Ms Ng Cher Keng, Director of Policy & Planning Telecommunication Authority of Singapore (TAS) Speech - 7th Asian Multimedia Forum Plenary Meeting
Ms Ng Cher Keng, Director of Policy & Planning
Telecommunication Authority of Singapore (TAS)
Speech - 7th Asian Multimedia Forum Plenary Meeting
Singapore, 17 June 1999
Good morning ladies and gentlemen,
1.1. The year 2000 will be a watershed year for Singapore's telecommunication industry. As we enter the new millennium, Singapore will see facilities-based competition in our basic telecommunication market. The road to liberalisation has been an exciting one for Singapore and today, I am pleased to have this opportunity to share with you our liberalisation experience and our plans for the year 2000 and beyond.
1.2. The new millennium will present tremendous promise, opportunities and challenges for the telecommunication industry. Despite the rapid pace of changes experienced in the industry, several key trends can still be identified. Firstly, with the global trends of privatisation, liberalisation and deregulation, conventional geographic market boundaries are rapidly disappearing and are no longer barriers to global service provisioning. For telecommunication service providers today, the world is their now their market and they are faced with the enviable task of serving the pent-up demand and needs of millions of potential customers. As domestic markets become increasingly integrated with the global economy, governments too are grappling with the regulation of cross-country global services such as GMPCS and cross-continental mergers and alliances. Secondly, new technologies are giving rise to an astonishing array of advance and innovative services. To meet the demand for even faster Internet connections and to support the myriad of bandwidth hungry applications, governments are focusing their efforts on the development of national and regional information infrastructures to ensure that their economies are prepared and ready to meet the demand of the broadband future. Lastly, but certainly not least, the Internet and the converging IT and telecommunication environment are transforming today's communication platform and redefining the way we communicate, work and enjoy our leisure activities. Consequently, convergence at the network and service levels have resulted in a melting pot of cross-sectoral, cross-technology applications, breaking down conventional regulatory models and forcing regulators to rethink and reassess their policies and frameworks.
2. The Broadband Future
Demand Side Broadband Drivers
2.1. The development of new Internet protocol (IP) based applications have resulted in an almost insatiable demand for bandwidth. As global competition intensifies with the freer flow of trade and information, the need to have access to instantaneous, up-to-date information becomes ever more critical. For countries and businesses, establishing a link to the global information superhighway is no longer a "nice-to-have", it has become a "must-have" for economic survival. Hence, economies are rapidly establishing domestic broadband networks and enhancing their international broadband connectivity. Businesses are also rapidly implementing their global operating and information management strategies over the Internet to leverage on its extensive reach and cost effectiveness. The lifestyles of consumers are also evolving. As the increasingly sophisticated consumers of today begin to communicate, shop, study, watch movies and spend their leisure and working time on the Internet, no longer will they be satisfied with hearing a disembodied voice over the plain old telephone in the future or joining the world wide wait for content to trickle down a choked 56.6kbps modem connection. Instead, their minimal expectations will be to have fast speed, full colour, crystal clear, motion picture quality communications. Such expectations will only grow higher as consumers and businesses continue to demand for better quality and faster connections.
Supply Side Bandwidth Drivers
2.2. This demand for bandwidth is in turn driving the feverish-like construction of submarine cables/projects such as FLAG, Project Oxygen and Global Crossing. Demand for capacity is so urgent that these cables are being snapped up the moment they are lit up. For example, Global Crossing has reported that it has already sold one of the transatlantic fibre cables it still has under construction "Europe's Window of Opportunity", Tele.com, 8 Feb 99.. The increased capacity has also resulted in plummeting costs. According to a report by KMI Corporation "1998 Worldwide Summary of Fibreoptic Undersea Systems", KMI Corporation, 1998, although undersea bandwidth capacity has increased by threefold, it had been purchased at only 42% of the cost of all previously available undersea bandwidth as technologies such as Wave Division Multiplexing (WDM) and soliton expand the capacity in new fibres. Bandwidth growth is also not limited to physical undersea cables. The continuing need for capacity has also attracted new bandwidth providers into the market in the form of "bandwidth-on-demand" satellite systems. It has also been reported that three of these systems alone, Teledesic, Skybridge and Celestri will add 14 million channels to broadband communications capacity in the next 5 years. The availability of capacity, coupled with the reduction in prices will continue to fuel the cycle of lower end-user cost resulting in increasing demand for communications leading to yet more demand for capacity.
