TELCOs – BT
A new era of telco competition
MDA cross-carriage policy, Next-Gen NBN to transform telco landscape
A CONTROVERSIAL government policy and the Republic’s growing fibre-optic readiness will ring up a new era in telco competition next year as all three operators go head-to-head in mobile, pay-TV and broadband services for the first time since they locked horns a decade ago.
In contrast to last year’s subdued start, 2010 kicked off on an industry-shaking note when the Media Development Authority (MDA) introduced its cross-carriage policy in March. After a lengthy deliberation, the mandate is set to kick in early next year and change the modus operandi of the pay-TV sector.
The mandate forces operators who sign exclusive programming deals to share such content with their rivals.
The move is envisioned to cap rising subscription costs and alleviate the hassle of having multiple set-top boxes for viewing content from different providers. It could also open the door to new contenders as they can now force incumbents to carry their programmes.
‘Nevertheless, we believe that there is still merit in being the original broadcaster of the content as all revenues – subscriber and advertising – will accrue to that party. As such, we may still see some fairly aggressive bidding for popular content,’ OCBC Research analyst Carey Wong said in a recent report.
‘And because of the common carriage, we also think that the move may provide an opening for other players such as M1 to enter the market without having to spend too much on building their own pay-TV infrastructure,’ he added.
And M1, which offered only mobile services before its broadband foray in 2008, did eventually throw its hat into the ring. Last month, it introduced OneBox, a service which allows customers to stream movies and concerts to their TV sets.
‘We will support government’s initiative in the pay-TV sector and develop M1 further in this aspect,’ the company said.
While consumers cheered the prospect of lower prices and greater choice, MDA’s policy was met with fierce resistance from the content industry.
The displeasure culminated in the form of a verbal lashing from the Cable and Satellite Broadcasting Association of Asia (Casbaa).
The trade group repeatedly accused local authorities of breaching international trade agreements. In addition, it warned that the implementation of cross-carriage would harm Singapore’s economy in the long run as foreign media investments will dry up.
Despite the protests, MDA stood its ground and it will soon issue a final decision on the mandate and how it is to be carried out.
Meanwhile, SingTel’s mio TV base swelled this year after it paid top dollar to pry the Barclays Premier League (BPL) broadcast rights away from StarHub. The consumer outcry that followed was widely seen as one of the triggers for MDA’s intervention in the pay-television sector.
The red camp’s pay-base jumped nearly 60 per cent in the past year to 250,000 subscribers as it started its first season of BPL broadcast in August.
‘2010 has been an iconic year for us, and has certainly placed SingTel firmly on its transformational journey from a telco into a multimedia services company,’ said SingTel Singapore CEO Allen Lew. In what could be the most significant telco infrastructure upgrade of the decade, Singapore’s new broadband highway – dubbed the Next-Gen NBN (Nationwide Broadband Network) – started to take shape this year.
The new fibre-optic network raises local Internet access speeds by 10 times or more, and is expected to reach all homes and offices by the end of 2012.
The new network also opens the door to new competitors as they can use it on the same terms as entrenched incumbents SingTel and StarHub.
And new competition did emerge with LGA Telecom and SuperInternet joining the three existing operators in launching new fibre-optic broadband packages in September when the Next-Gen NBN became partly operational.
For just under $400, StarHub and M1 now offer 1Gbps (gigabit per second) broadband plans through the new network, 10 times faster than the previous speed cap of 100 Mbps (megabits per second).
The fibre-optic rollout is supposed to reach 60 per cent of all homes and offices by the end of this year.
However, deployment hit a temporary snag as the management committees of condominiums refused to let OpenNet carry out its cabling works for fear of ruining their estates’ facade.
The impasse was eventually resolved when the Infocomm Development Authority of Singapore (IDA) stepped in and forced building owners to comply.
As the rollout is still a long way from completion, industry watchers say that it is not expected to make a big difference to the telcos’ bottom lines over the next 12 months. ‘I don’t think consumers will be rushing to switch to Next-Gen NBN in 2011 and we are more likely to see a gradual migration to fibre in 2011,’ said telecommunications consultant Soh Siow Meng.
‘It really depends on how hard the telcos want to push but I think telcos are likely to step up their efforts when the coverage is more pervasive in 2012,’ he added.
On the mobile front, all three operators managed to strengthen their cellular strongholds this year in spite of the country’s sky-high mobile adoption rate.
According to IDA’s latest estimates, some 142.1 per cent of the population now carry cell phones and nearly half of local handset users are now on high-speed 3G subscriptions.
Beyond the perennial consumer favourite – the iPhone, consumers also snapped up smart phones that are powered by Google’s Android operating system, seen as the closest contender to Apple’s runaway hit.
In addition, the growing popularity of tablets such as the iPad also helped to lift 3G subscriptions. All three telcos started offering standalone data plans that allow users to surf and check their e-mails on these devices in the second half of this year.
‘Tablets aren’t really new, but they seem to have taken off this year, with the iPad, the Dell Streak and others. We expect growing demand for smart phones and the rising predominance of touch tablet devices to become the key focus for 2011,’ said StarHub CEO Neil Montefiore.
On the handset front, more than half of the phones that were sold by the local operators in the January to September window were smart phones.
However, these are offered with higher subsidies to lower the retail pricing for consumers, and they are also accompanied by generous data bundles that once cost a premium on an ala carte basis.
As a result, profitability took a hit across the board but the three telcos said that they should see payback from smart phone users after a six to nine-month period.
With speculation running wild that a new iPhone and iPad are now in the works, consumers and telcos are likely to be bitten by the smart phone bug all over again in 2011.