Reconstitution of TAS & the Corporatisation of Singapore Telecom

Mr Mah Bow Tan, Minister for Communications Speech - Reconstitution of TAS & the Corporatisation of Singapore Telecom

Mr Mah Bow Tan, Minister for Communications
Speech - Reconstitution of TAS & the Corporatisation of Singapore Telecom
Singapore, 1 April 1992

Today's ceremony is a simple but significant one, significant because it marks a turning point in the evolution of the telecommunication industry in Singapore.

From today, the TAS that Singaporeans have known for the last 20 years ceases to exist. Taking its place will be not one, but three organisations, ie a new TAS, which will be a statutory board, and two companies, Singapore Telecom (ST) and Singapore Post (SP).

The new TAS will have 2 major roles, as a regulator and as a developer and promoter of the telecommunication and postal industry in Singapore. Its job is first to ensure that Singaporeans continue to enjoy high standards of telecommunication and postal services at reasonable prices and second, to guide the transition to a more competitive environment for telecoms and postal services. How will these objectives be achieved?

As a regulator, TAS will grant licences to Singapore Telecom and Singapore Post to operate a full range of services. The licences will set out certain terms and conditions which the companies will have to abide by. Among these conditions, TAS will impose a universal service obligation on ST and SP to provide basic telecoms and postal services. For example, ST must ensure that every household and business which wants a telephone line can get it, regardless of where they are located in Singapore. Likewise, SP must ensure that basic postal services, such as collection and delivery of letters, are provided.

The TAS licence will give ST and SP the exclusive right to provide specified basic telecom and postal services for a period of 15 years. These basic services include domestic telephone services and IDD, telex and telegram services, and the collection and delivery of letters and postcards. Why 15 years? Providing telecom and postal services is an expensive business. It requires heavy investment in modern equipment and state-of-the-art technology. For example, Singapore Telecom will be spending about $3.5 billion in the next 5 years to install an Intelligent Network, Broadband ISDN, and a new satellite earth station. The national network will be totally digitalised by 1994. Over the next 20 years, it plans to connect all homes and offices with optical fibres. Singapore Post (SP) will be investing more than $300 million for an automated mail processing centre at Jalan Eunos to cater for increased demand for postal services. The companies must be assured that such major investments are going to be viable, if they are to be encouraged to take a long-term view, and not be distracted by short-term financial objectives. The average economic life of the capital equipment involved is about 15 years. That is why we have chosen to give ST and SP 15 years of exclusive right to operate. Where the capital investment involved is relatively lower, we will reduce this exclusive period. For example, in the area of mobile communications, TAS will grant ST an exclusive period of only 5 years.

The granting of exclusivity is a worldwide practice, although the period of exclusivity varies from country to country. Hong Kong Telecom has an exclusive right to provide local telephone and basic phone services for 20 years, and an exclusive right of 25 years for international telecommunication services. Telekom Malaysia was given an exclusive licence to operate and provide domestic and international telecommunication services for 20 years in the first instance. In UK, after duopoly was introduced in 1984, a second operator, Mercury, was guaranteed that no further licence would be issued for at least 7 years.

TAS, the regulator, also has a critical role to play in developing the telecommunication market in Singapore. TAS must ensure that scarce resources such as radio frequencies are utilised to the maximum benefit for Singapore. It must work closely with overseas counterparts in the study and introduction of new technologies. It must prepare the ground for more competitive services to emerge. The Government is committed to a policy of liberalising the telecom and postal industry in the years ahead. However, the process will be a gradual and deliberate one. We will give time to all parties concerned to adjust to their respective new roles.

The liberalisation process has already begun. For example, the market for customer premises equipment is already liberalised. Such equipment include telephones, pagers, fax machines and PABXs. The market for Value Added Network Services (VANS) is also open to competition. It can be further liberalised. TAS will progressively introduce competition into other areas in telecommunications. It will be done in such a way that there will be long-term benefits to Singapore.

In preparation for its role, the TAS Act confers various powers on TAS to set up mechanisms for ensuring more competition, as and when the market is ready. For example, it can make arrangements for interconnecting different telecommunication systems when the situation arises. TAS has a duty to maintain effective competition between providers of telecom and postal services where applicable. I expect TAS to pursue a liberalisation policy that will increase consumer choice, stimulate greater efficiency in the use of resources, and encourage growth and innovations in the industry. I am confident that the new TAS Board will be equal to the tasks I have outlined.

In this exciting new phase, it will be guided by a new Board, made up of representatives from business, Government, Unions, with a blend of experience and new ideas. It is staffed by a group of dedicated people with a broad range of expertise in the telecommunication and postal industries. Upon their shoulders rest a heavy responsibility - to ensure that Singapore's telecommunication and postal services will continue to rank amongst the best in the world, in terms of quality, availability, and price.

At the same time, Singapore Telecom and Singapore Post know that they are the pathfinders in Singapore's drive towards a brighter telecommunications future. Over the last 2 decades, ST has done exceedingly well. Its dynamic and innovative board, working with its top management team and its skilled workforce, has helped make Singapore a telecommunications hub. With this wealth of experience and with the increased flexibility and autonomy to operate as companies, I am sure that not only will they take this next phase of their corporate life in their stride, but they will fulfill and exceed our highest expectations in taking Singapore Telecom onto greater heights and carving a niche for themselves in the world of telecommunications.

The reconstitution of TAS and the corporatisation of Singapore Telecom and Singapore Post today marks a new era of telecommunications in Singapore. Together, TAS', ST's and SP's joint mission is to maintain Singapore's position as a telecommunications hub, and in the process, to provide their customers even higher standards of service at competitive prices. I am confident that they will not let us down. All three organisations have an exciting future ahead. I wish them well.