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Spectrum auction expected in Q3 this year to facilitate entry of 4th telco

The spectrum rights will commence in April 2017, meaning that would be the earliest theoretical start for a new telco.

SINGAPORE: To facilitate the entry of a possible fourth mobile network operator in Singapore, a spectrum auction allocation exercise will be conducted this year.

The exercise will be held in two phases. The New Entrant Spectrum Auction will be held first, slated for Q3 2016, and is open only to interested pre-qualified parties which do not currently operate a nationwide mobile network in Singapore.

Following that, the general auction will take place and the new entrant will also be open to take part.

For the upcoming auction, the potential new mobile operator will get to pay less for the airwaves reserved, from the proposed S$40 million to S$35 million, primarily because of the changed composition of spectrum bands. 700 MHz has been removed due to uncertainty over the switch over date from analog TV transmission to digital.

The spectrum rights will commence in April 2017, meaning that would be the earliest theoretical start for a new telco. However, this is also dependent on the new player's confidence in its network and ability to deliver the mobile services.

According to industry body GSMA, sub-1 GHz airwaves offer improved coverage in urban areas and better in-building penetration improves quality of service. The 2.3 GHz spectrum on offer is good for high data, high-speed mobile networks. 

The Infocomm Development Authority of Singapore (IDA) said it will allow a reasonable period for the new mobile network operator (MNO) to build up its own network, and that the telco must achieve nationwide outdoor service coverage by October 2018. 


The new entrant must also prove its intent, with a series of pre-qualification criteria to meet. For instance, they must provide evidence of technical capabilities and its financial position, as well as provide the business plans for its rollout.

There is also a performance bond to meet, with the new entrant having to put up S$20 million, or 5 per cent of budgeted capital expenditure (CAPEX), whichever is higher. This is tied to the new telco's network rollout milestones, and IDA has the right to draw on the performance bond if the company fails any rollout milestones.

The new entrant is also not allowed to engage in spectrum trading, especially before it completes its nationwide outdoor deployment. These measures are in response to incumbent telcos' concerns about the new operator's capability and commitment. 

Existing telcos, too, must play ball as they have to ensure that their services can connect with the new player.


Despite objections from incumbents such as Singtel on the entry of a new player, IDA said: "The entry of a new MNO will increase competition in the mobile services market. It is likely to bring about a wider variety of innovative services and more competitive offerings to benefit consumers. A new MNO is expected to bring about increased investments in the infocomm sector, leading to more advanced technologies and improved service quality." 

Ms Jacqueline Poh, managing director of IDA, said: "Pervasive connectivity is a key enabler for our Smart Nation vision. This release of spectrum is timely as it will support the growth of applications that rely on data, as well as new growth areas such as the Internet of Things and Machine-to-Machine communications.”

She added: “The spectrum auction is designed with the interests of consumers in mind. The spectrum made available will allow all mobile operators to roll out or enhance their high speed networks as early as 2017. Having more players in the market will give consumers a greater choice in selecting an offering that best suits their needs.”


Broadband provider MyRepublic said it is more committed than ever to be the fourth telco. "Over the past few years we have seen our data plans shrink to single digits and rallied over additional charges for using 4G," said a spokesman. "Today we are extremely heartened by how the IDA has recognised the need to increase competition in the Singapore mobile market, to elevate the standard of services telcos provide to their consumers, and to take measured steps towards making Singapore a truly Intelligent Nation."

MyRepublic said it is in talks with a number of strategic partners to roll out a Next Gen pre-5G network. Preparations for the bid should be finished by April 2016, it said.

Asked if the S$20 million performance bond would be a stumbling block, the potential market entrant said it does not believe it would be.

New player OMGTel, owned by network provider, Consistel expressed satisfaction with IDA's announcement. Said chairman and director of Consistel Masoud Bassiri: "Previously they had three bands that were coming together, and now they have two bands. However in the 2.3 Ghz band we have double the spectrum. It enables the fourth operator to do a much more efficient network with the combination of a larger band with 900 (Mhz). So we welcome that decision actually."


Singtel's Group CEO Chua Sock Koong had said earlier that the entry of another telco could spark a price war and hurt the industry. On Thursday, it noted the finalisation of the framework for spectrum allocation in the mobile market brings "certainty" to the industry "for the moment" but alluded to reservations on the viability of the fourth player.

"While we see that some of our feedback and suggestions have been taken on board by IDA, we maintain our view however that a level playing field must be respected to ensure sustainable competition even if authorities are keen to facilitate the entry of a fourth operator," said Mr Yuen Kuan Moon, CEO, Consumer Singapore, Singtel.

M1 said it is “currently evaluating IDA’s decision in detail and will be seeking clarification".

"However, we welcome IDA’s move to set aside 2x5Mhz in the 900MHz band for each of the incumbent operators to meet quality of service standards,” said the spokesman. 

StarHub said it looks forward to acquiring the new 700MHz spectrum as soon as possible to provide its customers with faster data services and robust mobile coverage. "Operators need more spectrum, especially in the low bands, to cater for continued growth in mobile data traffic and the Internet of Everything," a spokesperson said.

Last July, IDA proposed for the entrance of one more player in the local mobile market as it does not see it being able to sustain more than four nationwide infrastructure players.

The last time the IDA tried to facilitate for the entrance of a fourth telco, there were no takers in the 2013 auction exercise. Instead, Singtel shelled out S$136 million for 100 MHz of the available 1800 MHz and 2.5 GHz on offer, while StarHub and M1 paid out S$120 million and S$104 million for the remainder.