Mrs Tan Ching Yee, Chief Executive Officer Infocomm Development Authority of Singapore Speech - ICT CEO Forum, Impact Muang Thong Thani, Bangkok
Mrs Tan Ching Yee, Chief Executive Officer
Infocomm Development Authority of Singapore
Speech - ICT CEO Forum, Impact Muang Thong Thani, Bangkok
Thailand, 05 August 2004
Khun Rianchai Reowilaisuk, Director General, Post and Telegraph Department,
Distinguished Guests,
Ladies and Gentlemen,
1. I am honoured to be here to speak on an important topic. I am happy to share some observations from Singapore's experience, as part of an exchange of ideas among friends. Given that countries differ in their market characteristics, policy-makers and business people can study the different view-points and perspectives at today's forum to draw useful lessons for use or further adaptation.
2. Although the topic refers to "ICT", my talk will focus on the "communications" aspect. Singapore's IT sector has been developing well over the last quarter of a century, with free competition and entry of new players, both local and overseas.
Telecom Liberalisation in Singapore
3. Singapore was set on a path of gradual liberalisation of its telecommunications industry from 1992, when its telecommunications authority was split into an operating company and an industry regulator. The pace quickened some four years back, and Singapore threw open its telecommunications market to full competition on 1 April 2000.
4. Four years on, the benefits are quite significant. I shall not go into details, but the charts summarise some key benefits. These benefits were in line with what the experts had predicted. In short, the calls for liberalisation have been rewarded by tangible benefits.
5. Our job is not completed. Hindrances to achieving fully effective competition remain in some segments of the telecommunications markets, due in part to natural monopoly characteristics. Singapore's small market size does not help.
6. Still, to have made progress was not without some effort. Experts can advise, but in the end, the Government agency has to turn that advice into practice. When my colleagues meet with their counterparts in other countries, we share many "war stories".
Three Observations
7. For this morning, I would like to share three observations with you, in an attempt to answer the question posed by the organizers, which is: "Competition in ICT - Does it come with enforcement and implementation?"
8. First, liberalisation not only means more work for the regulator, but more varied (and I would even suggest, difficult) work. Before 1992, most of the decisions were of a technical nature, whether a particular piece of equipment met standards and could be introduced without causing harm to the network. Furthermore, with the operator and the regulator being one and the same entity, any regulation was of a most friendly nature.
9. After 1992, as more players entered the market, the regulator needed to take into account more factors in its decision, including decisions that required a good knowledge of business and economics. New technologies were also emerging and we had to decide how these could be introduced in a pro-competitive manner. Examples include allowing competition in internet access and treating internet telephony as an application of internet to provide competition to conventional IDD.
10. With full liberalisation in 2000, the role of the regulator changed in a fundamental way. It moved beyond being a regulator to being the telecommunication industry competition authority. Its role was to safeguard and promote competition in the industry, for the benefit of the wider economy and consumers. The challenge also increased with the entry of many international players, used to high standards of transparency and responsiveness on the part of the Government authority.
11. The first year after full liberalisation was a period of frenzied activity. On average, IDA issued 1 new licence per working day. Five months later, in September 2000, we completed the competition framework. This is perhaps a record-setting feat. The entire exercise involved two rounds of extensive public consultation. There were many new stakeholders in the market, and they all wanted to give their inputs. We received some good advice and ideas.
12. Ten months after liberalisation, IDA approved the incumbent telco's Reference Interconnection Offer (or RIO), along the lines demanded by the competition framework. I will talk more about RIO later.
13. While the number of staff handling telecommunications competition issues in IDA today is not much higher than the number which the former Telecommunications Authority of Singapore had in 1992, the profile has changed. While we used to have mainly engineers and many technicians, today we have engineers, economists, accountants and lawyers. From being a technical regulator, we have become the agency to promote competition and growth of the entire telecommunications industry in Singapore.
