Undeterred, IDA allows for fourth telco in Singapore
By Benjamin Cher February 19, 2016
- Decision made after two public consultations, sizeable block of spectrum for No 4
- Operator required to pass pre-qualification tests and participate in an auction
THE Infocomm Development Authority of Singapore (IDA) has announced its decision to allow the entry of a fourth telco in Singapore for its upcoming spectrum allocation auction, despite incumbents raising the spectre of price wars in local media.
This decision follows two public consultations in 2015 and in 2014 to garner industry comments on the issue, and paves the way for hopefuls like MyRepublic to make a bid to become the fourth mobile network operator (MNO) in the island-republic.
The upcoming spectrum auction will be divided into two stages, with The New Entrant Spectrum Auction to be held first in the third quarter of 2016.
There will be a pre-qualification process to act as a “check to ensure only capable and committed parties are allowed to participate in the auction,” the IDA said in a statement.
The New Entrant Spectrum Auction will make 60MHz available from the 900MHz and 2.3GHz bands, with a starting bid of S$35 million (US$24.96 million), with the rights commencing in April 2017.
The 60MHz spectrum will include two 10MHz blocks in the 900MHz band and two 20MHz blocks in the 2.3GHz band.
READ ALSO: Axiata adamant that Celcom won’t be affected by smaller spectrum allocation
The new MNO will be required to achieve nationwide outdoor coverage by October 2018 and comply with IDA’s regulatory frameworks and requirements, including Quality of Service and service resiliency standards for 4G (Fourth Generation networks) that will soon be published, the regulator said.
The second stage, the General Spectrum Auction, will be held after the conclusion of the first auction, allowing incumbents Singapore Telecommunications Ltd (Singtel), M1 Ltd and StarHub Ltd, as well as the new MNO, to bid for new spectrum.
The general auction will be for 19 lots across the 700MHz, 900MHz and 2.5GHz bands.
Should there be no bidders for the New Entrant Spectrum Auction, the spectrum block will be auctioned in the General Spectrum Auction, increasing the spectrum lots for the incumbents.
Better offerings for consumers
Singapore’s Smart Nation initiative stands to gain from the upcoming spectrum allocation auction, according to IDA managing director Jacqueline Poh (pic).
“Pervasive connectivity is a key enabler for our Smart Nation vision,” Poh said in the statement issued by the IDA.
“This release of spectrum is timely as it will support the growth of applications that rely on data, as well as new growth areas such as the Internet of Things (IoT) and Machine-to-Machine (M2M) communications,” she added.
The auction is also designed with consumers in mind, according to Poh, with increased competition bringing about more variety in offerings.
“The spectrum made available will allow all mobile operators to roll out or enhance their high-speed networks as early as 2017,” she said.
“Having more players in the market will give consumers a greater choice in selecting an offering that best suits their needs,” she added.
IDA had previously raised the possibility of slashing the price for spectrum to be allocated to the fourth telco, according to reports in the Business Times and Straits Times.
The current new entrant spectrum composition has changed from the original composition of 900MHz and 700MHz to 900MHz and 2.3GHz.
The New Entrant Auction starting price is a discount of the potential S$64 million (US$45.66 million) reserve price the New Entrant Spectrum block commands under the General Spectrum Auction process.
Whether the new entrant will enjoy the discount remains to be seen as the bidding might price it beyond the reserve price tag.
The old guard
The incumbents reacted to the announcement cautiously, while applauding IDA for the allocation of the 900MHz spectrum.
“We are currently evaluating IDA’s decision in detail and will be seeking clarification,” said M1 corporate communications assistant general manager Chua Hian Hou.
“However, we welcome IDA’s move to set aside 2x5Mhz in the 900MHz band for each of the incumbent operators to meet quality of service standards,” he told Digital News Asia (DNA) via email.
Similarly, in a statement, StarHub said, “Operators need more spectrum, especially in the low bands, to cater for continued growth in mobile data traffic and the Internet of Everything.”
“We support IDA’s decision on the allocation of the 900MHz spectrum to existing operators, and we look forward to acquiring the new 700MHz spectrum as soon as possible to provide our customers with faster data services and robust mobile coverage,” it added.
Singtel, the No 1 player, was more wary with its statement.
“We note the finalisation of the framework for spectrum allocation and competition in the mobile market and the certainty it brings to the industry for the moment,” said Yuen Kuan Moon, chief executive officer of Singtel’s Consumer Singapore business.
“While we see that some of our feedback and suggestions have been taken on board by the IDA, we maintain our view however that a level playing field must be respected to ensure sustainable competition even if authorities are keen to facilitate the entry of a fourth operator,” he added.
MyRepublic has publicly, and some would say brazenly, made known its intention to become the fourth Singapore telco.
This decision will finally allow the company to put its talk into action, after it had hinted that unlimited data plans will be part of its offerings.
MyRepublic is also currently involved in a heterogeneous network trial along with the other three incumbents.
“Over the past few years, we have seen our data plans shrink to single digits and rallied over additional charges for using 4G,” chief executive officer Malcolm Rodrigues (pic) told DNA via email.
“Today, we are extremely heartened by how the IDA has recognised the need to increase competition in the Singapore mobile market, to elevate the standard of services telcos provide to their consumers, and to take measured steps towards making Singapore a truly Intelligent Nation.
“Now more than ever, MyRepublic is committed to becoming Singapore’s fourth telco – we look forward to participating in the spectrum auction,” he added.
The auction will require a hefty chunk of change, and MyRepublic will be raising a significant war-chest to finance this effort.
“Until then, there is still work to be done. We are working with investors to raise S$250 million,” Rodrigues said.
“We are in talks with a number of strategic partners to roll out a next-generation pre-5G network. All of these preparations for the bid should be finished by April,” he added.
As for incumbents’ comments that having a fourth telco would ignite a price war, Rodrigues refuted these allegations in a statement released last week.
“We've never competed on price in any market we've entered, we believe in bringing innovation to the table and providing users with what they want and need at prices they can afford,” he had said.
“The world is changing, meaningful data services are everything.
“Today's services in Singapore are not fit for purpose. The incumbents’ networks are not ready for the future. There is a desperate need for innovation in Singapore. We intend to bring it,” he added.
Other contenders like OMGTel, which has faded to obscurity since making public its intention to be the fourth telco, could also emerge from the shadows to make a bid.
Spectrums is a critical piece of the mobile operator business. The lower band spectrums are known to be effective for indoor coverage, while the higher bands allow operators to offer faster bandwidth like 4G.
The incumbents will each be allocated a 10MHz block in the 900MHz band, and will have to bid to increase their spectrum, in addition to forking out S$20 million (US14.27 million) for their allocated lot.
Currently, StarHub and M1 have 5MHz and 10MHz in the 900MHz band respectively, with Singtel owning the biggest share at 15MHz. The allocation for incumbents means StarHub has emerged as a winner with a spectrum increase, while M1’s spectrum remains the same, and Singtel has lost 5MHz.
The onus then would be on Singtel to bid and win the 2 x 5MHz block in the 900MHz band to maintain its current spectrum.
The incumbents with M2M and IoT offerings would need to maintain their spectrum coverage to continue these services to corporate customers, which might result in spending to either win the auction or improve infrastructure.
While time will tell how the incumbents will react to the new entrant, history might just repeat itself, with the incumbents holding the collective fort.
In 2013, IDA opened up spectrum for the possible entry of a fourth telco, with no new entrant coming forward, leading to the spectrum being allocated to the three incumbents.
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