2.3. The scramble is also on to supply fatter and faster pipelines to the homes so as to remove the traditional local loop bottleneck and bring broadband communications right to the doorstep. Already telcos are delivering an onslaught of digital subscriber line (xDSL) technologies to the homes and cable companies are providing broadband Internet access through their coaxial networks. On the horizon are wireless broadband networks such as local multipoint distribution services (LMDS) that will allow rapid broadband deployment. Ready and cost effective access to such broadband networks will further fuel consumer's demand for broadband multimedia services such as e-commerce, video-on-demand and tele-medicine which will in turn exacerbate the demand for high-speed international capacity.
2.4. It is no doubt that the future of the telecommunication networks is broadband. To help ready our respective economies, both in terms of infrastructure and services, to meet the challenges and leverage on the opportunities of this broadband future, there is much work ahead and governments have a key role to play. Two key and immediate challenges faced by governments are to:
a) enhance their countries' international broadband connectivity; and
b) ensure the construction and development of a resilient and robust domestic broadband network.
3. TAS Liberalisation Approach
3.1. To ensure that Singapore will be broadband ready and that service providers will be incentivised to continually invest and upgrade their telecommunication networks, the Telecommunication Authority of Singapore (TAS) has adopted a phased and managed approach towards liberalisation, introducing facilities-based competition before service-based competition. Our intention is to have facilities-based players that will compete vigorously and effectively in the market to provide a full range of basic telecommunication services nation-wide. These players are expected to invest in high-quality, advanced and resilient telecommunication infrastructure. This would in turn provide the necessary foundation to support a plethora of innovative and vibrant value-added services that will meet the future needs and demand of industry and consumers. We also believe that this approach would foster competition at all levels, from infrastructure development to service provision, and would spur our players to compete vigorously in all facets of the industry.
3.2. It must be highlighted however that competition is by no means our ultimate objective. The introduction of competition in our market is more a means of achieving our policy goals. In other words, we do not view competition as an end goal, but rather as an effective enabler and tool for achieving our policy objectives of maximising consumer welfare, encouraging infrastructure development and enhancing Singapore's position as an international business hub.
3.3. As a start, TAS will introduce full-service and facilities-based competition in the year 2000. Players entering the market at this stage must be committed to developing and advancing Singapore's telecommunication infrastructure and are required to roll-out a nationwide broadband-ready network. With facilities-based competition in place, TAS has committed to further liberalisation from 2002, both service-based and facilities-based competition. Our objective at this stage is to attract as many innovative and dynamic service providers as possible to introduce new service offerings or repackage, resell and value-add to existing ones. They can also roll-out their own networks if they want to.
4. Current Market Status
Public Basic Telecommunication Services (PBTS) Market
4.1. When Singapore Telecom was first corporatised in 1992, it was granted a 15-year monopoly for basic domestic and international telecommunication services until 2007 and a 5-year monopoly for mobile phone and paging services. However, given the pace of technology advancement, the developments in the industry world-wide and the strategic importance of telecommunications in sustaining a country's competitiveness, the Singapore Government in May 1996 shortened Singapore Telecom's monopoly for the provision of basic telecommunication services by 7 years, from 2007 to 2000. In May 1998, TAS proceeded to license a second PBTS operator, StarHub, through a public tender, to compete with the incumbent Singapore Telecom come 1 April 2000.
4.2. StarHub has committed to investing more than S$2 billion in its fixed-line network. Central to StarHub's network deployment plan is an aggressive schedule to roll out a nation-wide fibre optic cable network to homes and offices that will support a suite of innovative multimedia services on top of basic telecommunication services. In view of the substantial investment that StarHub will undertake to develop Singapore's telecommunication infrastructure, TAS has committed to a 2-year moratorium within which no additional PBTS operators will be licensed. This 2-year lead-time will allow StarHub to fully rollout its nation-wide network. As I mentioned earlier, TAS is committed to introducing additional facilities-based and service-based competition in 2002.
