Factsheet on Full Competition in the Telecommunication Sector

Infocomm is now a dynamic global business. Intense competition, rapid technological changes and business innovations have created a plethora of new business opportunities and generated new value-added serv...

As at 21 January 2000

1. Infocomm is now a dynamic global business. Intense competition, rapid technological changes and business innovations have created a plethora of new business opportunities and generated new value-added services. The development of the infocomm industry depends on the telecommunications sector being globally competitive, with many players offering innovative, high quality and cost effective services. As such, the Government of Singapore has decided to advance the introduction of full market competition in the telecommunications sector by 2 years from 1 April 2002 to 1 April 2000 1. The direct and indirect foreign equity limits for all public telecommunications services licenses will also be lifted with immediate effect 2. These measures will serve to encourage global infocomm players to participate actively in the Singapore market and locate their regional and global hubs here, thereby furthering Singapore's development as a leading knowledge-based economy and infocomm hub in the Asia Pacific.

¹ Moratorium period: The government had, at the time it held the public basic telecommunications services (PBTS) tender in 1997, committed not to further liberalise the PBTS market till 31 March 2002. This meant that full market competition in the telecommunications sector would be introduced only from 1 April 2002 onwards.

² Foreign Equity Limit: IDA currently imposes a maximum direct foreign equity limit of 49% on all major public telecommunications service licenses. The maximum indirect foreign equity limit on the local partner is also 49%. Therefore, at present, the effective maximum foreign equity limit on these licensees is 74%. The only exceptions are the Internet Access Service Providers and Internet Exchange Service Providers, for which the foreign equity limit was lifted in September 1999.

Licensing Approach

2. All persons operating and providing telecommunications systems and services will be licensed. The IDA will adopt a 2-pronged licensing approach and will differentiate between facilities-based and services-based type of operations. The former will be individually licensed; the latter will generally be class-licensed. A Class Licence is a licensing scheme where the terms and conditions are gazetted. Anyone who provides the services within the scope of the class licence will be deemed to have read and agreed to the terms and conditions of the class license and would be considered licensed.

3. There will be no foreign equity limits imposed for any licensee. Each licensee shall be a company incorporated under the Singapore Companies Act, Chapter 50.

Type and Scope of Licences to be Awarded

Facilities-Based Operations (FBO)
4. These are defined as operations that require telecommunications systems to be installed beyond a single set of premises in single occupation. Operators interested to deploy any form of telecommunications networks, systems and facilities to offer telecommunications switching and/or transmission capacity and/or services to existing licensed telecommunications operators, business and/or consumers will be licensed as FBOs. Examples of telecommunications systems that will be licensed will include mobile communications systems (e.g. base stations, mobile switching centres) needed to offer public mobile phone, paging, trunked radio, mobile data services; and fixed telecommunications systems (e.g. exchanges, fibre, ducts, submarine cables, frontier stations, international gateways) to offer services like local and international voice and data services, leased circuit services.

5. The IDA will award individual licences for FBOs based on the merits of the applications. Licence fees are payable. The structure and level of the fees payable will be in line with the current fees payable. The licence duration shall be set to give the licensee sufficient certainty in its operations. The licences may be renewed for a further period as the IDA thinks fit.

6. Licensees will also be required to comply with interconnection and access obligations as well as the minimum quality of service (QOS) standards set by the IDA. These will also be in line with the requirements and QOS standards set for existing licensees. A summary of the key licensing obligations is listed in Annex 1.

7. The IDA will adopt a technology neutral approach towards the licensing of FBOs to ensure that licensees will continue to strive to innovate and respond competitively to meet the needs of users. The configuration of the system deployed and the technology platform (wired or wireless) adopted will be left to the choice of the licensee, subject to spectrum and other physical constraints.

8. Depending on the scope and requirements of their operations, services offered and reach of customers, licensees may be designated as Public Telecommunications Licensees under section 6 of the Telecommunications Act 1999 and will enjoy provisions under the Act that facilitates their installation and maintenance.

Services-Based Operations (SBO)
9. Operators who lease telecommunications network elements (i.e. transmission capacity, switching services, ducts, fibre etc) from FBO licensees to provide telecommunications services to third parties or resell the telecommunications services of FBOs will be licensed as SBOs. In general, the IDA will take a class licensing approach here and interested parties shall be required to register with the IDA before providing the service. Notwithstanding this, the IDA may put in place an individual licensing scheme for selected types of SBOs where deemed appropriate. Separate licences/authorisation may also be required from other relevant government agencies for the provision of selected types of SBOs.

