Ceremony for Extension of MOUs between TAS & NTU/NUS on R&D Co-operation

Mr Mah Bow Tan, Minister for Communications Speech - Ceremony for Extension of MOUs between TAS & NTU/NUS on R&D Co-operation

Mr Mah Bow Tan, Minister for Communications
Speech - Ceremony for Extension of MOUs between TAS & NTU/NUS on R&D Co-operation
Singapore, 17 January 1997

Introduction

I am pleased to be here this morning to witness the extension of the Memoranda of Understanding (MOUs) between the Telecommunication Authority of Singapore (TAS) and National University of Singapore (NUS)/Nanyang Technological University (NTU) on Research & Development (R&D) co-operation. The increased funding and the widening of the scope of the MOUs will no doubt create a fresh impetus for R&D by the NUS & NTU in the area of telecommunications.

I hope that this co-operation will serve as an encouragement for the telecom industry to follow suit and undertake more R&D. In this way, telecom users will benefit from the innovations and the state-of-the-art technology, and Singapore's industries can remain competitive in the global marketplace.

R&D will also help TAS in its formulation of policies. As the telecommunication industry becomes increasingly competitive, we need to have in place policies and frameworks which will ensure that competition is effective and sustainable, and that the marketplace will benefit from the continuous injection of new ideas. Research into telecom policy will help TAS in its efforts to maintain a competitive telecom industry in order to support Singapore's role as a business hub. Hence, TAS has decided to widen the scope of the MOUs to include R&D in non-technical areas. This will be especially relevant as we move into a multi-operator environment.

You may recall that it was at this very venue in September last year, at the agreement signing ceremony for the formation of the Singapore One infrastructure consortium, that I announced that up to two more licences would be awarded for public basic telecommunication services when Singapore Telecom's monopoly rights expire on 31 March 2000. I also mentioned that more information regarding the upcoming pre-qualification tender in March 1997 would be released as and when ready so that parties who are interested in the tender will be given as much time as possible to get prepared. In this regard, I am pleased to announce that TAS will be releasing an Information Package today.

Information Package ("Info-Pack")

The purpose of the Information Package or Info-Pack is to assist interested parties to better understand the regulatory and operating environment for telecommunications in Singapore. With a better understanding of the telecommunication industry in Singapore and Government policies pertaining to the industry, potential tenderers can better decide whether to compete for the licence. More specifically, the Info-Pack will help prospective tenderers plan, seek partnerships and prepare their tender submissions before the pre-qualification tender exercise begins on 1 March 1997.

Info-Pack-General

The Info-Pack contains key regulatory frameworks and policies which will be important for any prospective entrant to the Singapore telecommunication market. Details such as the structure and size of Singapore's telecommunication industry, spectrum allocation policy, National Numbering Plan and TAS' interconnection regime are covered in the Info-Pack. These will assist prospective tenderers in assessing their business viability and determining their business strategy before participating in Singapore's telecommunication market.

The Info-Pack covers fundamental regulatory issues to ensure real and sustainable competition in a multi-operator environment. One such issue is the Interconnection and Access framework which spells out how the different operators' networks are to be interconnected. This framework includes the technical requirements for interconnection, the interconnect negotiation framework and the charging principles which will be adopted by TAS for such interconnect arrangements. It also provides guidelines for fair practices and accounting separation requirements. Such rules and guidelines will help put in place a framework for effective competition to thrive for the ultimate benefit of consumers.

Licence Fee

The Government's objective in the coming year 2000 tender is to choose up to two additional telecoms companies who can provide the best services to meet Singapore's telecommunication needs beyond 2000. We are not looking to maximise revenue from this tender exercise. Hence, the Government has decided to fix the licence fees payable for the public basic telecommunication services licences, instead of subjecting them to bidding. With the licence fees set up-front, tenderers can focus their efforts on putting up their best offer in terms of the facilities and the services they can provide. Financial offers will not be a part of the evaluation and selection process. Our intention is to introduce facility-based players so that they can compete effectively with the incumbent operator. Preference will be given to tenderers who will aggressively invest and develop Singapore's telecommunication infrastructure network rather than ride on Singapore Telecom's existing network infrastructure to provide services. Further details of the pre-qualification evaluation criteria will be provided in the pre-qualification tender documents in March 1997.

The licence fees will be set at an initial one-time licence fee of ten million Singapore Dollars (S$10,000,000). In addition, there will be an annual recurrent licence fee set at 1% of the licensee's audited annual gross turn-over (AGTO). To encourage the successful tenderers to be aggressive in providing quality services right from the start, the recurrent licence fees will be subject to a minimum of one million Singapore Dollars (S$1,000,000) for the first year, two million Singapore Dollars (S$2,000,000) for the second year and three million Singapore Dollars (S$3,000,000) for the third year of the licence. Thereafter, the 1% of AGTO will apply without a minimum fee till the expiry of the licence.

The one-time fixed component is comparable to what Singapore Telecom paid when it was granted its licence on 1 April 1992. This is to level the playing-field for all service providers after 1 April 2000. The quantum of the fixed licence fee component and the percentage for the annual licence fee represent what TAS feels is fair economic value for each of the public basic telecommunication services licences. Singapore Telecom's annual recurrent licence fees will also be set at 1% of its AGTO from 1 April 2000.

Licence Duration

The exercise to award up to two additional public basic telecommunication services licences is on schedule. I expect the final award to be made in mid-1998 to allow the licensees time to prepare for the launch of commercial services on 1 April 2000. The licences will be valid for a period of 17 years from 1 April 2000 and will expire on 31 March 2017 as will Singapore Telecom's licence. The licences may be renewed thereafter subject to terms and conditions deemed appropriate by TAS then. Interested tenderers are invited to seek clarifications from TAS after the release of this Info-pack.

Conclusion

The licensing of up to two public basic telecommunication services providers will be a watershed in Singapore's telecommunication history. I am confident that competition among the new operators and Singapore Telecom will bring about even better and more innovative services at more competitive prices for consumers and businesses, and in the process further enhance Singapore's competitiveness.

TAS will continue to set in place policies to ensure that Singapore's telecommunication infrastructure and services are continuously upgraded and developed so that we are at the forefront of technology and service innovations. In this respect, academia and TAS can work together in promoting R&D innovation to help Singapore stay abreast of developments in telecommunication. I wish TAS, NUS and NTU every success in their joint R&D collaboration efforts.

Thank You.

NB. The Information Package is on sale at the reception counter, TAS building 35 Robinson Road, during office hours at $51.50 per copy. For overseas order, please fax your name, address, contact number and the number of copies required to Fax: 65-323 7622.