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TAS Not Against Price Cuts by Mobile Operators

TAS reiterates that it welcomes competition and the various aggressive schemes put forth by operators that can ultimately benefit consumers. TAS would like to see more of such service schemes to benefit consumers, as this ...

Singapore, 1 February 1999 | For Immediate Release

TAS reiterates that it welcomes competition and the various aggressive schemes put forth by operators that can ultimately benefit consumers. TAS would like to see more of such service schemes to benefit consumers, as this was the rationale behind TAS' liberalisation of the market in the first place.

While TAS welcomes aggressive competition, TAS needs to ensure that any schemes proposed by the operators are not anti-competitive, such as unfair leverage of monopoly rights or introduction of long run commercially unviable schemes that will drive out market players, to the detriment of consumers' interests. TAS also needs to ensure that consumers are not restricted by unfair or undue tie-in conditions which will restrict their freedom to switch operators.

It is on these grounds that operators are required to seek TAS' approval on any permanent changes to service schemes, since these schemes will have a long-term effect. However, TAS recognises the need for operators to respond quickly in a competitive environment. TAS has, since 1997, allowed operators, under its "blanket approvals", the commercial flexibility to implement promotion packages without getting TAS' prior approval so long as these promotions are time limited and meet our safeguard conditions. Among the main conditions of TAS' "blanket approvals" are that the promotions should be without tie-in conditions, and should be for limited periods which end by 31 March 2000. These conditions are imposed to ensure that consumers are not locked in but can continue to have the freedom to switch operators when the mobile market is further liberalised in April 2000. Nevertheless, to allow operators to respond quickly to the dynamic nature of the market, TAS has granted approval on an urgent basis, sometimes within an hour or two even in cases of permanent changes.

With regard to the recent developments in the market, TAS wishes to clarify the sequence of events to explain our position on the mobile price reductions.

SingTel's Mobile Promotion

SingTel Mobile's (STM) announced three new offers on the 29 Jan 99 (Friday), namely the offer of free first 12 seconds of all incoming calls; the offer of rate discounts during specified peak hours; and the loyalty scheme to reward customers who have been with their network for a year or more.

The first two offers have in fact been approved by TAS several weeks ago. However, STM's loyalty scheme is still pending approval by TAS. This is because STM filed the scheme as a permanent programme and had yet to revert with clarifications required by TAS. TAS concerns include the long-term sustainability of the market; whether tie-in conditions would be imposed on subscribers; and its favour over long term customers only and not across all customers. TAS needed to clarify these concerns before considering whether to grant approval to STM for this permanent scheme.

When TAS clarified with STM on its announcement of its loyalty offer which was still pending TAS' approval, STM explained that its offer was covered under a previous approval granted by TAS under which they were allowed to offer discounts off the monthly subscriptions for 12 months. TAS' earlier approval was granted based on the condition that the benefits and tie-in conditions must not exceed 12 months and must end by 31 Mar 2000. STM's offer as advertised in the media was thus deemed to be misleading, as no such indication on the duration of the discounts was given in its advertisements. In order not to mislead the public, TAS had directed STM on 31 Jan 99 (Sunday) to make clear the terms and conditions of its loyalty programme in all its advertisements and promotional materials with effect from 1 Feb 99 (Monday).

TAS has required STM to show cause as to why their press release and advertisements were misleading or if indeed, it was meant to be the permanent loyalty programme, why did STM proceed before receiving TAS' approval. Depending on STM's response to our show-cause letter, TAS may take appropriate action.

MobileOne's Promotion

For MobileOne's (M1) case, their proposal was filed with TAS at 5:40pm on 29 Jan 99 (Friday) shortly after STM announced its offers. M1 subsequently made clear to the media that its offers were subject to TAS' approval. TAS gave approval to M1 in the early morning of 30 Jan 99 (Saturday) to proceed with its schemes from 1 Feb 99 (Monday). Given the circumstances that M1 has to respond to STM's scheme expeditiously and that M1 has made it clear to the public that its offers were pending TAS' approval then, M1 has not acted inappropriately. As such, TAS does not intend to take action against M1.

TAS is not against aggressive promotion schemes introduced by the operators, and is prepared to give flexibility to operators to introduce such schemes under its "blanket approvals". Both operators have in fact enjoyed speedy approvals from TAS, even for permanent changes to service schemes. There is thus no reason for any operator to go ahead to inform customers of offers that have yet to be approved by TAS and thereby potentially mislead customers. TAS maintains that prior to the further liberalisation of the mobile communications market, it is necessary for TAS to review long term and permanent changes to schemes in order to ensure a sustainable competitive market and protect choice for consumers.