Door swings open for fourth mobile operator

IDA to auction off final 3G spectrum in November despite opposition from incumbents

Local authorities will go ahead with plans to auction off Singapore’s final third-generation (3G) mobile spectrum this November despite opposition from incumbent operators.

In doing so, the government is also keeping the door open for a fourth player to break the country’s decade-long telecommunications trinity.

This 3G spectrum, which has been left unused for the last nine years, is set to go under the hammer on Nov 15.

Three lots within the 1,900 to 2,100 MHz (megahertz) frequency range will be up for grabs this time round and the reserve price for these have been set at $20 million each.

These additional details were disclosed by the Infocomm Development Authority of Singapore (IDA) in a set of auction documents published on its website last Friday.

The move is envisioned to provide existing operators – Singapore Telecommunications, StarHub, and M1 – with additional cellular bandwidth to cope with the explosive demand in mobile broadband services in recent years.

IDA statistics show that some 5.5 million wireless broadband users are now using smart phones and mobile broadband sticks to surf on the go, a trend which places a growing strain on a telco’s cellular network.

In addition, the IDA previously said the auction could also pave the way for a fourth mobile operator to join the scene.

All three incumbents protested the auction when the idea was first floated in March this year.

Instead, they collectively mooted a non-competitive, ‘administrative allocation’ approach where the remaining 3G spectrum is apportioned to them instead.

‘An auction will be a more efficient, objective, and transparent approach for allocating scarce resources because it relies on market forces to allocate them to those who value them most,’ the IDA said in its defence last Friday.

‘This takes into account the fact that radio-frequency spectrum is a scarce and finite resource and that a market-based allocation approach, such as an auction, is more effective in ensuring spectrum optimisation by operators,’ it added.

This was the same route it took in 2001 when the 3G spectrum first went on sale here.

Four lots were to be parcelled off then but the auction was scrapped as it only garnered three bids in the end.

SingTel, StarHub, and M1 eventually paid the reserve price of $100 million each for their 3G licences in 2001. The fourth unclaimed band is the one that IDA is now looking to allot.

Under IDA’s latest auction rules, the three incumbent operators can only bid for a maximum of two spectrum lots in the November auction.

Interested bidders must submit their initial offers by Oct 4 and they must be backed by bank guarantees, the regulator said.

Other companies outside Singapore’s telco fraternity are welcome to throw their hats into the ring but the spectrum will only be allotted to firms with an established local presence.

However, the IDA is giving interested foreign companies some leeway.

‘It is not necessary for such an entity to have been established in order for a bidder to participate in the auction,’ the regulator said.

This gives a new player a time buffer of at least two months between tabling their initial bids and setting up a local subsidiary.

However, market watchers believe the chances of having a fourth operator are slim as the incumbents have entrenched customer bases and they can be expected to defend their turfs aggressively.

Singapore did have a fourth operator once in 2002 in the form of Virgin Mobile, a joint venture between SingTel and Richard Branson’s Virgin Group.

However, it failed to make a dent in the market and the company pulled out within a year.