- POSTED: 26 Jun 2014 17:30
MyRepublic CEO Malcolm Rodrigues expects Singapore's three telco incumbents to resist "all along the way” in its bid to become the fourth telco in Singapore, but says his company is not out to "take down the giants".
SINGAPORE: There are plenty of assumptions that would need to fall MyRepublic’s way, as well as a helping hand from local regulator Infocomm Development Authority of Singapore (IDA), before the fibre broadband provider can realise its goal of becoming the fourth telecom operator in Singapore.
In an interview with Channel NewsAsia on Thursday (June 26), MyRepublic CEO Malcolm Rodrigues acknowledged that the road to become the new telco in an already-saturated market is fraught with obstacles. These range from regulatory constraints, to initial cost outlay, and likely resistance from the three incumbents – SingTel, StarHub and M1 – “all along the way”.
In its proposal to the IDA on June 19, MyRepublic said Singaporeans are still “underserved” by their existing telcos as access to their mobile applications and third-party services such as Facebook and WhatsApp due to the “very high cost” of data bundles.
“Global experience from other markets show that markets with three mobile operators – typically characterised by a lack of price competition, mediocre quality of service and pent-up innovation – can be made to deliver more value to consumers by the introduction of a fourth mobile operator,” the company stated.
Mr Rodrigues said that his company is not out to “take down the giants”, but intends to offer a 4G-only mobile service, and with it, corner about 10 to 15 per cent of the overall market. It hopes that by providing “unlimited data“ and affordable, but good quality access to the internet and third-party services, this would compel the other three telcos to re-evaluate their existing products to better serve consumers’ needs, he said.
IDA’S HELPING HAND NEEDED
The CEO, however, said that many assumptions need to go MyRepublic's way before its fourth telco dream can be realised. These include having a separate spectrum licence bidding exercise limited to potential new market entrants, and having a National Roaming Agreement in place, he said.
Elaborating, he said IDA needs to take into consideration that while the three incumbents’ bids for 4G spectrum in 2013 was based on them addressing about 30 per cent of the overall local market, MyRepublic is only gunning for 10 to 15 per cent.
Additionally, it does not require as much bandwidth as the incumbents. SingTel, StarHub and M1 bidded and were awarded 100 megahertz (MHz), 90 MHz and 80 MHz, respectively, of spectrum in the previous auction last June. In contrast, MyRepublic is proposing for 20 MHz of sub-1 GHz airwaves and another 100 MHz of 2.3 GHz or 2.6GHz for capacity at the outset in order for a broad, nationwide coverage, said Mr Rodrigues.
“We hope that IDA will take all these into consideration” when they deliberate on the public feedback received, he said.
IDA said on its website that the deadline to submit comments to the public consultation for "Proposed allocation of spectrum for international mobile telecommunications (IMT) and IMT-Advanced services and options to enhance mobile competition" ended on June 19, 2014.
He added MyRepublic did not bid for the 4G spectrum last year because it was focused on its fixed fibre services and the spectrum on offer then did not suit their needs.
RESOURCE SHARING A MUST
Mr Rodrigues said another factor for a fourth telco to enter the market is for the IDA to ensure there is a regulated National Roaming Agreement in place for the new player to scale its services.
“A new entrant will need at least three years to match the coverage level of the incumbent service providers. Therefore, a regulated national roaming agreement will be required to enable a gradual market entry,” MyRepublic stated.
This means that while MyRepublic’s projected initial network of “200 to 300” macro cell base stations are deployed throughout the country, there will be spots that it will not be able to reach. In such cases, its customers would then be offloaded to any of the three incumbents’ mobile networks for 4G coverage, Mr Rodrigues said.
While waiting for IDA’s next move, MyRepublic has outlined a first-year budget of between S$250 million to S$300 million should the conditions be right for it to become the fourth operator. It is, however, not able to estimate how much it would have to fork out for licensing rights besides hoping that it would be “as low as possible”, Mr Rodrigues added.
He said once spectrum rights are assigned and financing is in place, the company can expect to roll out its mobile services within "six to nine months".
INCUMBENTS' WAIT-AND-SEE STANCE
Asked if MyRepublic expects resistance from the incumbent telcos in the area of access to existing mobile network infrastructure, the CEO said he expects resistance from the start. This could be from the three telcos arguing that there is no need for a fourth player in the already-saturated market, to how allocating additional spectrum to another player is not the optimal use of the increasingly scarce resource, he noted.
When contacted, StarHub did not comment directly on MyRepublic’s intention to enter the market. A company spokesperson did say in an email on Thursday: “Customer satisfaction has always been our top priority, and we remain committed to delivering high service standards and greater benefits to our customers. At this point in time, it is premature for us to comment further prior to IDA’s decision.”
M1, too, expressed similar sentiments. An M1 spokesman said the telco has invested S$1.6 billion to enable them to deliver quality mobile experience to customers, and will "continue to make signficant network investments to build a highly advanced mobile network."
Meantime, a spokesman from SingTel said "SingTel is not new to competition. We operate in a very competitive and fast changing industry. We will always work hard to earn the trust and support of our customers."
ANALYSTS WEIGH IN
"The regulator has to bend over its back, rather, overhaul the whole regulator regime, in order to accommodate (MyRepublic's) demands" said DBS Vickers analyst Sachin Mittal. "For example, like (having) an enforced national roaming agreement - why would a telco open up its network to someone who wants to kill the telco? And they want reserved spectrum, rather than an auctioning of some of the lower spectrums - I think there are some issues which IDA will have to look into."
Gartner Research Vice President Foong King Yew said the "biggest challenge" to market entrants in a mature mobile market in Singapore is achieving "good enough" mobile coverage from the fourth player, right off the bat. This is to attract customers in the shortest time possible and in the most economical manner, he added.
"The success of creative service bundles and applications are contingent on the network operator having a good service coverage and service quality," Mr Foong said. "Therefore, if IDA is keen to attract a fourth mobile operator in the country, it must look at ways to address these challenges."