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Singapore Preps for a Fourth Mobile Player

With wireless broadband penetration of nearly 200%, Singapore is hardly short of connectivity.

Yet the government of one of the world's most highly connected countries has decided it needs further network competition and investment.

The Infocomm Development Authority of Singapore (IDA) has made up its mind to add a fourth mobile license and is aiming to entice newcomers to bid at its forthcoming auction some time in the fourth quarter.

The decision in February to open up to a new player prompted warnings of a price war from Chua Sock Koong, the CEO of incumbent operator Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY). Chua quickly walked that back but her initial response reinforced the view -- widely held in the industry -- that the three state-backed operators have enjoyed a cozy rivalry over the past 15 years and are resistant to extra competition.

The IDA seems to have come to the same conclusion. Following an industry consultation it declared that a new operator would bring "greater competition and service innovation," pointing out that in some markets the arrival of a new mobile network operator (MNO) had generated new services and price reductions of as much as 40%.

The regulator rejected arguments from operators that a new player would stifle network investment. On the contrary, the experience in other markets suggested that a new competitor was likely to "incentivize the MNOs to invest in their mobile networks," it said.

The IDA plan is to auction 235MHz of spectrum in the 700MHz, 900MHz, 2.3GHz and 2.5GHz bands. For new entrants, it has set aside 60MHz in the 900MHz and 2.3GHz bands at a floor price of S$35 million ($26 million).

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One confirmed candidate for the new license is broadband startup MyRepublic. As a retailer on the government's NBN fiber network, it has clocked up 55,000 subscribers in just 18 months by attacking the incumbents on price. CEO Malcolm Rodrigues believes he can achieve a similar result in the wireless market. (See Singapore Startup Eyes 'Telco Salesforce' Role.)

He is not shy in pointing out its shortcomings, either. "The three operators are a bit of a disappointment," he said. "There's no differentiation and they're not investing in networks."

He believes the government needs the new licensee to help the city-state achieve its "smart nation" goals and tap into the IoT boom.

SingTel declined to comment, but the number-two operator, StarHub , said that new licensees in other mature markets "have not gained traction due to high costs of spectrum and new infrastructure." It claims to be differentiating itself through its LTE network speed and customer service quality.

Analyst Sherrie Huang, Asia-Pacific program head at Analysys Mason , believes a new player will likely drive competition. "Investment and differentiation are definitely there, but the regulator hopes to see more [of them] as well as more competition, and that's why this fourth license is coming," she said.

She expects the new entrants will first start offering basic telecom services and then expand into other areas.

— Robert Clark, contributing editor, special to Light Reading

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