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Responding to the New Landscape of Convergence

BG Lee Hsien Loong, Deputy Prime Minister - Address Official Launch of IDA, Orchard Hotel

BG Lee Hsien Loong, Deputy Prime Minister - Address
Official Launch of IDA, Orchard Hotel

Singapore, 3 December 1999


1. I am happy to be here today with you at the launch of I.D.A -- the Info-Communications Development Authority of Singapore.

Need for Change

2. In recent decades, the IT and telecommunications industries have been the fastest developing industries in the world. They have been driven by spectacular advances in technology, deregulation in telecommunications, and exponential declines in costs. The industries themselves have been repeatedly transformed out of recognition. They have changed the way business is done in every sector of the economy. They are altering the way people live, work, communicate, and entertain themselves.

3. Increasingly, IT and telecommunications have converged to become a single industry - the ICT industry. For example, voice and data transmissions are converging; today, we can make overseas telephone calls via the Internet, at a fraction of standard IDD rates. At Comdex a few weeks ago, John Chambers of Cisco Systems spoke of light switches and air-conditioners that know when their internal parts are starting to fail, and automatically email the manufacturer to send a replacement part to the owner.

4. The impact of the digital revolution will not be incremental, but will be as profound as the invention of the steam engine which heralded the industrial revolution. The response cannot just be to make incremental improvements to the traditional way of doing things. For many industries, the response must be fundamental, completely changing the way they conduct their business.

5. The pace of development is perhaps most furious in the US. Traditional brick-and-mortar industries and business models are in real danger of being rendered obsolete. Their key pre-occupation today is how they can re-engineer and reposition themselves to survive in the digital age. Retail outlets are struggling to meet the challenges of the Internet, where you can now buy almost anything - books on, aeroplanes on eBay, and custom-made cars from Ford.

6. In capital markets, intermediaries who do not add value beyond implementing transactions are being swept away by online trading. Securities exchanges themselves are busy fending off attacks by electronic communication networks, or ECNs, which offer low-cost, price-efficient trading of securities through fully electronic means. Established investment banks, like Merrill Lynch and Morgan Stanley Dean Witter, have had no choice but to join the fray and introduce on-line trading services. They know this will cannibalise their traditional business. But they also know that if they do not do this themselves, somebody else will cannibalise their business anyway. They call this new mindset "TINA", which stands for There Is No Alternative.

Responding to the Changes

7. Singapore must similarly adapt to this new environment. There is no alternative! Our financial industry must embrace IT, whether it is in internet banking and securities trading, or using IT to automate their back-office operations. Our retailers face competition not just from shops in Johor Baru, but from global retailers who can reach out to Singaporeans through the Net. Government agencies must be net-savvy. They should use the internet to do business with the public, offering public services and conducting e-commerce. They should use intranets to operate internally as efficiently as any commercial firm. We must join the revolution or be swept away, just as hand-made horse carriages were swept away by the Model-T Ford.

8. Up to now, NCB and TAS have been working separately. NCB has been promoting the use of IT, encouraging the development of the local IT sector, and fostering the concept of an "intelligent island". TAS has been promoting and progressively deregulating the telecommunications industry, introducing competition and new players.

9. Today, our level of awareness, acceptance and adoption of IT among the general public is among the best in the world. Our PC and internet access penetration rates are on par with technology leaders like the US and Sweden. In telecommunications, we have a world class national information infrastructure, providing high quality services to MNCs, financial institutions, and Singaporeans.

10. The convergence of technologies and the changing environment now requires us to make a major shift in our approach, to "think global" and "think innovation ". It is no longer just a matter of proliferating PCs and wiring up everyone in Singapore, or ensuring fair play among our telcos. We have to think about facilitating businesses beyond Singapore's shores and out-competing competitors from around the world. We must introduce more innovative services and offer more attractive value propositions, in order to make Singapore a vibrant, competitive hub. Moreover, we must do this at an accelerating pace. If we move fast, but the competition moves faster, we will still be too slow.

Establishment of IDA

11. This is why the Government decided to bring all the strands together and merge NCB and TAS. After careful deliberation, we decided to name this new agency the Info-Communications Development Authority, I.D.A.. This is to reflect its role in formulating and implementing policies for promoting, developing and regulating the communications and information technology industries.

12. With I.D.A., the key responsibilities for the ICT industry will be centred in one place in the Government. This will help us to develop and implement a more integrated and co-ordinated approach for the industry. But given the pervasiveness of information and communications technology across all economic sectors, I.D.A. cannot function in isolation. It has to work closely with other Government agencies, including EDB, SBA, NSTB and MAS.

