This post will focus on a recent New York Times article on incumbent operator SingTel’s role in government plans to introduce competition for broadband service providers. The government of the island-state also plans to roll out a next-generation broadband network with speeds capable of downloading the contents of an entire DVD in mere seconds.
Singapore feels a sense of urgency watching other Asian countries roll out high-speed networks:
Japan and Hong Kong have been leading the way, with private companies already offering speeds as high as one gigabit per second, or 1,000 megabits per second
South Korea, one of the world’s most wired places, has also announced plans to complete a new broadband network offering one gigabit per second in all major cities by 2013.
In Fiji, we should now be aiming for 35megabits per second, the speed required for streaming high-definition video. Those interested in offering IPTV services should take notice. This technical benchmark would drive enough consumer demand and create a volume of Internet traffic that would help Fiji achieve greater negotiating capacity at the wholesale level. Not only do we hope to get even lower prices from providers like SCCN, we hope to become a viable market that catches the eye of backhaul providers who then promote competition by investing in additional infrastructure.
But what’s happening in Singapore now is a result of the recognition of the failure of strategies such as the one outlined above. As Khoong Hock Yun, an official in the Infocomm Development Authority of Singapore explains:
“If you look at history across many developed countries, after years of liberalizing their telecom sector, the essential part of their fixed-line network is still owned substantially by the incumbent,” he said, referring to former monopoly providers like SingTel. “Those who have the physical infrastructure have a huge competitive advantage, and every service company remains dependent on the incumbent for their fixed line network needs.
Incumbent operators remain a key impediment to achieving successful liberalisation:
“As a result, much of the pace of development, in terms of pricing and services offered, really depends on the investment decision of that incumbent and whether they want to partner with other people to create solutions they may not be prepared to offer at that point in time themselves.”
That’s where the Government of Singapore stepped in with a plan that dramatically shifts the regulatory framework for promoting competition for broadband, relying on a mixture of public subsidies and private-sector participation. Government is restructuring the telecommunications structure into three main functions: the building of the infrastructure, the operation of the network and the provision of retail services.
At the heart of the plan is a new consortium that will be responsible for building of the next generation national broadband network:
OpenNet, the infrastructure builder is owned by a consortium formed by Axia of Canada and three Singaporean companies — SingTel, Singapore Press Holdings and SP Telecommunications — using existing parts of SingTel’s network. As part of the agreement, SingTel has agreed to transfer certain infrastructure assets to a separate entity, owned by SingTel, by 2011. It has agreed to reduce its stake in that entity to less than 25 percent by April 2014.
The Government of Singapore hopes that this regulatory approach will bring about greater competition in broadband while fostering innovation, promoting development, and investment in new infrastructure.