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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.

Stiffer rules to keep telcos in line

IDA move set to raise transparency, consumer protection and promote fairer competition

After a two-year deliberation, local authorities are pressing ahead with plans to raise consumer protection by outlawing the use of bait-and-hook tactics where telcos start charging unsuspecting consumers after a free trial.

From Jan 21, the Infocomm Development Authority of Singapore (IDA) will introduce a stiffer set of operating rules for telcos as part of its triennial review of the Singapore Telecom Competition Code.

Among the upcoming changes is a new rule which forbids telcos from automatically charging consumers upon the expiry of a complimentary trial. Operators can only do so if they have ‘obtained express agreement’ from customers, the IDA said in a statement yesterday.

Dishing out freebies such as time-limited access to more pay-TV channels or selected mobile services is a common tactic telcos use to get subscribers to try out more offerings in the hope of eventually converting them to become paying customers.

However, consumers have cried foul that the terms of some of these free trials are buried deep in the fine print of their contracts. Consequently, they end up being charged for services that they are unaware of.

While the ruling will still allow for free samples, it will prevent such disputes from arising as consumers will now need to give the go-ahead.

In addition, the regulator also seeks to ensure that Singaporeans will have uninterrupted access to basic telecommunications services such as a fixed-line telephone with its new rules.

To guarantee this, IDA will not allow telcos to ‘cross-terminate’ a customer’s fixed-line subscription if he has violated the conditions of a separate agreement such as failing to pay his monthly mobile phone bills.

The same prohibition applies to services that are covered by a telco’s affiliates under separate agreements.

‘This would mean that telecom operators cannot exert undue pressure on consumers to make payment of disputed charges through threatening to terminate services offered by an affiliated telecom operator, unless the services are offered under the same service agreement,’ the IDA explained.

Another major change to the Singapore Telecom Competition Code is aimed at promoting fairer competition.

It comes in the form of a caveat which allows the IDA to slap a prohibition clause on any telco that is found to have abused its market position.

Previously, this only applied to Singapore Telecommunications and StarHub, the two operators that are deemed to be dominant by the IDA.

‘This (the change) takes into consideration that licensees may acquire significant market power in certain telecom markets over time, and will allow IDA to investigate and take measures if such licensees’ actions restrict competition,’ it explained.

When contacted, all three operators – SingTel, StarHub and M1 – said that they are reviewing the changes.

StarHub added that it is already going by IDA’s new book as it does not charge customers after their free trials without their consent.

Plans to change these regulations were first unveiled in November 2008 when the regulator initiated its first round of public consultation.

It then fine-tuned the rules after taking into account feedback from telcos and industry players and opened them up for a second round of comments a year later.

More changes could yet be in store for local operators as the IDA is currently seeking public feedback on proposed changes to the broadband landscape as well.

A new condition that is being studied as part of its ‘Net Neutrality’ consultation is the requirement for telcos to disclose real or average download speeds.

Currently, telcos advertise their Internet packages based on peak download speeds that are typically attained in controlled, laboratory conditions.

The increased transparency will give consumers a better picture of what they are paying for, the IDA previously said.

In addition, operators will not be allowed to block legitimate content and services, a condition similar to the one adopted by the US Federal Communications Commission in its Net Neutrality ruling on Tuesday.

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.