another 500,000 new residents here. If they can get a good percentage of them as customers, they will be cash flow positive.
For Liberty, its ambitions are bigger than the Singapore market. The Republic is its first market, followed by neighbouring countries.
So what will be the IDA's response to the consultancy paper?
As the telco regulator and the industry promoter, IDA has to walk a fine line. Its response has to be balanced to protect the incumbent telcos' investments in the network infrastructure and at the same time, create opportunities for a fourth mobile network operator or MVNO.
It will probably also lay out the guidelines for telcos which want to bid for the mobile operator licence.
For MVNOs, it will probably not mandate that telcos re-sell airwaves at a fixed price. But its response will probably contain a pricing framework for the telcos and MVNOs to work out.