Sweet deal to greet potential 4th telco

Big discount on mobile frequencies could see more choices and better deals for consumers

Infocomm Development Authority (IDA) announced that the fourth telco would be offered 60 MHz worth of mobile frequencies at a discount of 45 per cent. ST PHOTO: DIOS VINCOY JR

A fourth telco could give the existing players a run for their money after the authorities decided to stick to their guns and offer the potential newcomer generous terms - including a significant discount on mobile frequencies.

For consumers, this could mean more choices and better deals as the telcos ramp up efforts to protect their turf.

Despite strong objections from incumbents Singtel, StarHub and M1, the Infocomm Development Authority (IDA) announced yesterday that the new kid on the block would be offered 60 MHz worth of mobile frequencies at a discount of 45 per cent, or $35 million.

This is based on a different mix of frequencies. Based on the original mix, the reserve price was $40 million, or a 60 per cent discount.

IDA will also reserve a third of all the usable frequencies in the premium 900MHz band for the potential newcomer. This is a premium band that allows stronger signals with less equipment, and existing telcos have been using it to deliver better indoor coverage.

A mobile airwave auction will take place in the third quarter of this year and the fourth telco could be rolling out its services as early as April 2017.

"Having more players in the market will give consumers a greater choice in selecting an offering that best suits their needs," said IDA managing director Jacqueline Poh.

Just the threat of a new entrant has seen existing players offer lucrative deals.

For instance, in July last year, M1 rolled out a line-only plan for $30 a month, which comes with a generous 5GB data allowance. Singtel responded in September with a similar offering, while StarHub deepened the discounts for its line-only mobile plans in November.

IDA said that it needs to help the potential new entrant as there are high entry barriers. For one thing, the newcomer will not be generating any revenue while it incurs a huge capital expense in rolling out a new network. Existing players are also expected to bid prices up in the upcoming airwave auction to keep out the newcomer, IDA said.

The authority made the decision after consulting the industry from July to August last year.

Two local companies - fibre broadband service provider MyRepublic and a unit of Consistel, which set up the Singapore SportsHub's wireless systems - are eyeing the chance to become the fourth telco here.

While MyRepublic and OMGTel, Consistel's telco unit, cheered the decision, the three telcos reacted cautiously.

Mr Yuen Kuan Moon, head of Singtel's Singapore consumer business, said the telco maintains its view that "a level playing field must be respected to ensure sustainable competition even if the authorities are keen to facilitate the entry of a fourth operator".

An M1 spokesman said it is evaluating IDA's decision in detail and will be seeking clarification.

A StarHub spokesman said: "Operators need more spectrum, especially in the low bands, to cater for continued growth in mobile data traffic."

To allay the fears of the incumbent players, IDA said it will allow Singtel, StarHub and M1 to keep at least 10 MHz worth of their existing 900MHz frequencies.

Telcos also have other frequencies, such as 2.1GHz, for their 3G services, IDA noted.

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A version of this article appeared in the print edition of The Straits Times on February 19, 2016, with the headline Sweet deal to greet potential 4th telco. Subscribe