7 April 2008 - Remarks By Ms Yong Ying-I, Chairman, Infocomm Development Authority Of Singapore, At The Launch Of RFP For Singapore’s Next Gen NBN Operating Company
Remarks By Ms Yong Ying-I, Chairman, Infocomm Development Authority Of Singapore, At The Launch Of The Request-For-Proposal (RFP) For Singapore's Next Generation National Broadband Network (Next Gen NBN) Operating Company on 7 April 2008 at IDA's Office
1. Good evening, ladies and gentlemen. Thank you for joining us this evening as we share with you further developments about Singapore’s ultra-high speed Next Generation National Broadband Network or Next Gen NBN in short, that will be ready by 2015.
2. We had a press conference on 11 Dec last year to launch the Request-for-Proposal or RFP, for bids for a Network Company (or NetCo). That was the 1st part of the Next Generation NBN project. Today is the 2nd part of the project, where I am pleased to announce the launch of the RFP to invite interested parties to submit bids to be the Operating Company, or OpCo under the Next Gen NBN.
3. Let me take a minute to explain again what the Next Gen NBN is. The Next Gen NBN is new investment in our infocommunication infrastructure. Capable of delivering ultra-high speeds of up to 1 Gbps and beyond, the Next Gen NBN will enable individuals and business users to fully leverage new and innovative online services. It is a strategic enabler that will transform the way we work, live, learn and play.
4. IDA believes that the Next Gen NBN is very important to Singapore’s continued economic success. Singapore has always made timely and carefully planned investments in our key economic infrastructure to sustain our economic competitiveness in the global economy. This includes infocomm infrastructure. Our existing telecoms infrastructure has served us well till now but it is important that we continually anticipate the needs of the economy and our citizens in an era of rapid technological change and invest forward. We are already seeing a rapid increase in online services and transactions over broadband networks, and our existing infrastructure is hitting its limits. We expect demand for bandwidth to grow as more infocomm services become available, and new infrastructure is necessary.
5. So last December, we outlined the industry structure of the Next Gen NBN that we think will enable a vibrant industry that meets users’ needs. This industry structure comprises three levels of players: namely, the Network Company (NetCo), the Operating Company (OpCo) and Retail Services Providers (RSPs). The NetCo is the entity that will design, build and operate the passive infrastructure that will carry the traffic of the Next Gen NBN. It sells capacity to the next layer of entities that operate the active infrastructure of the network. We have called this the Operating Company or OpCo layer. The OpCos in turn sell wholesale bandwidth connectivity to the RSPs, which they then use to offer innovative Next Generation broadband services to end-users.
6. In order for Next Gen NBN to catalyse the development of a more vibrant and competitive broadband market, it is critical for the Next Gen NBN to ensure effective Open Access to the infrastructure by downstream operators. As a policy, we have therefore decided to adopt separation between the different levels of the Next Gen NBN to achieve effective Open Access. In the 11 Dec RFP, we therefore asked interested parties to submit bids for a Structurally Separated NetCo. Structural Separation between the NetCo and the OpCos is the critical feature of that RFP and we will recap what Structural Separation means later in the briefing. Likewise, in today’s RFP for the Next Gen NBN Operating Company or OpCo, we require the Next Gen NBN OpCo to be Operationally Separated from downstream RSPs. This Next Gen NBN OpCo will be subject to price control and universal service obligations as well.
7. The emphasis on separation between the infrastructure layers reflects our view that Singapore will more fully realise the economic benefits of this investment if RSPs are able to obtain wholesale bandwidth connectivity from a Next Gen NBN OpCo at non-discriminatory prices and conditions, and likewise that the NetCo is a neutral player providing passive infrastructure to all. This industry structure should support the development of a vibrant RSP industry and drive significantly more competitive prices to end-users.
8. I should explain that the OpCo in today’s RFP is only required to be Operationally Separated from the downstream RSPs. Compared to the Structural Separation imposed on the Next Gen NBN NetCo, Operational Separation is less stringent as the Next Gen NBN OpCo will be allowed to retain full shareholding ownership of its downstream operating units, such as RSPs. However, the Next Gen NBN OpCo will be required to treat all downstream units equally, and on a non-discriminatory basis. The Next Gen NBN OpCo will have to operate on a standalone basis, separate from its affiliated downstream operating units, and be subject to various obligations, including being established as a separate legal entity and maintaining separate board, management and staff.
9. To bring about this environment, we had earlier announced that the Government was prepared to provide a grant of up to S$750 million to the successful bidder for the NetCo, the RFP for which will close on 5 May this year. For the OpCo, the Government is prepared to provide a grant of up to S$250 million to the winning bid. The total Government grant, for both the active and passive infrastructure of the Next Gen NBN, will therefore be up to S$1 billion. We believe that this will catalyse significant private sector investment.
8. With the Next Gen NBN in place, business users as well as consumers can look forward by 2015 to a range of new and exciting services. Business users will benefit from ready access to a robust and pervasive network that can support data-intensive transactions including real-life high-definition video conferencing, high speed online transactions and graphics-based data visualisation. Small and medium enterprises can benefit from high speed broadband to tap on grid computing applications and data storage facilities at competitive rates. Students will be able to make use of visually immersive and interactive learning applications for a richer and deeper educational experience.
10. I will now ask Mr Khoong Hock Yun, IDA’s Assistant Chief Executive in charge of Infrastructure Development, to take you through the details for the Next Gen NBN OpCo RFP. Thank you.
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