Singapore Reserving 60MHz for new mobile operator
Even as expectations are high of the Infocomm Development Authority (IDA), Singapore’s telecoms regulator, organsing auction for a total of 225MHz of new spectrum so to be auctioned, the regulator has already proposed setting aside 60MHz at a lower reserve price in a separate auction to be open only to new entrants.
The structure of the next spectrum auction is intended to attract a newcomer to the Singapore mobile market, which currently has three mobile network operators (MNOs).
The 60MHz allocation will include 2 x 10MHz in the 700MHz band, 2 x 10MHz in the 900MHz band and 20MHz in the 2.3GHz band. Understanding the huge CAPEX required to launch a network, the IDA aims to lower the barrier to entry by setting the reserve price at SDG40 million ($29.5 million) for the entire block.
It said that to qualify a potential bidder can’t have rolled out a nationwide mobile network and can’t be an associate of an incumbent.
This won’t be the first time IDA has set aside spectrum to facilitate the entry of a new player. Similar measures were adopted for its 4G spectrum auction in 2013, but a fourth operator didn’t step forward to bid in the auction.
While IDA aims to introduce measures to attract a new MNO, it said it also plans to ease entry conditions for MVNOs. But it does not intend to impose additional measures suggested by some for new obligations on site access or RAN sharing on the incumbent MNOs, since it noted there are already regulatory frameworks in place.
Liberty Wireless director Adeel Najam said the company welcomes IDA’s view that there may be scope for greater competition and service innovation in the market. The company plans to soon launch an MVNO in Singapore under the Circles Asia brand.
Accordingly, the IDA stated:
“Given the strong interest from the market and the potential consumer benefits to be reaped with a new entrant, IDA proposes to facilitate the entry of a new mobile network operator by setting aside 60 MHz out of the 225 MHz of spectrum at a lower indicative reserve package price of S$40 million, for a spectrum auction that is opened only to potential new entrants. This is in recognition of the fact that a new entrant will face entry barriers in a mature market, given the significant upfront capital investments required to deploy nationwide services for consumers. The new entrant who successfully bids for this set-aside spectrum package is required to deploy its own network and achieve nationwide rollout by end September 2018.
“IDA also proposes to provide guiding principles to aid wholesale negotiations between Mobile Virtual Network Operators (MVNOs) and mobile network operators, recognising that MVNOs who have the ability to re-package wholesale services into their own service offerings can also bring about innovative service offerings for targeted consumer segments.
“Given the size of Singapore’s mobile market and global market developments, IDA does not at this juncture see Singapore’s mobile market being able to sustain more than four nationwide infrastructure players with new MVNOs also entering the market.”
According to Ms Jacqueline Poh, Managing Director, IDA: “IDA has always been open to the entry of telcos that can bring about innovative and competitive services in the market, and enhance mobile broadband services on a sustainable basis. These proposals have taken into consideration market interest as well as initial industry feedback.”
As the spectrum bands to be released at the coming auction and the framework to facilitate market entry are significant decisions to be taken by IDA, IDA has decided to allow an opportunity for the industry and public to comment on IDA’s proposals before finalising them. The public consultation begins today, 7 July 2015 and will close on 12 August 2015.
Reducing the barriers
While setting aside spectrum for a potential fourth entrant is something IDA has done in the past, Liberty’s Najam noted there is a larger amount of spectrum set aside this time in the bands that would achieve some capex efficiency.
He added, however, that certain conditions that would significantly decrease the barriers to entry, like mandated national roaming, have not been included in the proposal.
“IDA’s proposal validates our entry in the market as a ‘thick’ MVNO focusing on the intelligent network layer and in offering product and service innovation to mainstream consumers,” he said.
IDA said in its report that “thick” MVNOs, which would have more control over their operations, customer databases and services, can bring about innovative or niche services to benefit consumers on a larger scale and can compete in a more sustainable manner.
Najam said IDA’s proposal to set up “negotiation principles” between MNOs and thick MVNOs provides a basis for long-term sustainability in the market for MVNO players.
Strong industry response
After issuing a 39-page response to its first public consultation, which was launched in April 2014, the IDA yesterday opened a second consultation to address issues raised in the comments sent by 20 companies. These firms included Asia Broadcast Satellite, Inmarsat, Dynamic Spectrum Alliance, Ericsson, Qualcomm, Walt Disney, MyRepublic and the country’s three mobile operators.
IDA said in a statement that the issues include the technical considerations for the allocation of a number of spectrum bands and the proposed facilitation framework for new entrants.
An economic study by IDA found that a new MNO may potentially bring about net long-term benefits that are driven by price decreases, as well as non-price improvements in service and pricing innovation.
It believes that the “appropriate and balanced policy approach” is to encourage one new MNO to enter the market, since, based on its study, the entry of two or more new MNOs could result in a fragmentation of spectrum holdings among the newcomers as well as a smaller market share for each new player.