Asia Times: Southeast Asia


	May 30, 2002	atimes.com

Southeast Asia

Singapore goes against the 3G grain
By Tony Sitathan

SINGAPORE - With the rest of the developed world raking in billions of US dollars by auctioning off its third generation (3G) mobile phone licenses, Singapore pinched itself and decided to instead offer competitive rates for its licenses.

3G purports to be able to transmit video, audio and data at 10 to 20 times the current speed of mobile phones.

Singapore became one of the very few countries in the world to offer reduced rates for 3G licenses, starting out at US$87 million before lowering them to $58 million. "It became the laughing stock of the 3G world overnight. However, on hindsight, it did the wiser thing by taking stock of market sentiments at a time when the 3G magic was wearing off," noted Yoshio Nomura, a telecommunications analyst for a Japanese securities brokerage firm based in Singapore.

Why did Singapore go against the grain and not ride the 3G balloon that brought several countries dizzying amounts of money, only a few months earlier? Minister for Communications and Information Technology Yeo Cheow Tong made the decision and points to the major adverse results suffered by the global telecom industry over the past year. These changes in turn have prompted both the government and several key telecommunications companies to rethink their earlier 3G rollout plans.

The 3G auction in Europe last year raked in a historic $41.8 billion and Britain earned $32.2 billion by auctioning its 3G licenses. Since then, however, the euphoria for 3G licenses has somewhat died down, notes Andrew White of EURO Consult, based in Hong Kong. "It's somewhat ironic that the bubble burst on the 3G phone licenses even before there had been any actual rollout of this technology. Even before Japan and Europe had embraced this technology, the high 3G licensing costs has led to debt downgrades throughout the telecom industry, and that is somewhat frightening to the Asian telecom scene," he said.

While the the Infocomm Development Authority of Singapore (IDA) 3G auction proceeded on schedule on April 23, 2001, the nationwide network rollout deadline has been extended to December 31, 2004, according to the IDA. It also noted that by year's end, the network rollout deadline will be reviewed. When the results of the auction were finally announced last month, the 3G license fee was tagged at $58 million apiece by the IDA. And there were three candidates, M1, SingTel and StarHub Communications.

On 3G-spectrum allocation, the IDA pointed out that 2x60MHz of paired plus 20MHz of unpaired 3G spectrum will be made available. This is divided into four blocks where one block consisting of 2x15MHz of paired spectrum and 5MHz of unpaired spectrum, and three blocks consisting of 2x14.8MHz of paired spectrum and 5 MHz of unpaired spectrum. "This serves the broader interest of the public as well as the 3G spectrum providers, since it gives the end users a broader choice of connectivity," maintains an official from IDA.

Several telecom operators were enthusiastic with the offer price changes. MobileOne (Asia) Pte Ltd (M1) agreed that $58 million is a better true representation of the current value of a 3G license and said that it would participate in the bid for a 3G license. Mobile One intends to move out of the CDMA spectrum and has started to install 3G base stations instead.

StarHub, the latest mobile and fixed-line operator in Singapore, is another keen participant in the 3G auction as well. According to its CEO Terry Clontz, "The regulator has made a prudent and fair decision, taking into account the interest of operators and consumers. This is an important decision for Singapore, bearing in mind the market dynamics and technology involved," he said.

According to a spokesperson from SingTel, the news to slash the auction prices was welcome, especially since it has been keeping within the limits of the current market demands. “And according to its complete adoption of 3G technology into mainstream Singapore, it's been estimated that each person is liable for around $44 to make the commercialization of 3G successful,” said the spokesperson.

IDA officials maintain that it is offering tax and other incentives to attract foreign telecommunication companies to invest in its 3G infrastructure. However, the IDA won't grant foreign players open access to existing second generation, or 2G, mobile phone networks. Dulcie Chan, a spokesperson form IDA, was quoted earlier as saying that a variety of incentives, including the tax variety, are being offered to prospective investors. There is reportedly still room for foreign operators to grab a slice of the 3G market in Singapore and IDA welcomes such moves to further liberalize the city-state's highly regulated telecommunications market.

Across the causeway, Malaysia has begun its commercialization of 3G technology but intends to announce its licensing method only next year. “Although it is behind Singapore in its efforts to spread the 3G mantra, it nonetheless wants to roll up its sleeve and jump onto the 3G bandwagon,” said Patrick Tan, a multimedia observer and writer based in Kuala Lumpur.

According to Malaysia's Energy, Communications and Multimedia Minister Leo Moggie, there will be some general delays in the adoption of 3G technology. “As for 3G, we don't anticipate it will be commercialized until 2002. That seems to be the general thinking in the telecom industry,” she said.

Moggie mentioned that current industry players and telecom operators are in discussion with Communication Ministry representatives on how best to distribute the 3G licensing spectrum. He made reference to other countries adopting an open-ended auction for 3G mobile licenses while others based their bandwidth distribution decisions on a "beauty contest" approach.

Malaysia had yet to come with "firm thinking" on the 3G mobile licensing approach and will need more discussion within the industry. "We need to be more practical with our country regardless of what other countries do," he added.

However, the chief executive of Telekom Cellular, the mobile operator of incumbent telecom leader Telekom Malaysia, told reporters that 3G is "still conceptual" and that "nobody would want to use it" if operators build 3G networks next year. “Mainstream 3G will not take off in Malaysia probably until 2005,” he said. Despite such precautions Malaysia would be the second nation after Singapore, in Southeast Asia, to seriously look at the 3G wave.

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