The old model is broken. Telcos need to reinvent themselves

The collapse of the Simba-M1 merger and Singtel’s renewed interest in consolidation have revived debate over the structure of Singapore’s telecommunications sector. But the discussion should not focus only on whether the market needs three or four telcos. The deeper question is how Singapore’s telcos arrived at this point, and why consolidation alone may not solve the sector’s problems.

Singapore’s telecoms sector has gone through more than three decades of liberalisation and competition. The process began in 1992 with the corporatisation of Singtel. In 1997, M1 entered the mobile market. In 2000, limits on the number or type of telecoms licences were removed, except where there were physical or resource constraints. StarHub also entered as Singapore’s third mobile operator in April 2000. This liberalisation opened a market that had once been dominated by one operator, and gave consumers more choice through competition. The Telecom Competition Code, finalised in September 2000, helped prepare the market for the move from monopoly towards competition. It dealt with issues such as consumer protection, infrastructure sharing, competition rules and mergers.