The Straits Times of 19 October 1999 carried an article citing a letter from Mr Philip Yeo, Advisor to Pacific Internet (PI). In his letter, Mr Yeo said that TAS has not assuaged PI for his concerns that SingTel may unfairly cross-subsidize SingNet ...
Singapore, 20 October 1999 | For Immediate Release
The Straits Times of 19 October 1999 carried an article citing a letter from Mr Philip Yeo, Advisor to Pacific Internet (PI). In his letter, Mr Yeo said that TAS has not assuaged PI for his concerns that SingTel may unfairly cross-subsidize SingNet. He also complained that TAS had earlier turned down PI's suggestion for an independent auditor and was "silent on the details of the methodology used and the specific results of the findings".
Following PI's complaint about the alleged cross-subsidy in SingNet's toll-free plan for its subscribers in December 1998, TAS conducted a detailed investigation immediately. TAS established that SingNet had paid SingTel the existing standard commercial rate for the lease of toll-free lines. It concluded that the plan was not anti-competitive as no subsidy was involved and the same rate of charges was made available to all Internet Access Service Providers (IASPs), including PI. This conclusion, using the investigation methodology that is based on TAS' guidelines on accounting separation, was conveyed to PI over several meetings in mid-January 1999. PI thereafter suggested that TAS adopt a different financial model to investigate the matter. According to PI, this methodology was more reflective of the operating costs of an IASP. TAS' re-assessment, based on the financial model proposed by PI, arrived at the same conclusion. This was conveyed to PI, along with some errors in PI's assumptions on 9 February 1999.
While TAS has worked with PI and even used PI's own investigation methodology, it is inappropriate for TAS to release the specific financial information of SingNet to PI nor to the public as these are commercially sensitive. As a regulator, TAS is obliged to safeguard the confidentiality of financial information provided by licensees in the course of our investigations.
PI thereafter asked TAS to appoint an external auditor to verify the figures. TAS did not accede to PI's request because the case involves the issue of accounting separation, which is a requirement imposed by TAS on SingTel as a licensee with multiple telecommunication service licences. This accounting separation has to be certified by the external auditors of SingTel. TAS also has to be circumspect in acceding to requests by complainants to have external auditors delve into the accounts of their competitors. TAS therefore relies on its own qualified accountants to investigate such complaints. This is in line with international practice adopted in countries such as Australia, Hong Kong and the United Kingdom.
Mr Yeo's letter also contained several factual inaccuracies. Firstly, in accordance with TAS' requirements, SingNet was incorporated as a separate company from SingTel on 2 May 1998, and not April 1999, although SingNet was fully functional as a corporation in April 1999. Secondly, the $40 million figure was wrongly described as SingNet's cost to provide toll-free service. This $40 million is in fact, the total estimated cost savings enjoyed by its customers over two years through the various promotion schemes that were launched since mid-December 1998. This information has been publicised in various newspaper reports and on SingNet's website, as well as communicated to PI previously.
As a regulator, TAS believes in adopting a light touch approach and encourages self regulation in the industry. TAS treats all players in the industry fairly. It encourages them to implement innovative schemes while making sure that these schemes are not anti-competitive in nature for the long term benefits of consumers. TAS shares the views of the industry for greater transparency in dispute settlements and anti-competitive investigations. It will continue to work closely with the industry as we develop Singapore into a leading global information communication hub in the Asia Pacific.
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