Why It Matters

Singapore's mobile telco sector needs a shake-up

The authorities' willingness to dangle hefty discounts - the biggest ever - on a scarce resource like the frequencies in the radio spectrum to woo a fourth telco to set up here goes to show only one thing: Singapore's mobile telco sector needs a shake-up. While open to the idea of having more mobile virtual network operators that lease bandwidth from existing telcos and resell to consumers, the Infocomm Development Authority (IDA) appears to be more in favour of mobile operators that own physical infrastructure, to spur competition and benefit consumers.

On Tuesday, the regulator proposed to let a potential fourth telco bid for about 60MHz worth of frequency bands at a reserve price of $40 million - 60 per cent lower than the normal reserve price of $100 million.

The authority recognises that the market today has settled into three big camps, with the existing mobile telcos - Singtel, StarHub and M1 - each serving about one-third of the market and offering little price differentiation and innovation.

"A new entrant is likely to bring about a wider variety of innovative services and more competitive offerings to the benefit of end-users," the IDA said on Tuesday in a statement.

It cited the example of intense competition in the fibre broadband market brought about by the entry of more players over the past four years, leading to broadband prices being more than halved and surfing speeds jumping by up to 20 times

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

The sale of these spectrum bands has been described as "a major change" and will help any potential new entrant provide nationwide coverage.

During the last auction, in 2013, the lower-band frequencies - which allow better signal propagation with less mobile equipment - were not for sale.

This could be a watershed moment for Singapore's mobile sector.

A version of this article appeared in the print edition of The Straits Times on July 11, 2015, with the headline 'Push for mobile sector shake-up'. Print Edition | Subscribe