14. Given the limited staff resources but vastly expanded job scope, we also had to re-engineer our workflows to be more productive. For example, new players can now apply for telecom licences online. Approval is typically given within 2 to 8 weeks, depending on the type of licence applied.
15. Given the rapid changes in the industry, it is not possible to assume that "Government knows all". We leverage on external consultants and experts when we need additional inputs in specific areas requiring highly specialised expertise and knowledge. For example, we had the assistance of international consultants when developing the competition framework as well as the RIO. We continue to study best practices in other countries, to get new ideas and to validate what we are doing.
16. In addition, we tap the expertise of the operators in the market. Every major rulemaking is put out for public consultation before the rulemakings are finalised, in order to tap the collective wisdom of all stakeholders. We know that some will use the consultation to lobby for their vested interests. Nevertheless, given the diversity of opinions and views expressed, such inputs give IDA invaluable feedback on how its decisions will impact the market and different players. In some cases, decisions are modified or refined in response to public feedback. This makes for a more robust competition regime.
17. The second observation I would like to share is that: details do matter. Indeed, they make or break the policy framework.
18. Intellectually, we can all understand the importance of competition and the need to have more players. But the question is how exactly do new players come in to play? This is especially important in the telecommunications industry - would customers sign up with a new player if they cannot place calls to their friends who are customers of the incumbent? So we need a proper interconnection framework.
19. As business people would know, there is no reason why any business, including an incumbent telco, would want to bend over backwards to ease the entry of a competitor. Interconnection is a complex matter - it ranges from technical specifications to pricing and terms and conditions of service provisioning.
20. So IDA decided to step in to intervene. Where the parties can come to agreement based on commercial negotiations, well and good, please proceed. If not, the new entrant has the option of using a "model contract" called a "reference interconnection offer" or RIO which IDA has asked the incumbent to make available.
21. Like any good contract, the RIO must go into excruciating details. It is 625 pages thick. I have here an example, to illustrate the need to be as specific as possible:
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Local Loop Unbundling: |
22. Another example of detail is the precise Interconnection Dispute Process that IDA put in place. When new entrants and the incumbent are unable to agree to interconnection rates and conditions, IDA has a detailed process to resolve the matter, with strict timelines. The figures refer to the number of days.
23. The third observation I would like to share is that: Review framework and measures constantly to ensure relevance. No competition framework is right for all times, unless it is totally irrelevant. In Singapore's case, the IDA has committed to a mandatory 3-year review for its competition framework.
24. In addition, as competition develops in each segment, rules are eased to reflect such developments. For example, in November 2003, IDA lifted some obligations that it had earlier imposed on SingTel on its International Telephony Services, in recognition that competition in this market had developed to a level where the obligations were no longer necessary to help preserve competition in the market. While some competing licensees were keen to see a continuation of the obligations imposed on SingTel, IDA decided to proceed because of its objective of imposing no more regulation than is necessary.
25. From time to time, we may need to do the opposite, to impose new pro-competition measures because competition in certain market segments remains unsatisfactory. This is the case for local leased circuits, where wholesale prices would be pegged at a 30-50% discount off retail rates for a period of up to 2 years, to allow for competition to develop.
26. The commercial interests of the different players would want IDA to decide in one way or another. It is also not difficult to see why the incumbent operator and its competitors often have diametrically opposing views. The challenge for any competition authority is in keeping scrupulously focused on policy objectives of competition development - to put in place new measures where effective competition does not exist and to remove existing measures where competition has developed well.
Conclusion
27. To summarise, my answer to the question of this forum is that effective competition is nothing but implementation, implementation and implementation. And implementation is nothing if not backed by timely and effective enforcement when the need arises.
28. Embarking on liberalisation is like starting a journey with no known end-point. We need plenty of stamina, determination and wisdom to walk this path. This is made easier through sharing of experiences with others who are also walking this path. And from time to time, we have to look back on the benefits as we walk along this journey.
29. Thank you.
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