TELCOs – BT

Little impact on telcos from latest tune-up

SINGAPORE’S telecommunications regulator may have toughened the rules for operators but it should be business as usual when the new regime kicks in next month. What could make a major difference to the consumer businesses of SingTel, StarHub and M1 is the government’s eventual decision on the controversial issue of ‘net neutrality’.

Last week, the Infocomm Development Authority of Singapore (IDA) finalised the changes to the country’s Telco Competition Code after a two-year deliberation. These regulations, which prescribe how operators should market their products and services and behave towards competitors, will take effect from Jan 21.

Rather than overhauling the landscape, IDA has fine-tuned existing regulations by taking more precautionary measures to safeguard the interests of the country’s growing pool of mobile and broadband users.

The headlining change is the outlawing of bait-and-hook tactics. Telcos are forbidden from automatically charging consumers upon expiry of services that were once offered as a free trial.

While this might have been an issue in the formative years of the mobile industry, telcos now know that this trick will do more harm than good.

A disgruntled customer now has the ability to air his grievances to hundreds and even thousands with a mere mouse click. The explosion in social media tools such as Facebook and Twitter has given consumers the ability to put their service providers on a much tighter leash.

As such, most should have already steered clear of such tactics. Outlawing bait-and-hook then becomes more of a legal formality than a behaviour-changing endeavour.

A second revision to the Telco Competition Code removes the ability of telcos to cross-terminate services. For example, if you repeatedly fail to pay your monthly mobile bills, your operator cannot threaten to cut off your home phone line subscription or your broadband if they are under a separate contract.

As the operators have rightly pointed out to IDA during its two-year feedback process, they resort to the termination of services only as a last resort after all other measures have been exhausted.

In the grand scheme of things, bad debts from such defaulters are but a pin prick on an operator’s overall revenue.

Throughout the year, the mobile subscriber bases of all three telcos showed signs of healthy growth. This trend is set to continue into 2011 with the release of more feature-packed smart phones, including the much-speculated iPhone update.

What the regulator has left untouched are the guidelines for quality of services and, in particular, the mobile broadband consumer experience.

The telcos are now monitored for their service levels when it comes to fixed-line Internet services. As more and more users are now surfing on their phones, the same yardsticks should be applied to mobile broadband as well.

However, this issue could eventually be addressed in a separate IDA consultation. Specifically, the regulator is currently seeking feedback on net neutrality.

The subject is a hotly contested one in the United States. Net neutrality proponents assert that everyone should be allowed equal access to all legitimate content and services on the Web.

Operators should not be allowed to block sites or applications, nor should they be allowed to tier their pricing. This means service providers cannot create a fast lane for people who can afford to pay more for broadband, thereby creating a speed divide between the rich and the poor when both are accessing the same content.

The US Federal Communications Commission did not address this issue in its inaugural net neutrality ruling last week but it did prohibit operators from blocking sites and services on their fixed-line network.

Blocking is already frowned upon by IDA but what it is seeking to do now is to make operators reveal their actual or average broadband speeds. Currently, local telcos are promoting their broadband packages based on top speeds – a scenario rarely achievable for the home user.

In place of such unattainable claims, IDA wants operators to be transparent and give users a more realistic indication of what they can expect on a daily basis.

If enforced, this rule could add to a telco’s operating costs. Consumers would naturally lean towards operators who give them more bang for their buck.

To ensure they don’t end up on the losing end, telcos will have to step up their monitoring efforts and even invest in tools to better manage their broadband pipes.

After a decade of market liberalisation, local authorities seem bent on nudging the telecommunications industry into the next phase of development. The onus is now on telcos to quickly adjust to what is shaping up to be a challenging 2011.

Hopefully, when the going gets tough, local operators will prove their mettle and really get going.

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