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Telecommunications Liberalization

The telecommunications industry was public until the 1990s.  It was in the early nineteen-ninety’s that the government decided to liberalize the industry and take a phased approach towards introducing market competition in the telecommunications industry. 

The liberalization strategy began when Singapore privatized Singapore Telecom in 1992.  Singapore Telecom had an exclusive license to operate basic telecommunications services until 2007.  However, in 1998, the Government advanced the expiration of Singapore Telecom's exclusive license for basic telecommunications services from 2007 to 2000.  In 1998, government awarded a license to StarHub to start its commercial operations by 2000.[1]  The license was awarded by the Infocomm Development Authority of Singapore (IDA). 

Why Liberalize?

The Government decided to accelerate the liberalization of the Singapore telecommunications sector in order to introduce more competition and thus lower prices and accelerate growth of the industry.  The also wanted to encourage foreign investments for technologies such as web server farms, portals, content creators, etc.[2] .  The government was extremely interested in firms that could new services and new technology and thus allow Singapore to remain competitive. 

Fixed Phone Service

 From 1992 to April 2000, Singapore Telecom was the sole provider of telecommunication services in Singapore.  At the time, Singapore Telecom was the largest Singapore company in terms of market capitalization with about S$40 billion.  From 1992 to 1999, the company spent S$1.9 billion on infrastructure upgrades and invested in 53 joint ventures and strategic investments in 20 countries.  Singapore Telecom reorganized in 1999 into the company SingTel..[3]  

In 2000, StarHub was awarded a license to compete in the telecommunications industry.   StarHub  is a consortium of British Telecommunications Plc and NTT Corp. StarHub is a challenge to Singapore Telecommunications Ltd. in several market segments including internet access and mobile phone service.  As a way to gain market share early, StarHub offerered free Internet services as a way to establish the brand awareness as an attempt to compete with SingTel.

Value Added Networks

The Telecommunication Authority of Singapore (TAS) began to liberalize the Value Added Network operators in 1995.  TAS awarded licenses to Value Added Networks (VAN) operators that provide store-and retrieve services on their own.  This categroy of VAN is classified as a Type A VAN.  There are two other types of VANs, type B and C.[4]  

 Type B VANs provide their own store-and-retrieve services as well as VAN-to-VAN interconnection using leased lines. Type B VAN operators were introduced in 1995 when the TAS liberalized VAN-to-VAN interconnection and allowed VAN operators to choose their own communication protocols for speedy interconnection with other VANs.[4] 

In 1996, the TAS further liberalized VAN operations by allowing Type C VAN operators to provide a wider range of VAN services.  These services included packet switched data services, electronic messaging, facsimile, telex and voice-mail services.

Internet Service Providers 

In 1998, there were over 343,900 Internet subscribers in Singapore.  At the time, there were 3 licensed IASP providers in Singapore.  The Telecommunication Authority of Singapore licensed each of these.  The first license was awarded to SingNet in 1994.  The second license was awarded to Pacific Internet.  And in September 1995, the consortium, Cyberway, won the third license to provide public internet access service.   According to the US Department of Commerce, in October 1995, IASPs were allowed to resell their services.

Mobile Phones 

According to the US Department of Commerce, Singapore licenses mobile network operators.  In 1998, two operators had licenses: SingTel Mobil and M1.  In 1997, M1 was granted a 20-year license to operate the second mobile phone network in Singapore.

 StarHub was the first mobile operator to charge its customers on a per-second basis. At present, the lowest unit used to charge for air time from Singapore mobile operators is a six-second measure. This approach was expected to cut consumers' bills by 50% by not charging them to take calls on their mobile phones.

Satellite

In March 1996, TAS began to liberalize broadcasters and satellite uplink/downlink operators by allowing them to directly enter into service agreements without having to order space segment through Singtel.  In February 1997, the TAS further liberalized its direct access policy to allow broadcasters and satellite uplink/downlink operators to invest in the satellite system.  The TAS does not restrict the number of satellite uplink/downlink operators.  There are two groups of licensees, the first group offers uplink/downlink services to broadcasters.  The second group is comprised of self-providers i.e. broadcasters.  There is no limit to the number of licenses issued, and anyone who applies to and abides by the TAS conditions may apply and be granted licenses. There are currently four firms providing satellite uplink or downlink services in Singapore. [6]  They include

• Singtel
• Television Corporation of Singapore
• ST Teleport Pte Ltd
• Walt Disney Company.

Conclusion

 Singapore wants to become Asia’s leading info-communications hub.  To achieve that status, the Government decided to accelerate the liberalization of the Singapore telecommunications sector ahead of schedule.  The Government will also actively and aggressively encourage foreign info-communications organizations to invest in Singapore and will grant more licenses for companies to operate.  Consumers are expected to benefit from this aggressive liberalization rate for two reasons: lower cost of goods and services resulting from competition and the availability of more goods since foreign companies are now encouraged to invest in Singapore.

[1] 2000. Telecom:Full Liberalization. Tradeport. 27, January.

[2] Lynx Technologies, Inc. Worldlynx Global Telecom Newsletter

[3] 2000. Telecom:Full Liberalization. Tradeport. 27, January.

[4] U. S. Department of Commerce - National Trade Data Bank, November 3, 2000

[4] ibid

[5] ibid

[6] 1998. U.S. Department of Commerce. Strategis. 16, November.