Govt grant for fibre network helped to lower cost to public
Director, Corporate and Marketing Communication, Infocomm Development Authority
We refer to Mr Jonathan Yap’s letter, “Unanswered questions about OpenNet sale” (Sept 11).
It is incorrect to take the Infocomm Development Authority’s grant to OpenNet, deduct from it the value of the transaction and conclude that OpenNet has made a loss.
The IDA’s S$750 million grant was for rolling out a nationwide, high-speed broadband fibre network (NBN), so that consumers and businesses did not have to bear the full cost of the roll-out. By mid-2012, fibre was effectively deployed to 95 per cent of homes and businesses.
On the other hand, the proposed S$126 million transaction price for OpenNet’s shares is a commercial decision. Among other things, this price is likely to have taken into account cash flow from OpenNet’s continued services to telecom operators.
Since 2000, when Singapore’s telecommunications market was fully liberalised, any operator issued with a Facilities-Based Operator licence could deploy its own fibre broadband infrastructure, and there are licensees who have done so. OpenNet does not enjoy a monopoly. The services and prices of OpenNet, a dominant licensee, are regulated by the IDA and are independent of who owns OpenNet or who its sub-contractors are.
The authority’s regulation of wholesale prices for fibre broadband has helped to facilitate the market entry of downstream retail providers offering competitive and innovative broadband services to the public.
In assessing the proposed acquisition of the shares in OpenNet by CityNet, the trustee-manager of NetLink Trust, the IDA will consider all factors.
These include ensuring that the transaction does not result in a substantial lessening of competition in any telecommunications market in Singapore or harm the public interest.