10. The operations and services that may be offered will range from International Simple Resale (ISR) to offer international voice and fax services to local voice and fax services and local and local and international data services. SBOs can also offer callback and Internet-based international telephony and fax services.

Number of Licences to be Awarded

11. The IDA will adopt a free market entry and exit approach and will not pre-determine the number of licences to be awarded. Licences will be issued based on the merits of the application. The IDA will evaluate licence applications based on, but not limited to, the applicant's commitment in developing and investing in Singapore's infocomm infrastructure, ability to deliver its proposed service and/or infrastructure commitments, and commitment to quality of service standards. All applications will be treated on the basis of objective, non-discriminatory and transparent selection criteria and procedures. There may however be spectrum and other physical constraints (e.g. frequency spectrum, land for satellite and cable landing stations) which would inevitably limit the number of licences that could be issued. Where such constraints arise, the IDA will award the licences following a comparative and/or auction-based selection exercise.

Licence Application

12. All interested parties are invited to start their discussions with the IDA immediately to facilitate their entry into the Singapore market from 1 April 2000. The detailed application guidelines and licensing frameworks will be released on 31 January 2000.

13. Existing licensees are also welcome to discuss with the IDA if they are interested to participate in the liberalised market.

(This document is intended to inform interested parties of the licensing framework in the fully competitive telecommunications environment. It does not bind the IDA to any particular course of action in relation to the handling of any application nor to grant any licence to any party nor the terms of any licence to be granted. )

Annex 1

Licence Obligations of Facilities-based Operators

Interconnection, interoperability and access obligations
1. All FBOs will be required to ensure interconnection, interoperability and access with all telecommunication licensees of the IDA. The intention is to ensure any-to-any communications in a multi-network multi-operator competitive environment for end-users who can access any services of any service provider regardless of which system the end-users are directly connected to.

2. The interconnection, interoperability and access arrangements should be economically, technically and administratively efficient. The arrangements should be transparent to end-users. The arrangements should be non-discriminatory between systems in terms of overall functionality, price, quality and performance of the interconnection between the systems and treatment of calls.

3. The IDA will facilitate the commercial negotiations between the parties on the terms of interconnection, interoperability and access, both the technical and charging and operational aspects. The IDA will intervene judiciously, where it is necessary to expedite the process and resolve impasse in negotiations. Interconnection charges should be cost-oriented, base on forward looking economic cost standard and using long run average incremental cost computation. The IDA will also require unbundling of network elements (i.e. the disaggregation of the network into economically and technically feasible elements) so that FBOs can make their own build-buy decisions based on their operational requirements. The IDA will require parties to reach agreement within a specified period of time and failing agreement, will determine the remaining outstanding issues. The IDA's decision here will be final. Implementation of the agreement shall be prompt and efficient.

4. The IDA has issued a Code of Practice (Interconnection, Access and Infrastructure Sharing) under section 26 of the Telecommunications Act 1999 which all licensees will be required to comply with. The IDA reserves the right to review the Code from time to time to ensure its continued relevance.

Universal Service Obligation
5. As a general rule, USO will only be imposed on Public Telecommunications Licensees so designated under section 6 of the Telecommunications Act 1999.

6. FBOs using wireless technologies will however be required to ensure nationwide coverage and availability.

International Services Competition

7. The IDA may impose competitive measures to safeguard against potential anti-competitive practices by licensees who provide services between Singapore and countries where the competitive forces have not fully developed.

Competition Framework

8. The IDA will continue with its sector-specific competition safeguards to ensure development of fair competition in the telecommunications industry. The IDA will issue a Code of Practice (Fair Competition) under section 26 of the Telecommunications Act 1999 which all licensees will be required to comply with. The IDA reserves the right the review the Code from time to time to ensure its continued relevance.

Quality of Service (QOS) Standards

9. Licensees will be required to comply with the Quality of Service Standards which IDA may from time to time issue to the licensees.

Legislation

10. Licensees will be required to comply with the Telecommunications Act 1999, the Radiocommunications Regulations and any other legislation enacted governing the telecommunications sector.

Key Liberalisation Moves

Here are some of the key liberalisation moves since 1989: