Hello to a New Mobile Operator?

Despite 13 years of interest by the Infocomm Development Authority of Singapore (IDA) to open up a fourth local telco, there have been no takers largely due to prohibitive barriers of entries created by the current incumbents of the mobile market: Singtel Mobile, StarHub Mobile and M1. However, noise on a fourth Mobile Network Operator (MNO) reached fever pitch in mid-2015 when the IDA proposed setting aside wireless spectrum (a critical component in the provision of mobile coverage) for prospective MNOs in the upcoming spectrum auction following

Not only will such a move increase competition, bring about lower mobile service prices and a wider variety of innovative service offerings to benefit end-users, a new MNO may also incentivise incumbents to invest in upgrading their infrastructure to improve the quality consumers’ experience.The fibre broadband market, for example, is proof that there are benefits from increased competition in the local telecommunications industry. New Retail Service Providers offering fibre broadband services over the Next Generation Nationwide Broadband Network has seen the the price of 1Gbps broadband plans fall by more than 88% since 2010, with prices as low as $39.00/month available today.

The public have also also raised concerns about the incumbents’ complacency after a OMGtel responded to a Strait Times article in October 2015. All three incumbent MNOs responded to IDA’s public consultation voicing a lack of support of IDA’s plans to facilitate the entry of a new MNO based on 2 reasons. Firstly, setting aside spectrum for the new MNO could lead to insufficient spectrum for the incumbents to meet the 3G Quality of Service (QoS) standards set by IDA. Secondly, the incumbents believed that IDA’s proposed policy would be counterproductive, as it would deter future investment in telecommunications infrastructure, leading consumers to suffer in the long run.

In response OMGTel, a potential new MNO, shared that it was technically feasible for incumbents to maintain their 3G QoS standards even with spectrum set aside for the new MNO. OMGTel opined that the concerns raised by the incumbents reflected a “lack of planning” and “sense of entitlement” which further underscored the need for more disruptive competition in the mobile market.

International studies have not yielded more conclusive results than the spectrum auction in 2013 which resulted in no bids. For example in France, the 4th MNO (Free Mobile) introduced €19.99 plans that offered unlimited calls, messaging and internet. However, other multi-MNO markets are facing pressures to consolidate amongst the MNOs. In the UK, one MNO (Three) has sought to take over another (O2), with the deal currently being subject to regulatory scrutiny.

Personally, I believe it is too early to determine if a Singapore should have a new MNO. The first determinants will be whether it is accurate that the impact of the new MNO’s spectrum allocation on incumbents’ mobile QoS standards to be minimal or if the current incumbents’ are correct that the spectrum IDA intends to make available to the new MNO is prized for its good signal propagation characteristics (i.e. it would more effectively enhance mobile reception), thus compromising the incumbents’ ability to meet 3G mobile QoS standards.

The second determinant will be the effectiveness of IDA’s plans to ensure that a robust, credible and committed MNO enters the market (e.g. pre-qualification checks for new bidders, levying a performance bond, setting of key performance milestones such as nationwide coverage and QoS standards)

The third determinant is whether a new MNO will cause incumbents to scale back their network investments to the minimum level required to meet these standards, to the detriment of end users.

My verdict is that Singapore should consider what is best for Singapore in terms of creating a SMART nation. Given the vast doubts of a new physical MNO (which now seem to be a toss up between MyRepublic and Consistel), the focus should be on innovation rather than a fourth facilities-based operator because if done right, Singapore consumers will enjoy the rewards of service and price for years to come.

A new breed of virtual operators (like Google’s Project Fi in the United States), driven by the technological advances in smartphones and cloud computing, has emerged as an answer for consumer innovation and enhanced consumer experience. Mobile Virtual Network Operators are “asset-light telco operators which buy airwaves (data and voice capacity) in bulk and re-sell them to consumers.” They require less capital and get going in months instead of the 15 to 24 months needed to roll out an islandwide mobile network.