Award Ceremony for Licences to the Successful PBTS & PCMTS Tenderers

Mr Mah Bow Tan, Minister for Communications Speech - Award Ceremony for Licences to the Successful PBTS & PCMTS Tenderers

Mr Mah Bow Tan, Minister for Communications
Speech - Award Ceremony for Licences to the Successful PBTS & PCMTS Tenderers
Singapore, 5 May 1998

1. Just over a year ago, on 1 April 97, Singaporeans had their first taste of competition in the telecommunications services market. One new mobile phone operator, M1 and three new paging operators, ST SunPage and Hutchison IntraPage and M1 rolled out their commercial services to compete with the incumbent operators, SingTel Mobile and SingTel Paging. The start of competition in mobile communication services marked the beginning of a new era for Singapore's telecoms industry. Within a few months, we began seeing the benefits of competition. Consumers in Singapore began to enjoy a wider range of quality products and innovative services, at prices not seen before. New players as well as the incumbent operators, equipment manufacturers, suppliers and dealers have improved their efficiency and competitiveness.

2. More significantly, the market has expanded. The proportion of people in Singapore with mobile phones has risen from 14 per cent one year ago to 27 per cent today, while the proportion with pagers has increased from from 35 per cent to about 44 per cent. In absolute numbers, the total number of mobile phone subscribers has increased from 431,000 to 849,000 as at end March 98. This is almost a 100% increase. Paging subscribers rose from 1.07 million as at end March 97 to 1.35 million as at end March 98. This represents an increase of over 25 per cent, a significant increase, considering our already high base. In terms of cellular and paging penetration, we are now among the highest in the world.

3. As consumer demand for mobility and communication increases with affluence, our mobile communication market will continue to grow. In such a competitive environment, we can expect the operators to continue investing in new technologies to introduce new and innovative value-added services of good quality to meet the needs of the market place. Our decision taken in 1996 to further liberalise the entire telecommunication services will further enhance these benefits. As a follow-up to this decision, a tender was called in August 97 to license up to two more Public Basic Telecommunication Services (PBTS) operators. Another tender was called in Oct 97 to license up to two more Public Cellular Mobile Telecommunication Services(PCMTS) operators. At the close of the tender on 31 Dec 97, three consortia submitted their bids for the PBTS tender, and two for the PCMTS licence.

4. In further liberalising the telecommunication industry, one of our guiding principles has been to ensure that competition will be effective and sustainable. Hence, the tender evaluation for the new licences was based not on how much tenderers were prepared to pay for the licences, but how well prepared they were to invest in infrastructure to make our telecommunication services more competitive. Tenderers were further required to provide their investment commitments under a one-more-operator and two-more-operator scenario and to indicate their preference for the number of additional operators. The top two tenderers for the PBTS licence preferred only one more operator. They indicated clearly that their investment commitments would be significantly reduced under a two-more-operator scenario. It was evident from this exercise that at this point in time, Singapore could support only one more facilities-based PBTS entrant. Therefore, to ensure long-term infrastructure development as well as effective and sustainable competition, and taking into account the views of the market, TAS recommended and the Government decided to license only one more PBTS operator in this tender exercise.

5. StarHub was selected for the PBTS licence primarily because of its aggressive rollout plans for an extensive optical fibre network to homes, offices and other buildings by year 2000. StarHub has committed to invest more than $2 billion in its fixed line network and has also offered a comprehensive range of services at competitive prices and at higher quality of service standards.

6. For the PCMTS tender, both StarHub and P2P made strong proposals with a comprehensive suite of customer-oriented services, supported by an extensive network. Both planned to invest between $500 to $700 million each over the next few years in their network. Their investments were not significantly different for the one-more-operator and two-more-operator scenarios. Both tenderers' submissions indicated that the market can support four highly competitive PCMTS operators. As there is continued strong demand for wireless communication services, TAS recommended and the Government decided to award two more PCMTS licences, one to StarHub and another to P2P. Unfortunately, P2P will not be getting its licence due to circumstances which I am sure you are all aware. We will only be awarding one more PCMTS licence today to StarHub.

7. Notwitstanding that only one more PCMTS license will be awarded, the objective of liberalisation will not be affected in any way. Come the year 2000, we will still have three PCMTS operators, and two facilities based PBTS operators to provide us with sustainable and effective competition. Judging from the developments so far in our mobile phone and paging services market, I am confident that competition will spur the telecom operators to provide an even better and wider range of services at competitive prices.

8. Singapore is committed to the liberalisation of our telecommunication sector and it will not stop in the year 2000. TAS has earlier announced its intention to license additional PBTS operators, through future public tenders, to provide commercial services from 1 April 2002. The type and number will be determined at a later stage. With more extensive infrastructure in place by then, there will be greater scope for more services-based licences to be issued without them having to put in heavy infrastructure investment. For example, more operators can be licensed to provide basic telecommunication services such as voice telephony, fax and data services using the extensive facilities and infrastructure available then as well as innovative value-added Intelligent Network-based services.

9. Today's award ceremony marks another important milestone in our telecom history. A second operator is now licensed to provide both international and domestic services. StarHub has the responsibility to provide effective competition to benefit consumers in Singapore. It has to fulfil the comprehensive and advanced network rollout it committed in the tender, to provide a wide range of high quality services at competitive prices as promised. Only then, will StarHub contribute significantly to the development of Singapore's info-communication infrastructure and services, and in the process bring benefits to its shareholders, its customers and the economy as a whole. I would like to extend my heartiest congratulations to StarHub for having won the two licences. I wish you every success.