To enhance competition in Singapore's local leased circuits (LLCs) markets, telecom operators will be encouraged to build parts of the LLC network, where feasible, and provide more competitive services and products. To facilitate this, as an interim measure...
Singapore, 16 December 2003| For Immediate Release
Lowered Wholesale LLC Prices to Reduce Business Costs and Increase Consumer Choice
To enhance competition in Singapore's local leased circuits (LLCs) markets, telecom operators will be encouraged to build parts of the LLC network, where feasible, and provide more competitive services and products. To facilitate this, as an interim measure, SingTel will be required to provide wholesale prices for LLCs in addition to the current retail LLC products that they provide. Thereafter, SingTel's LLCs that connect between SingTel's exchange buildings and end-user sites (LLC tail-circuits) will be made available at cost-based prices. Facilities-based operators (FBOs) will also be allowed to co-locate their telecom equipment at SingTel's exchange buildings, to access SingTel's LLC tail-circuits.
These regulatory measures, announced today by the Infocomm Development Authority of Singapore (IDA), aim to lower LLC market entry barriers, encourage operators to build infrastructure, and bring about lower telecom costs to businesses and end-users in Singapore. The measures were first proposed during a public consultation exercise1 in June 2003, and later fine-tuned following inputs from the industry.
State of Competition in Singapore's LLC Market
IDA has determined that the full conditions for effective and sustainable competition in the LLC markets are not yet present. Competition remains limited in the retail and wholesale LLC markets within Singapore, even though Singapore's published LLC retail prices for key bandwidths are generally competitive when compared to other countries' published prices. Regulatory intervention is necessary to further enhance competition in the provision of LLC services.
In assessing the competitiveness of each market, IDA considered measurement criteria such as the market structure, which includes factors such as the number of operators, their relative market shares, and the ease of market entry and exit; choice of substitute products; and pricing levels and trends.
SingTel remains the only operator with pervasive nation-wide network coverage and is the main LLC supplier to competing operators and retail customers. There are, however, no wholesale prices for most of SingTel's LLC services. As such, other operators have to compete for customers with LLC services bought at SingTel's retail, or near retail price levels. At the same time, it is recognised that operators are unlikely to replicate the tail circuits as extensively as SingTel's existing network.
LLCs are important infrastructure used to provide access to corporate telecom products, such as international capacity, Internet connectivity and a host of value-added and managed data services. These products are commonly purchased by business users, such as banks and MNCs, to communicate with their local and international offices. As such, wholesale LLC prices will generate more competitive pricing for these telecom products, and will bring broad-based cost savings to end users.
IDA has thus required SingTel to provide wholesale LLC prices at "retail-minus" levels. FBOs that require full connections that are from end-users' sites to the FBOs' exchange buildings or data centres, will pay wholesale prices at 30% below SingTel's retail prices.
FBOs who only require LLC tail-circuit connections that link between end-users' sites to SingTel's exchange buildings (where the FBOs have co-located equipment), will pay wholesale prices at 50% below SingTel's retail prices. These wholesale LLC prices will be available for up to two years. Thereafter, SingTel's LLC tail-circuits will be made available at cost-based prices.
The availability of wholesale prices have been carefully determined to strike a balance between encouraging facilities building and providing operators with business certainty. Operators, who currently own LLC networks, will continue to have some economic incentive to rollout LLC infrastructure where possible, and ensure network resiliency.
Lower wholesale LLC prices for up to two years, and the availability of cost-based tail circuits thereafter, will provide FBOs with a more reasonable and comparable cost structure to compete more effectively. Cost-based pricing for tail-circuits will allow SingTel and competing operators who have built LLC networks, to achieve an economic rate of return. As such, these measures will also encourage FBOs to rollout their networks, become less reliant on SingTel's LLC infrastructure, and thus enjoy more economic and commercial flexibility in the future.
More details of IDA's decision can be found in the Explanatory Memo at https://www.imda.gov.sg/, under the sections "Policy & Regulation", "Consultation Papers".
ISSUED BY CORPORATE COMMUNICATION DIVISION
INFOCOMM DEVELOPMENT AUTHORITY OF SINGAPORE
Notes to Editors:
1IDA conducted a public consultation on proposed regulatory measures for the LLC market on 30 May 2003. The public consultation was closed on 20 June 2003, with 12 industry submissions. The submissions are available at https://www.imda.gov.sg/, under the sections "Policy & Regulation", "Consultation Papers".
About Infocomm Development Authority of Singapore
The Infocomm Development Authority of Singapore (IDA) develops, promotes and regulates info-communications in Singapore, with the aim of establishing Singapore as one of the world's premier infocomm capitals. To nurture an internationally competitive infocomm industry, IDA offers a comprehensive range of programmes and schemes for both local and international companies. For more information, visit https://www.imda.gov.sg/
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