The local authorities will not interfere with interconnection fees that smaller Internet service providers (ISPs) pay to the two major telcos here, saying that consumers have not been harmed.
The Infocomm Development Authority (IDA) issued its decision earlier this week after concluding its two-month public consultation held last year.
Smaller ISPs like M1, ViewQwest, MyRepublic and SuperInternet pay Singtel and StarHub fees for the shortest path - and fastest access - for their subscribers and hosted websites. Some of them said it was two to three times the price of international links charged by international telcos.
They wanted the IDA to mandate "peering" - or the free exchange of local Internet traffic among local ISPs - which is practised in Hong Kong.
ISPs have to interconnect to let subscribers from one ISP "talk" to those of another, or reach websites hosted by another ISP.
Singtel and StarHub command about two-thirds of broadband subscribers - or more than one million between them.
In its decision papers, the IDA said it has not found evidence of anti-competitive behaviour.
"Smaller ISPs are not prevented from accessing content on the Internet or content hosted by the larger ISPs as they have multiple IP transit options to choose from," said the authority, adding that these options include overseas telcos.
Fees paid to Singtel and StarHub are also not increasing as a proportion of the total costs borne by smaller ISPs, said the IDA.
MyRepublic acknowledged this.
Its chief executive, Mr Malcolm Rodrigues, told The Straits Times yesterday: "Most of our subscribers watch video and our traffic goes to sites like Google and Netflix, which have a direct link with us at reasonable cost."
He added that the value of direct links to Singtel and StarHub has "diminished" in recent times.
Moreover, the cost of these links has been coming down in line with international prices, according to the IDA. One such local link used to cost US$7 (S$9.50) per Mbps in 2013, but it is now going for US$3.15 per Mbps.
The IDA also noted that consumers are not punished by the payments. On the contrary, they have benefited from falling broadband prices.
An ultra-high-speed 1Gbps fibre broadband plan now goes for $50 or less a month. Such low prices were unheard of in 2009 when a 100Mbps plan - 10 times slower - cost at least $70 a month.
Singtel and StarHub supported the IDA's decision.
A StarHub spokesman said the market is already competitive and needs no regulatory intervention.