Mobile Communications Competition
4.3. Competition in the mobile phone and paging market segments was introduced in 1997 with the expiry of Singapore Telecom's monopoly over mobile communications. MobileOne was licensed as Singapore's second mobile phone operator. With the advent of competition, our mobile phone penetration rate soared by more than 150% from 14.2 per 100 population in Mar 97 to 36 per 100 population in May 99. Competition has stimulated rapid growth and interests in the entire market and consumers have been able to enjoy better service standards and a wider range of value-added services at more competitive prices.
4.4. In May 98, a third mobile phone operator, StarHub was licensed to begin commercial services from 1 Apr 2000. We expect the entry of StarHub to further stimulate the market here.
4.5. The paging market in Singapore is also fully liberalised. There are currently 4 paging operators and our penetration rate of 40.3% As at May 99. remains one of the highest in the world.
4.6. Mobile communications, in particular mobile data, will continue to be a key growth area of the telecommunication industry. By the turn of the century, data will account for 95% of global telecommunication traffic, as opposed to the current levels of 5% according to a report in Asian Communications. Early indications are that there will be around 10 million mobile data users by the year 2001, bringing in revenues in the region of US$1.7 billion.
4.7. The impact that the Internet will have on our lives will be profound. It is imperative that a conducive environment be established to nurture and encourage the development of Internet infrastructure and services. As such, the provision of public Internet access services (IASP) in Singapore was further liberalised in Oct 98 and interested parties meeting the minimum application criteria will be licensed.
4.8. With this move, we hope to see more competitive access service provision, the creation of richer and more interesting content and the introduction of more innovative value-added services and applications riding on the Internet platform. More importantly, we also aim to enhance Singapore's connectivity regionally and globally. Thus, as part of our IASP licence application criteria, applicants are required to establish Internet links, both regionally and internationally.
4.9. A second motivation for the further liberalisation of the Internet access market was the convergence of telecommunications and information technology. We see an opportunity for our public telecommunication licensees to enhance their traditional telecommunication services offerings by exploiting and leveraging on the convergence of IT and telecommunications. An IASP licence will allow our current telecommunication service licensees, who are interested to do so, to offer a seamless suite of integrated multimedia and telecommunication services, and in so doing, reap additional synergy and economies of scale from their operations.
4.10. At present, there are 3 Internet access services providers and more than 90 Internet resellers operating in Singapore. Our dial-up penetration rate is 14%.
4.11. TAS has also actively taken steps to continuously review and liberalised the various service segments, especially services which do not fall under the monopoly rights granted to Singapore Telecom. These include Satellite Uplink/Downlink for Broadcasting Purposes, self-provisioning VSAT for intra-corporate communications, Public Trunked Radio Services, Public Mobile Data Services and Value-added Network Services (VANS). In addition, where services do fall within the scope of the monopoly rights granted, TAS has liberalised the resale of these services and established the relevant frameworks to license resellers.
5. YEAR 2000 AND BEYOND
Changing Role of the Regulator
5.1. With the advent of competition and convergence, TAS must also review and reassess our role and the focus of our policy development. The role and focus of TAS as a proxy competitor to Singapore Telecom is evolving to one of mediator of disputes, facilitator of competition and promoter of industry and technological development. The changing industry landscape from a monopoly situation to a multi-network, multi-operator competitive environment means that greater resources must be channelled towards strengthening the regulatory frameworks to ensure a level playing field and the development of fair, effective and sustainable competition.
Ensuring Sustainable Competition
5.2. While we have introduced competition in our basic telecommunication market, this signals only the beginning, not the end, of the work we need to do to ensure that both consumers and the industry can reap the full benefits of the multi-network, multi-operator competitive environment. We must now focus our efforts to ensuring that competition is effective and sustainable in the long run. As more and more players enter the market, and as the degree of competition intensifies, it is inevitable that over the long run, margins will increasingly be squeezed and the customer base increasingly fragmented. It is therefore critical that there exists a clear, coherent and robust competition framework to prevent anti-competitive and unfair practices while ensuring that the players' flexibility and creativity in their operations are not stifled. It is not our intention to tilt the playing field in the favour of either the incumbent or the new entrants. Instead, our objective is to ensure a level playing field, so that all players can compete effectively on the merits of their range of innovative services, quality of customer care, technology superiority, quality of services and pricing.
