The more the merrier
Sun, May 11, 2008
The Straits Times

Broadband users who complain about slow speeds and high prices here often point to one thing - the SingTel-StarHub duopoly.

The two dominant telecoms operators own almost all the cables here that carry our phone calls, Internet data and pay-TV programmes.

Every company that wants to offer an Internet service will most likely have to route traffic through the two telcos, and as a result, pay a part of the earnings to them.

Some service providers have tried building smaller networks and tapping onto SingTel and StarHub's when needed. But all they ended up with, if you asked Pacific Internet, were often meagre pickings after paying off the big boys.

Why not build a rival new network? Until now, that was too expensive for a new entrant.
As events unfolded last week, Singapore came a step closer to a new network that will be shared by many providers at a fair price. For users, it means more competitive offerings.

Two groups of companies, made up of both old hands and new players, put up their bids to build Singapore's new cyber highways last Monday.

Both plan to lay fibre-optic cables, which can carry an almost infinite amount of data for decades to come, to homes. They will deliver a myriad of services like high-definition TV, 'life-like' videoconferencing and tele-medicine.

The technology has already been rolled out in Japan, Hong Kong and other well-wired places. Singapore will be next, in as early as the next two years.

More importantly, emerging along with the newfangled technology is a seismic change in the market. More competition has already come in the past two years, after the Government injected funds into projects like Wireless@SG.

The free Wi-Fi hotspot project cost $30 million in public funds, but has given users thousands of places to surf for free.

Even more ambitious now are the new cyber highways, dubbed Next Generation National Broadband Network and costing up to $1 billion in state funds.

In exchange for financial help, no single telecoms operator can own the entire network, in an 'open access' arrangement. One company will lay the cables, another will operate the switches, and others will sell services to users. While there are only two bids for the first part of the project - to lay the cables - what is heartening is that there are newcomers to the game, with new ideas.
Leading the OpenNet group is not SingTel but Canada's Axia NetMedia, which has teamed up with SingTel, Singapore Press Holdings and SP Telecommunications.

Axia is known for its work in Canada, where it runs a similar open access network that grew out of a government plan in 2001.

Then, in Alberta, Canada, there were only a few service providers. Now, after an open access network was set up, there are 91 service providers hooked up to Axia, serving 242 communities, including some which had only dial-up Internet previously. Schools, libraries and even hospitals can now tap into this network, called Alberta SuperNet, to videoconference or to share ideas on 'remote' whiteboards where information is sent over the Internet.

There is another important outcome of the bid. SingTel, the largest telco here, will not dominate the market like now, even though it has a 30 per cent stake in OpenNet.

If it wants to deliver its mio TV service, or any other service, over the network, it will have to pay the same amount as any newcomer to the market.

The hope is that small firms, like the ones offering online games or niche TV programmes, can use the network to deliver their services. In the past, they would have had to work on SingTel and StarHub's terms.

If Axia has the expertise of running an open network, then City Telecom has that of laying fibre-optic cables in high-rise Hong Kong apartment blocks that are not unlike those in Singapore.

While rivals are still stuck with speeds of about 25Mbps, City Telecom has zoomed ahead with offerings of 1,000 Mbps.

Hong Kong has always been held up by users here as a model when it comes to broadband services. With the fastest broadband link there, a movie takes just minutes to download. Here, we're talking about hours.

From what has unfolded so far, the stage seems set for an opening up of the market like never before.

Even if SingTel or StarHub, should they lose in their bids, resort to setting up their own ultra-fast networks, measures are being put in place to prevent them from returning to their old dominance.

Just last month, the Infocomm Development Authority proposed new rules that would put the same 'open access' restrictions on a network funded and built by StarHub or SingTel.

This means they will be forced to open up that network to rivals despite spending their own money. Even before the rules have come to pass, they are already having some effect. SingTel Singapore's chief executive officer Allen Lew said last Monday that telcos should be looking to a future when they earn their revenues from services, instead of holding on to infrastructure to dominate the market.

There will be problems, certainly. There will be people upset by the hassle of wiring up their homes, just as there were when cable TV was introduced more than a decade ago.

What will people do with the speed? Will they stick to existing broadband services? For now, there are no sure-fire answers.

Speeds will be faster - 10 times faster for a start - and prices will fall with more players joining the fray.

After years of having little to choose from, that is indeed good news.

Broadband users who complain about slow speeds and high prices here often point to one thing - the SingTel-StarHub duopoly.

Alfred Siew
siewtha@sph.com.sg