SINGAPORE-The Telecommunication Authority of Singapore is taking a new approach to encouraging competition in the local wireless market. Beginning April 1, 2000, TAS will lower annual license fees for mobile and paging operators to 1 percent of annual sales.
Currently, paging providers pay 3 percent of annual gross turn-over, and cellular operators pay 6 percent. The new flat-fee rate structure thus represents a substantial decrease in expenses for carriers, and it also will coincide with the introduction of additional cellular competition. The government is in the process of licensing up to two additional cellular providers to the market, which now includes SingTel Mobile and MobileOne (Asia) Pte. Ltd. The new carrier or carriers would be able to launch service on the same date.
“The license-fee reduction is to ensure that the mobile phone and paging service operators will continue to invest in improving their networks and services to bring in more competitive prices and enhanced quality of service standards to consumers,” explained Leong Keng Thai, Director General of TAS, at January’s Wireless Showcase Asia in Singapore.
Originally announced by the Minister of State for Communications John Chen in September, the rate plan reflects the government’s push to continue growing what already is one of the most dynamic wireless markets in the Asia-Pacific region.
With a population of just 2.8 million, Singapore touts the world’s highest paging penetration at 42.3 percent and a mobile phone penetration of 23.9 percent, according to Leong.
“With a fully liberalized telecommunication market in the year 2000, Singapore will be one of the most open and competitive info-communication markets in the world,” said Chen at Wireless Showcase Asia last month in Singapore. “We must continue to remain proactive and technologically ready to embrace the highly dynamic changes in the telecommunication revolution so that Singapore will continue to be internationally competitive.”
Chan Kin Hung, senior director of marketing, sales and customer service for SingTel Mobile, said the license-fee reduction is “definitely good news.”
“As regards whether this will translate to lower rates for our customers, we have ongoing reviews,” said Chan. “Where savings can be passed on to our customers, we have done so. We have been doing this all the while. In the year 2000, the reduction is one of the several factors that will be taken into account in our review.”
Jay Kitchen, president of the Personal Communications Industry Association, took an interest in Singapore’s new license-rate plan and told RCR he planned to meet with Leong to learn more about it and determine if a similar concept could be transferred to the United States. PCIA was the show organizer for Wireless Showcase Asia.
“When it comes to the regulatory fees and the universal service taxes that are being imposed on the licensees in the United States, you have to wonder how much more we could do and how much faster could [carriers] build out these systems if they didn’t have all these financial burdens imposed by the government [through] entitlement programs,” said Kitchen.
He estimates that 20 percent to 40 percent of wireless service prices to consumers go toward covering government-imposed fees and taxes. Take those away, he said, and wireless carriers could lower prices and compete in the local loop.
Kitchen pointed to the 1994 digital wiretap bill-the Communications Assistance for Law Enforcement Act (CALEA)-which he says is going to cost the industry tremendously. While Congress has set aside $500 million for CALEA implementation, the wireless industry believes that amount is just “the tip of the iceberg” as to what it really is going to take for the network modifications, he noted.
As for monies going to the Universal Service Fund, Kitchen said the whole concept of subsidizing basic services in rural and poor urban areas would not be necessary if the cost of service was low enough for carriers.
“Instead what we’re doing with universal service is we’re paying money to the government, which then administrates the whole process and sends some of that money back out to subsidize communications,” said Kitchen. “Why not just do it directly by lowering prices?
“All of those [fees]-added on to the costs of doing business-inhibits the carriers from building out infrastructure and from driving the prices down.”