5.3. The importance of a robust competition framework becomes even more apparent in this era of convergence. As market, service and customer boundaries disappear, issues such as undue discrimination, cross-subsidisation and predatory pricing become increasingly convoluted. The competition framework must be updated to take into account the needs and requirements of an increasingly complex environment.
5.4. TAS has already put in place guidelines on fair practices and conduct. The objective of these guidelines is to act as a reference for players to monitor and benchmark their own behaviour. TAS has also required our licensees to implement accounting separation. TAS has also established dispute/complaint resolution procedures to ensure that inter-operator disputes and complaints will be resolved expeditiously and fairly without unnecessary recourse to the courts.
5.5. TAS is in the process of reviewing and updating the above guidelines to ensure that they remain effective and relevant with the developments and trends in the industry.
5.6. Access to Internet will continue to grow ever more critical. Information infrastructures - national information infrastructures (NII), regional information infrastructures (RII) and global information infrastructures (GII) - are expected to be largely Internet-based. If however the cost of putting infrastructure and accessing the Internet is prohibitively high or inequitable or unsustainable, this will result in patchy and unequal development of the Internet across economies. This in turn will prevent countries from fully reaping the benefits of Internet connectivity.
5.7. Hence, the questions faced by regulators today regarding the Internet are many-fold: How do we ensure that our economies are well-plugged into the global information superhighway? How do we ensure the availability of competitively priced, innovative and quality value-added Internet access and services?
5.8. To address these issues, Singapore has proposed a study at the APEC Telecommunications Working Group (TEL) on the compatible and sustainable international charging arrangements for Internet services (ICAIS). The purpose of the study is to assess how to create a more sustainable and more equitable financing arrangement for international Internet connectivity. The study also aims to provide relevant and in-depth information to industry, government and users on the development of the Internet in the Asia Pacific region. For the industry, such information will assist them in forming accurate Internet business models. For governments, such information will assist them in formulating flexible and conducive policies for Internet. For Internet users, the information will help to explain to users the pricing discrepancies for Internet access in different countries. The ICAIS study is due to be completed by May 2000.
5.9. This will be the first time that anyone is attempting to chart the Internet in any cohesive way via the entire Asia Pacific region and to predict its growth trends. The results will be of great interest, not only to governments, but to industry as well. TAS would like to encourage greater participation and dialogue between government and the industry to ensure that the study undertaken will indeed be a fruitful and useful one.
5.10. On the domestic front, TAS will continue to work with our sister agencies to continue to develop our national information infrastructure, Singapore ONE.
5.11. A convergent future holds much promise for the industry. For the consumers, convergence means greater convenience and choice and more interesting and useful services at lower prices. For service providers, convergence means opportunities to reap economies of scale and scope as well as synergies across their multiple networks. But in order to reap the full benefits of convergence, regulators too must reassess their sector specific frameworks and regulations to address the unique challenges of the converging environment.
5.12. As of 3 June 99, the telecommunication regulator in Singapore, TAS, together with the National Computer Board have been merged to form the new regulatory and promotion body for IT and telecommunications. The new body, the Information Technology and Telecommunication Authority (ITTA), will come under the purview of the expanded Ministry of Communications and IT (MCIT). This move will improve policy co-ordination and implementation and will foster the integrated development and application of IT and telecommunications in Singapore.
6. Concluding Remarks
6.1. In addition to the above, TAS is also channelling our efforts towards establishing the framework for greater competition and liberalisation in 2002. Given the remarkable transformation taking place in the telecommunication industry, the challenge for us now is to create an environment that will attract innovative and competitive players who are committed to developing our infrastructure and services to an even higher level of sophistication. Our aim is to establish a vibrant playing field that will allow both service providers and consumers to exploit fully the opportunities arising from convergence, technological advances and liberalisation. We will ensure that a conducive, robust and flexible framework is in place to encourage the development of long term, sustainable competition so that ultimately Singapore can transit successfully to a competitive, knowledge-based economy and society.