A frequent traveller to places such as the United States, Hong Kong and Taiwan for work, information technology sales professional Brandon Lim used to chalk up mobile phone bills of at least S$500 to $600 a month. “I had long conference calls that lasted one to two hours — that kills it — and text messages were expensive too,” said the 40-year-old.

These days, however, the size of his monthly mobile phone bills has shrunk to just above S$100 on average.

Ms Low Qiuling, 33, has also seen her mobile bills while on vacation become more manageable. Gone are the days when she spent as much as S$500 on phone bills during a trip to Europe.

Ms Low, who works in corporate communications, travels two to three times a year. When overseas, she either rents on arrival at airports devices with cheap Wi-Fi connectivity, or she makes calls and sends messages only when she is at places with free Wi-Fi.

Consumers such as Mr Lim and Ms Low have much to thank the disruption to the telecommunications industry in recent years for, as it has seen new players shaking things up by offering cheaper deals, for example, and incumbent telcos having to follow and to raise their own game by offering more innovative products.

Over-the-top (OTT) services such as Whatsapp have all but rendered SMS (short messsage service) obsolete as well as made it cheaper or even free for people to talk to their loved ones overseas or conduct tele- and video-conferencing with business acquaintances abroad, as long as they have an Internet connection. On the other hand, the Great Digital Disruption has pummelled telcos worldwide, including the incumbent players — Singtel, StarHub and M1 — in Singapore: Even as official statistics show total minutes of outgoing international calls going up exponentially in the past six years, revenue from such calls, for example, has fallen by about half for Singtel and M1 based on their financial results.

But it is not all bad news for the telcos: The upshot is that customers are consuming more data than ever. M1 and StarHub, for example, have seen their revenues from mobile data jump several folds.

Mr Naveen Menon, a partner at A.T. Kearney’s media and technology practice (Asia Pacific), said: “In this era of rising mobile traffic and falling prices, telecom operators need a large scale transformation. A telco can remake itself as a basic ‘data utility’, or become a full ‘digital navigator’ that takes on the likes of Apple or Google when it comes to innovating in services and content. If they fail to do either, the opportunity could be lost.”

In Singapore, industry players and experts point to the introduction of Apple’s iPhones in 2008 and 2009 — and the instant runaway success of these smartphones in the market — as ushering the era of disruption for telcos, with consumers able to access the Internet on the go. Around the same period, the Government rolled out the Next Generation Nationwide Broadband Network (NGNBN), significantly lowering the barriers for new entrants into the telco market.

The disruption to the telco industry will reach another milestone this quarter — if, as expected, a fourth telco licence is awarded to a new player. The Infocomm Development Authority is expected to put up a 4G spectrum auction between this month and September, some three years after a similar auction failed to draw any concrete interest.

TELCO WARS

The entry of MyRepublic and ViewQwest into the fibre broadband market in 2011 and 2012, respectively, have led to greater competition and paved the way for price wars. Previously, the three incumbents tended to move closely together when it came to pricing or service, prompting questions on whether there was enough competition. In response, some telcos told TODAY at that time that competition had moved beyond pricing in Singapore’s small and mature mobile market and they differentiated themselves on factors such as quality, reliability, speed and innovativeness of their mobile services.

In 2014, however, a price war broke out when MyRepublic offered its 1Gbps fibre broadband package at S$49.99 a month, which was about eight times cheaper than what M1 and StarHub were then offering. Shortly after, M1 slashed its price by half to offer its 1Gbps plan at the same price. Singtel and StarHub subsequently launched unlimited (with average typical speeds of 800Mbps) and 1Gbps fibre plans respectively priced at S$69.90 per month.

Speaking to TODAY, MyRepublic chief operations officer Greg Mittman said: “Telcos have been in a protected space for a very long time, and there was zero price competition. Now you have competition coming in, people’s expectations will have to be re-adjusted ... We don’t aim to be the cheapest, but to give you the best value for money.”

A Singtel spokesman, however, played down the notion that the industry needs a fourth telco to shake things up. “Everyone thinks that we need a fourth telco to spur innovation and competition. But we don’t think it’s going to take a fourth telco to spur competition that is already happening in the market,” he said.

The incumbent telcos have come up with a slew of new offerings in recent years. For instance, M1 launched its Data Passport service last year, where customers pay between S$10 and S$25 more per month to use their local data bundle when they travel to any of 44 destinations across Asia, Europe and United States. A similar service was launched later where customers pay S$50 per month for 27 destinations in Europe.

The new service has seen the number of M1 customers who use data roaming increase by more than 80 per cent now as compared to a year ago — helping to cushion the fall in IDD revenue.

In April, M1 also launched a Voice Over Wi-Fi trial, which enables users to make data voice calls even for fixed line numbers.

M1 chief commercial officer Lee Kok Chew said: “Generally, we are seeing people using more data because of increased video streaming, usage of apps, as well as faster devices and networks. In addition, we have introduced innovative services such as Data Passport for affordable data usage overseas. On average, each person uses 3.3Gb of data on smartphone now, as compared to 1.6Gb four years ago.”

Meanwhile, Singtel came up with WhatsApp plans which are tagged to customers’ existing pre-paid plans. These allow them to send unlimited volume of WhatsApp messages without incurring additional data charges. It also launched its own Wavee app last year which imitates Whatsapp functions such as enabling users to make voice calls, send instant messages and set up chat groups. It also started offering standalone data plans, super-sized shareable data add-ons, and data-free music streaming. “OTT is disrupting many industries besides the telecommunications industry. But it is not a zero-sum game for us,” said the Singtel spokesman. “We are meeting the OTT challenge by looking at how we can complement each other. For example, we are partnering with content providers like Netflix and Viu to enrich the range of digital services we can offer to our customers.”

StarHub is focusing on its “hubbing bundles” which comes with a suite of services such as fibre broadband, fibre television and mobile broadband. Its latest HomeHub Go package offers five services, including a 7GB mobile postpaid line, for a single fee.

Referring to StarHub being named by an independent global study as having the fastest LTE network twice in a row, StarHub chief marketing officer Howie Lau said: “Another key differentiator for us is network quality. Amid continued growth in mobile data use, we will continue upgrading network quality using the latest available technologies, such as HetNet and 1Gbps small cells.”

Hetnet stands for Heterogeneous Networks, where mobile devices can seamlessly switch between different types of networks such as from home Wi-Fi, 4G and public Wi-Fi. Small cells refer to mini base stations that boost 4G coverage.

INCUMBENTS’ ADVANTAGE: DEEP POCKETS


In an increasingly crowded market, all three incumbent telcos believe they have a key advantage over their newer and smaller competitors — their better network quality, given the millions of dollars they have ploughed into building, maintaining and upgrading their networks. In other words, they have deeper pockets for capital investments.

StarHub said it has invested over S$1 billion on upgrading its mobile network over the years. Its capital expenditure (CAPEX) last year made up 13.5 per cent of its total revenue that year. M1 has also invested more than $1.8 billion in its mobile network to date, and spends more than $100m a year on CAPEX.

Industry players have cast doubt on the ability of any new entrant to have the financial might to roll out a mobile network that can meet the Quality of Service (QOS) set by the IDA - an assertation disputed by MyRepublic, which along with wireless solutions company Consistel, has publicly stated their interest in obtaining the fourth telco licence. MyRepublic projects that S$250million would be sufficient to roll out a mobile network, although telcos state they have invested much more, in their networks.

M1’s Mr Lee said:”M1 has invested more than $1.8 billion in its mobile network to date, and spends more than $100m a year on CAPEX, to enhance customer experience, as well as meet IDA’s QoS.”

Likewise, Singtel said it has spent a total of S$1.6 billion in capital expenditure over the last two years. This year, it has set aside another S$1 billion for capital expenditure domestically. “The quality of coverage that our customers enjoy today is the result of years of capital-intensive investments in network upgrades and spectrum,” said the Singtel spokesman.

Industry players said that in order to break into the market and gain a foothold, new entrants would have substantial obstacles to surmount - not least the strong relationships enjoyed by the incumbent telcos with building owners and overseas telcos, which would be hard for the new boy to replicate quickly. To improve mobile coverage, telcos have to work with building owners who would provide the space for base stations.

NEW BOYS BENT ON SHAKING THINGS UP

Despite the odds, MyRepublic and ViewQwest are confident that they can rumble with the big boys. Their lean and low-cost operations and the sound regulatory environment here work in their favour, they said.

MyRepublic’s Mr Mittman said: “If we had built ourselves as a traditional operator, we wouldn’t get there. But now, we have built a new type of organisation, one that taps on cloud computing, less headcount and more automation.”

In Singapore, MyRepublic currently has 100 employees. Should they succeed in becoming the fourth telco, they will add another 200 staff. Even then, their headcount would still be five times fewer than M1 and 10 times smaller than Starhub, according to Mr Mittman.

Due to the high cost of labour here, ViewQwest, which has 60 employees in Singapore, has outsourced some of its operations to Malaysia. ViewQwest chief executive officer Vignesa Moorthy said: “We’re focused on providing a single service, and we have no legacy infrastructure to deal with. We use productivity tools like cloud computing, but traditional telcos spend millions of dollars on customer relationship management tools, for instance.”

As for relationships with building owners, Mr Mittman noted the small pool of major landlords in Singapore which meant it would not be too difficult for his company to build ties from scratch. Also, there is plenty of rooftop spaces that can potentially house MyRepublic’s base stations, he added.

On whether S$250million would be enough to roll out a mobile network, Mr Mittman said: “We have a lean model, we already have the infrastructure for a fixed fibre network, call centres, operational IT platforms, and a regional customer base of 100,000.”

Referring to the smallest among the three incumbent telcos, Mr Moorthy added his two cents worth about the challenges: “It is not impossible. M1 had to start somewhere... IDA has regulation in place that says buildings cannot prevent you from coming in to set up base stations, and there are companies that sell wholesale roaming... Over time, you can build your own relationships with the (overseas) operators.”

POWER TO CONSUMERS

Blessed with more choices as service providers try and outdo one another, customers are in a sweet spot.

Mr Clement Teo, senior analyst at research firm Forrester, referred to the oft-cited Amazon experience - what the e-commerce giant did to revolutionise customer experience. “What is changing is that (telco) customers are becoming consumers of digital content... and they want what Amazon offers, it is constantly re-fining what it knows about you, it makes it easy and simple to make purchases.”

He noted that some telcos, including Telstra in Australia and CSL in Hong Kong, are starting to shift their business strategies to “survive in a digital world”. “There are so many customer touch points, from email to retail shops to calls, and many processes such as the process from when you sign up, to the technician going to your place. Each step needs to be benchmarked and improved,” he said. Referring to Telstra and CSL, he added: “What these two telcos are doing, is to look at all these touchpoints and put in the right processes.”

A telco should also tap on analytics and technology to share customer data across the company, put in new systems and hire the “right kind of people”, he said.

To that end, Singtel, for example, has set up a new business unit that focuses on digital marketing, advanced geoanalytics and OTT video. Together with some of its affiliates, Singtel uses geoanalytic tools to optimise planning of its networks and retail stores, as well as sharpen its marketing initiatives. The company said that it started on plans four years ago to transform itself from a traditional telco to a communications company. Among other things, it started digital engagement efforts via its My Singtel app, live webchat and social media channels.

While telcos here get back to the drawing board and mull over ways to ride the wave of digital disruption, consumers now find themselves having the upper hand, as the balance of power tilts away from the businesses.

Accounts director Mr Eric Wong, 40, said: “Pricing for one (has improved), we seem to be getting more for the same amount of money.”

Now that their appetite has been whetted by what competition can bring, consumers are looking forward to more improvements. “(The telcos) still have some way to go, especially in customer service,” said Mr Wong, adding that the companies ought to also look at improving their mobile coverage islandwide.

Now, for the first time in a long while, the customer is king.

Source:
courtesy of TODAY

by Tan Weizhen

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