New bidders for 4th telco licence to get big discount

SINGAPORE — After an earlier failed attempt to inject more competition by opening up spectrum for a fourth telco, the Infocomm Development Authority (IDA) is making another effort by offering a 60 per cent discount on the starting price of the auction, and limiting participation to only new bidders.

The IDA is releasing 60MHz of spectrum to the prospective newcomer, out of the 225MHz that will be up for auction early next year.

The rest of the spectrum will be for the current telcos, to meet growing demand for mobile data traffic.

Given the size of the mobile market here and global market developments, the IDA said it does not see the market as being able to support more than four players.

The new entrant which successfully bids for this spectrum is required to build and deploy its own network, and achieve nationwide rollout by end September 2018, the IDA said today (July 7) at a media briefing. It added the spectrum awarded would be sufficient for the new entrant to roll out a nationwide network.

“The entry of a new mobile player will increase competition in the mobile services market. A new entrant is likely to bring about a wider variety of innovative services and more competitive offerings to the benefit of end users,” said IDA managing director Jacqueline Poh.

She also flagged new growth areas, such as Internet of Things and machine to machine communications, that will arise with Singapore’s effort to become a Smart Nation, and create opportunities for the new entrant.

A public consultation for the release of the spectrum bands and the framework to facilitate market entry for the fourth telco started yesterday and will close on Aug 12.

In the last 4G auction in 2013, the IDA set aside spectrum for new entrants --- but without discount -- - and no one responded. There was industry feedback during the previous public consultation that cost was a prohibitive factor. 

In the past year, fibre broadband provider MyRepublic, as well as transport operator SMRT in collaboration with local tech firm Consistel, have signaled their intent to throw in their bids to become Singapore’s fourth telco.

MyRepublic today said it was very glad that the indicative reserve package price is lower for the new entrant.

“MyRepublic would still have gone in for the bid even if there wasn’t a lower price on the spectrum. The spectrum being offered is an excellent range, and is exactly what we need to bring our vision of a data-focused mobile network to reality,” added a spokesman.

Consistel, which started a company called OMGTEL to enter the fray to  be the fourth telco, said: “It has always been OMG’s intention to participate and we are encouraged by the positions the IDA has taken.”

Mr Ajay Sunder, vice-president of ICT practice at research firm Frost & Sullivan, felt that the new entrant would find it challenging in this mature market, even with the discounted spectrum.

“Singapore is a mature market, even if we talk about 4G. The new operator would need a capital expenditure of at least a billion US dollars over the next three years, to make any kind of dent in the Singapore market,” he estimated.

But rather than introduce competition by way of reducing price alone, he said the new entrant should find a niche market.

“If you look at broadband as an example, MyRepublic has found its niche target of gamers, having a pricing plan for this new segment, then expanding the services. That might be a better play (to find a niche group of consumers), than simply cutting prices.” 

The IDA said it would facilitate entry for the fourth telco not just by setting aside the discounted spectrum, but also facilitating inter-connection with the other networks for the flow of traffic, as well as mobile number portability.

“At the end of the day, it is up to the new entrant to introduce competition into the market by coming up with new, innovative services which differentiate themselves from the incumbents,”said Ms Poh.

The IDA today also proposed to provide guiding principles for Mobile Virtual Network Operators, to aid wholesale negotiations with the telcos. MVNOs provide mobile services by buying airtime in bulk from the existing telcos instead of building their own physical mobile networks.

The current telcos are taking it in stride, even as they have previously voiced their views that the market is already mature and competitive.

“StarHub is adept at operating in a competitive market. We will continue to focus on our Hubbing value proposition which sets us apart, and on providing quality service for our customers,” said a spokesman.

A Singtel spokesman said: “Singtel is no newcomer to competition. We stay committed to our customers and will continue to invest in areas that ultimately matter to them.”

M1 said it is studying the paper and will respond in due time.