13. I.D.A.'s strategic vision is to make Singapore the key global info-communications hub in Asia. Other countries too aspire to become global ICT hubs, as everyone realises that this is the way to the future. For example, Hong Kong is attempting to replicate the success of the Silicon Valley with Cyberport, while Malaysia is pushing on with its Multimedia Super Corridor. So I.D.A. has its work cut out for it.

14. There may be room for more than one info-communications hub in Asia. But Singapore must strive hard to become one of these global hubs, or we will become irrelevant to the region and the global economy in the information age. To achieve this, I.D.A.'s strategy is to pursue three key strategic thrusts to "dot-com the 3 Ps": the public sector, the private sector and the people sector.

15. The first thrust is to promote and develop the ICT industry. This includes positioning Singapore as a vital node in the regional and global information networks of the future. It also includes developing the technological platforms and knowledge infrastructure, attracting and developing competent IT manpower, and maintaining a transparent, pro-business and pro-consumer regulatory framework.

16. The second thrust is to encourage companies in all other economic sectors to leverage on ICT as a competitive tool. This will include developing services supporting electronic commerce, and having the Singapore Government be a leading and exemplary user of ICT such as broadband Internet, wireless Internet and Internet appliances.

17. The third thrust is to harness ICT to enhance the quality of life, making sure all sectors of Singapore society enjoys the benefits of ICT. This will help us to build a critical mass of ICT users, which in turn will support the other two thrusts. It will also reduce the risk of a digital divide in our society.

18. I.D.A will not be starting from scratch. We have already put in place a broadband National Information Infrastructure, accessible to nearly all households in Singapore. We have also built up a substantial network of regional and global internet connectivity links. We have a quality pool of ICT professionals. These will help us to become an internet content hub for content development, hosting and delivery, as well as for e-commerce.

19. While pursuing these strategic programmes, I.D.A. will continue with specific measures to deregulate the telecommunications industry. It will introduce competition, promote the industry and encourage the creative use of telecommunications. TAS has already been doing this over the last few years, but the task is far from complete. I.D.A. must pick up where TAS has left off, and press on.

20. It will be a demanding task, as rapid technological advancement makes our target a constantly moving one. Our competitors, both regional and global, are liberalising their telecom sectors rapidly, and actively marketing themselves to MNCs and investors. The two - liberalising and marketing - go together. While once we could be competitive while maintaining a regulated domestic environment, this is now impossible.

21. We must stay ahead of the tide, continuing to deregulate and introducing more competition as quickly as possible. It is not only that there is no alternative, but that an open and fully competitive environment for info-comms is profoundly in Singapore's economic interests. It will spur the industry to strive for a quantum leap in quality of service, competitive pricing, and creative exploitation of emerging technology.

22. Paradoxically, our task is more difficult because our starting position is not a weak one. Even though we have been slightly slower off the mark in introducing competition than other countries, our telecommunications industry has stayed efficient and up to scratch. Our tariffs are generally in line with competitors, or lower. For this credit goes not only to TAS as regulator, but also to the incumbent players, particularly Singapore Telecom. But this very advantage has masked the urgency of change, and made it more difficult for us to break with the past.

23. The tidal wave of competition is already upon us. We must move decisively now to ride the wave, and not try in vain to hold it back. This applies both to regulators and players. In this situation, the adage "If it ain't broke, don't fix it" does not apply. Our policies have not failed; they have succeeded, so far. But they will not continue to succeed in future. By the time our policies no longer work, it will be too late. We must fix them before they are broken.

24. The government's task is not simply to regulate the telecommunications industry, or to ensure a level playing field, but to promote and develop the industry. Hence the word "Development" in the name of I.D.A.. For its part, the industry cannot afford just to adjust reactively each time the competitive situation shifts. It has to discard mindsets formed in more stable times, and embrace radical change pro-actively.

25. While this strategic imperative is clear, the actual management of transition is complex. There will inevitably be many issues of contention amongst the players. This has also been the experience in other countries which have liberalised their telecom sector. I.D.A. will continue to act vigorously to remove any obstacles to greater competition and faster pace of innovation, while at the same time ensuring inter-connectivity between competitors for the benefit of consumers. In short, I.D.A. regulates in order to develop the industry. If the industry understands this approach, it can work better with I.D.A. to further its own long term interests, and I.D.A. can adopt a lighter touch in regulating and developing the industry.


26. The Internet revolution waits for no one. We aim to emerge a winner in the digital future. I.D.A. will play a key role in leading Singapore to meet these challenges of succeeding as an information economy and society. In "dot-coming Singapore ", the 3 P-sectors should work closely together. The merger of NCB and TAS to form I.D.A. will help us approach this task in an integrated and co-ordinated way, in close partnership with the ICT community.

27. It gives me great pleasure now to launch the new I.D.A, the Info-Communications Development Authority of Singapore.