Price war breaks out among telcos

SINGAPORE — After years of benign competition and insistence from the major telcos that competition among them has moved beyond pricing, a price war is well and truly under way in the high-speed fibre broadband market.

Yesterday, M1 launched a promotional S$49-per-month 1Gbps fibre broadband plan — slashing its price by half to go head-to-head with MyRepublic’s Ultra 1Gbps package, which the start-up is offering at S$49.99, and SingTel’s S$69.90 Unlimited Fibre plan, which was put on the market only last month. In response to media queries, StarHub said it is revising its 1Gbps fibre broadband plan, but declined to elaborate. It has stopped selling its S$395.90 plan. “We are working on a new 1Gbps home broadband offer and will announce exciting details in the coming weeks,” said its spokesman.

In January, broadband provider ViewQwest cut its 1Gbps plan to S$149.90 from S$499.95. A week later, MyRepublic shook up the telco sector further with its S$49.99 1Gbps plan, which was about eight times cheaper than what M1 and StarHub were then offering. Subsequently, M1 cut the price of its S$399 plan to S$99, before it was slashed further yesterday.

SingTel started offering a comparable plan only last month, with its Unlimited Fibre broadband package, which has “no speed limit” and allows users to reach average typical speeds of 800Mbps. A SingTel spokesman said it has no plans to change its promotional prices for now, as the new package was just launched. “However, we regularly review our price plans to ensure that our customers enjoy exceptional value for money,” he said.

Mr Chua Hian Hou, assistant general manager for corporate communications at M1, said the telco was “further extending our value leadership to cater to the needs of customers who want a high-speed plan”.

On the latest developments, analysts noted a distinct shift in the telcos’ pricing strategies. Previously, M1, SingTel and StarHub have tended to move closely together when it comes to pricing or service. For example, when StarHub announced in April that it planned to start charging for its 4G add-on service, it emerged that M1 and SingTel also planned to introduce the exact same charge of S$10.70 for the value-added service if and when they stop offering it for free or at a discounted rate.

This led some consumers to question why the three settled on the same price, while also asking if there was enough competition in the local telco market. Some of the telcos said in response that competition had moved beyond pricing in Singapore’s small and mature mobile market and they differentiate themselves on factors such as quality, reliability, speed and innovativeness of its mobile services.

Apart from pricing its new plan just below MyRepublic’s price, M1 is also bundling the high-speed fibre broadband service with free 1Gbps mobile broadband service, among other freebies.

The analysts said the move by M1 — which has not diversified its business as much as SingTel or StarHub — was necessary in order for the company to gain market share.

Mr Foong King Yew, vice-president at research firm Gartner, said: “M1 has to do this because it has been a single-play mobile player. It has to find ways to grow, to leverage on fibre, and this presents an easier entry into the market. Pushing down the price will enable them to grab market share and grow their subscriber base.”

Mr Clement Teo, senior analyst at Forrester Research, said economies of scale and falling technology costs will enable M1 to sustain its new price plan. The company’s latest move — to offer the most competitive price — “does put pressure on the other two (established) telcos from a pricing perspective”, depending on the take-up rate. Still, the impact will not be too large for now, he said.

Experts said demand for 1Gbps plans will surge only when essential services that rely on high speeds become more popular, such as telehealth and high-definition video conferencing.

A MyRepublic spokesman suggested that the major telcos were following the start-up’s lead. “With SingTel having launched its consumer 1Gbps last month and M1 doing it now, we’re happy to see Singapore move towards the 1Gbps standard,” he said. After it launched its plan in January, MyRepublic initially could not cope with the volume of sign-ups, resulting in complaints from consumers about installation delays and unresponsive customer service. Still, the start-up is confident that it can hold its own against the big boys. “We have had more experience rolling out and maintaining a 1Gbps network,” the spokesman added.