Telcos object to subsidy for newcomer

People walking past a neighbourhood shop selling handphones.
People walking past a neighbourhood shop selling handphones. PHOTO: ST FILE

The authorities' proposal to set aside premium frequency bands at a heavily discounted rate to entice a fourth telco to set up here has received strong objections from the three existing telcos.

Singtel, StarHub and M1 dismissed the need for a fourth telco, and warned that consumers would suffer poor mobile connections as there would not be enough frequency bands for each operator.

The telcos were responding to a call in July by the Infocomm Development Authority (IDA) for public feedback on its proposal.

It had proposed to let the newcomer bid for 60MHz worth of spectrum at a reserve price of $40 million when the normal reserve price is $100 million.

What would be reserved for the new entrant are lower-band frequencies of 700MHz and 900MHz, which allow better signal propagation with less mobile equipment.

In its written feedback, Singtel criticised IDA's proposal, saying it would cause the existing telcos to face "spectrum constraints in meeting the Singapore market's bandwidth needs".

StarHub chimed in: "This means a poorer customer experience for Singaporeans, and a negative impact on Singapore's ongoing push for global competitiveness in mobile broadband speeds."

M1 called for IDA to let the existing telcos retain their rights to use the 900MHz bands "to meet IDA's stringent 3G standards".

These standards stipulate at least 99 per cent islandwide outdoor coverage, and at least 85 per cent coverage within a building.

The three telcos also questioned IDA's rationale for subsidising the newcomer in the upcoming spectrum auction, and wanted greater parity in treatment.

M1 called the subsidy "unprecedented" and asked for more justification.

Singtel warned: "If the IDA artificially alters competitive dynamics by subsidising a market entrant it is essentially expropriating the expected benefit of this investment. This could discourage the three existing (telcos) from undertaking future investment."

StarHub also asked if the newcomer would last if it is dependent on the subsidy for market entry.

Ten other companies, including locally-based fourth telco hopeful Consistel and MyRepublic, also gave feedback in the consultation exercise. IDA has yet to announce its decision.

Fibre broadband services provider MyRepublic and wireless systems specialist Consistel, which set up the Singapore Sports Hub's wireless systems, wanted more frequency bands to be reserved for the entrant. Consistel also suggested that IDA consider not just the highest bids, but also other criteria such as the technologies used and the bidder's ability to cover indoor spaces with good signal strength.

"Studies have shown that 75 per cent of mobile data consumption is expected to take place indoors," it said.

A version of this article appeared in the print edition of The Straits Times on September 08, 2015, with the headline 'Telcos object to subsidy for newcomer'. Subscribe