Hefty discount on airwaves to woo 4th telco

Existing players can bid for bands at higher price; new contenders welcome IDA move

The potential fourth telco is expected to roll out services nationwide by the end of September 2018. ST PHOTO: KUA CHEE SIONG

To entice a fourth telco to set up shop here and compete against the likes of Singtel and StarHub, the authorities are planning to dangle a financial carrot - heavily discounted mobile airwaves.

The Infocomm Development Authority (IDA) has proposed to let the potential fourth telco bid for around 60MHz worth of airwaves at a reserve price of $40 million - 60 per cent lower than the normal reserve price of $100 million.

"This is in recognition of the fact that a new entrant will face entry barriers in a mature market, given the significant upfront capital investments required to deploy nationwide services for consumers," said IDA in a statement.

Additional spectrum will also be available for bidding by existing telcos Singtel, StarHub and M1 in a general auction at a higher reserve price to meet the growing consumer demand for mobile data traffic.

The proposal is part of a second public consultation launched yesterday by IDA. It will end on Aug 12.

The market today has settled into three big camps, with the existing mobile telcos each serving about one-third of the market and offering little price differentiation.

In a bid to spur competition and bring benefits to consumers, IDA consulted the industry on ways to ease in more players during the first consultation in April.

Fourth-telco contenders - local fibre broadband provider MyRepublic and wireless systems specialist Consistel - gave the thumbs up to the latest proposal, which offers lower-band frequencies of 700MHz and 900MHz to the new entrants.

In a statement, MyRepublic said: "The spectrum allocated to the fourth mobile operator will ensure that it will be able to deliver fast mobile Internet with excellent coverage... We are also very glad that the indicative reserve package price is lower for the new entrant."

A Consistel spokesman said IDA's sale of spectrum in the 700MHz and 900MHz frequencies is "a major change" and will help the potential new entrant in providing nationwide coverage.

The 700MHz band will be freed up as early as 2018 when analogue TV signals are turned off in the nation's migration to digital TV.

The rights to the 900MHz band, currently in use by existing telcos, are due to expire in April 2017.

The auction framework is expected to be finalised by the end of this year. Auction application is slated to begin early next year.

The successful fourth mobile operator is expected to roll out services across the island by the end of September 2018.

Past efforts to issue a fourth mobile-operator licence have been unsuccessful. When 4G airwaves went on sale in 2013, no fourth mobile player showed up.

Managing partner Rob Bratby of technology law firm Olswang Asia said the discounted spectrum-auction reserve price will attract bidders this time around. But more can still be done to level the playing field for new entrants.

"They will have a tough time competing with established players. A lot of customers are locked into long-term contracts," said Mr Bratby. "It would be helpful to have regulatory measures to lower switching costs or termination fees."

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A version of this article appeared in the print edition of The Straits Times on July 08, 2015, with the headline Hefty discount on airwaves to woo 4th telco. Subscribe