INTERNET BROADBAND AND MOBILE TELEPHONES (Charges)

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INTERNET BROADBAND AND MOBILE TELEPHONES:

(Charges): 4.

Mdm Cynthia Phua asked the Minister for Information, Communications and the Arts whether our charges for Internet broadband and mobile telephones are more expensive compared to our neighbouring countries.

The Senior Minister of State for Information, Communications and the Arts (Dr Balaji Sadasivan) (for the Minister for Information, Communications and the Arts): Mr Speaker, Sir, Mdm Phua asked if our charges for Internet broadband were more expensive compared to our neighbouring countries. The Internet broadband charges in Singapore are set by the market. Competition and technological advances have driven prices down and increased broadband subscription. Prior to 2000, majority of the consumers were on dial-up Internet access plans. Since 2000, consumers were able to subscribe to

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broadband services via cable modem or ADSL technologies. Higher access speeds are more common now and consumers can choose from broadband access of 256 kbps to as high as 25 Mbps. Residential broadband prices have declined by up to 70% for unlimited access plans since 2001. There are also low cost packages for novice users with low usage. Household broadband penetration has increased to 46.6% in May 2005, up from 33% in December 2003. Today we estimate that more than 40% of broadband subscribers in Singapore are on access speeds of at least 1.5 Mbps.

While broadband prices have become more competitive and access speeds have increased, IDA recognises that Singapore still lags behind the leading regional economies of Korea, Japan and Hong Kong. However, in comparing broadband prices, we must be mindful that every country has different cost structures. On this aspect, I have explained in this House in September 2004 that underlying factors such as market size, usage profile, web surfing habit as well as competition from alternatives can have important impact on the price.

Recent media reports had cited that the prices of local broadband access were kept high by the anti-competitive behaviour of incumbent operators controlling critical telecom infrastructure and thus hampering the entry of competitors into the market. The reports also suggested that such conduct had gone unchecked by the regulator. Such perceptions are unfounded.

First, IDA has consistently worked to overcome the lack of effective competition in infrastructure by requiring SingTel and StarHub to offer wholesale broadband access to their respective networks. IDA has also mandated SingTel to offer its local leased circuits and unbundled local loops at regulated pricing. These measures are aimed at enabling

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Internet Service Providers (ISPs) not affiliated to these two companies to compete with them in the retail broadband services market without having to make heavy infrastructural investments.

Second, to encourage greater competition, IDA is working closely with various industry players to offer alternative broadband access technologies, such as wireless broadband. In May 2005, IDA conducted an auction to allow industry players to bid for spectrum rights to provide wireless broadband access services in Singapore. IDA believes that the six operators that were awarded the spectrum rights will provide further competition in the broadband industry and open up more innovative and competitive broadband packages to consumers and businesses.

In addition, IDA is also supporting technical trials in alternative broadband technologies that can lower deployment cost and increase access speed. These technology trials and pilot projects will help to iron out technical, operational and business issues. If successful, these trials will provide greater incentive for the operators to deploy these new technologies on a larger scale.

I would like to assure this House that IDA will continue to seek strategic partners to deploy new technologies and business models to enable users in Singapore to enjoy competitive, pervasive and high-speed broadband access.

Mdm Phua also asked about our mobile phone charges. Singapore's mobile market remains one of the most competitive markets in the region, with a large variety of price plans available for consumers to choose from, bundled with various attractive incentives such as free incoming calls and free IDD calls. For example, a typical non-free incoming GSM mobile phone package would cost consumers in Singapore approximately

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$28 per month which comes with additional bundled services such as free SMS, caller IDs and voicemail. I would like to point out that at this price range, our mobile services are not out of line with other regional markets. However it is not possible to make direct comparisons on account of the various packages and bundlings being offered by each and every operator.

Our competitive mobile sector is largely due to the liberalisation of Singapore's telecommunications market. Prior to April 1997, Singapore had only one operator for mobile services. However, with the entry of M1 in April 1997 and StarHub Mobile in April 2000, consumers now not only have three operators to choose from, but also a large variety of service packages available to them. Competition has resulted in lower mobile prices and greater innovation in services as operators sought to differentiate themselves. As a result, mobile phone penetration in Singapore is one of the highest in the world at 95.5%. This means that there were over 4 million subscribers in May 2005. Operators have also commercially launched 3G services since early 2005 at prices comparable to 2G (or GSM) services, opening up more service offerings to consumers.

In conclusion, MICA and IDA will continue to promote competition in our broadband and mobile market for the benefit of consumers.

Mdm Cynthia Phua (Aljunied): Mr Speaker, Sir, being a global economy, these two services are critical for our businesses as well as for individuals. Can the Senior Minister of State tell us exactly how do our charges compare to China, Malaysia and Korea? In addition, is his Ministry also looking into regional alliances with broadband service providers of other countries so that these regional

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alliances could bring down the cost of business across countries?

Dr Balaji Sadasivan: Sir, I believe Mdm Phua is concerned about international calls in the region. While local calls may be relatively cheap, the cost of international calls can vary. And this is because, particularly with roaming services, there are business arrangements made with companies that are outside our jurisdiction. To provide seamless connectivity when consumers roam between countries, there are commercial agreements in place between the local and the overseas operators.

The cost structure for international roaming services therefore comprises several components. A mobile user would typically need to activate an international roaming service with his mobile service provider before he can make and receive calls while overseas. The activation of the roaming service may incur a one-time charge and subsequently there may be monthly subscription charges. In addition, there are also charges placed by the operator in a particular country that your call is going to. Those charges are not under our jurisdiction. So, while we are able to use market competition in Singapore to keep our charges down, it is not possible to determine what the charges in these countries will be. Hence, while businesses

would like to have the charges as low as possible, we can only control using the market for the charges from the Singapore side.

Mr Zainudin Nordin (Bishan-Toa Payoh): Sir, I just would like to know whether MICA is aware of the penetration of broadband access to the lower-income families in Singapore.

Dr Balaji Sadasivan: I do not have the data in terms of broadband penetration depending on income level, but we can check that up and provide that to the Member.

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Mdm Cynthia Phua: The Senior Minister of State has not answered the cost comparative with China, Korea and Malaysia. I would just like to have an indicative pricing as to our level of charges.

Dr Balaji Sadasivan: It is very difficult to make comparisons across countries because there are various packages across countries. But if we look at prices internally within Singapore, we can see that the prices have come down as a result of competition. For example, SingTel's Classic Plan in 1997 cost $45 a month. An equal plan today in June 2005 costs $28. Likewise, MobileOne's Prime Plan, which was $40 in 1997, has come down to $28. So, while it is possible for us to compare prices of similar packages in Singapore, it is very hard to make comparisons across countries.