Singapore outlines spectrum auction details for potential fourth operator

Singapore has confirmed plans for its much-anticipated spectrum auction to be held later this year, paving the way for a possible fourth mobile operator by as early as April 2017.

The Infocomm Development Authority (IDA) on Thursday said the auction would be held in two phases, each releasing fresh spectrum to support a new mobile network operator as well as enable current market players to enhance their mobile service offerings. In all, a total of 235MHz of spectrum will be made available for International Mobile Telecommunications (IMT) and IMT-Advanced services, including 4G.

The first phase, scheduled for the third quarter of this year, will be available only to "interested pre-qualified" bidders that currently do not operate a nationwide mobile network in Singapore. IDA said the pre-qualification process would ensure only "capable and committed" market entrants were permitted to bid in the auction.

Following this, the second stage will be open to existing mobile operators--M1, StarHub, and Singtel-- as well as the new operator, should one be established after the first phase of the auction is completed.

To secure its spectrum, the potential fourth telco would have to fork out at least S$35 million, which had been reduced from the previously proposed S$40 million reserve price. IDA explained the amount was revised to reflect a change in the spectrum bundle, now comprising 40HMz in 2.3GHz TDD band and two lots of 10MHz in the 900MHz band.

Should there be a lack of a qualified bidder in the new market entrant phase, the spectrum from here would be reallocated to the next phase and made available--at the corresponding reserve prices--to existing market players.

In the second phase, incumbent operators would be able to obtain at least two lots of 5MHz spectrum in the 900MHz band, at a reserve price of S$20 million for each lot. This spectrum would enable existing market operators to "ensure continuity of 3G services", IDA said.

In addition, 5GHz spectrum in the 2.3GHz and 2.5GHz TDD bands would be available for bidding. Citing industry body GSMA, IDA said sub-1GHz airwaves offered better coverage in urban areas and in-building penetration, resulting in improved service quality. The 2.3GHz spectrum also would facilitate high data, high-speed mobile networks, it added.

According to IDA, the spectrum rights for the new market entrant would commence in April 2017, indicating a potential fourth operator could begin operating then. However, IDA said it would allow "a reasonable period" for the new operator to build up its network, which must provide nationwide outdoor service coverage by October 2018.

The new operator would have to meet this, and other requirements stipulated by the regulator including service resiliency and quality of service standards. For instance, it must have road tunnel and in-building service coverage by October 2019 as well as establish service coverage at underground MRT stations and lines by October 2021.

Existing operators that succeed in securing the 700MHz and TDD spectrum bands would need to provide nationwide 4G or IMTAdvanced services by January 2019.

IDA said the introduction of a fourth telco "will increase competition" in Singapore's mobile market and seed a "wider variety of innovative services and more competitive offerings" for consumers. In addition, it said a new operator would further drive investments in the local infocomm sector.

IDA Managing Director Jacqueline Poh said in the statement: "Pervasive connectivity is a key enabler for our smart nation vision. This release of spectrum is timely as it will support the growth of applications that rely on data, as well as new growth areas such as the Internet of Things and machine-to-machine (M2M) communications.

"The spectrum made available will allow all mobile operators to roll out or enhance their high speed networks as early as 2017. Having more players in the market will give consumers a greater choice in selecting an offering that best suits their needs," Poh added.

Fiber operator MyRepublic, and potential new market entrant, confirmed plans to participate in the auction and raise funds to support its bid.

In a statement following IDA's announcement, a MyRepublic spokesperson said: "Today, we are extremely heartened by how the IDA has recognised the need to increase competition in the Singapore mobile market, to elevate the standard of services telcos provide to their consumers, and to take measured steps towards making Singapore a truly intelligent nation.

"Now more than ever before MyRepublic is committed to becoming Singapore's fourth telco [and] we look forward to participating in the 2016 spectrum auction," he said. "Until then, there is still work to be done. We are working with investors to raise S$250 million. We are in talks with a number of strategic partners to roll out a next-gen pre-5G network. All of these preparations for the bid should be finished by April 2016."

Singtel Group CEO Chua Sock Koong, though, expressed concern a fourth player would focus primarily on a price war and harm the local industry. "The only way that they can gain customers will be by way of reducing prices... Clearly, just leading prices down, it's not good for the sustainability of the industry," Chua said in a Bloomberg Television interview last week. She had previously also suggested Singapore did not need a fourth operator.

In response, MyRepublic CEO Malcolm Rodrigues dismissed suggestions it would compete solely on price. In a post on the company's Facebook page, Rodrigues said: "We've never competed on price in any market we've entered. We believe in bringing innovation to the table and providing users with what they want and need, at prices they can afford.

"Today's services in Singapore are not fit for purpose," he added. "The incumbents' networks are not ready for the future. There is desperate need for innovation in Singapore."

A previous spectrum auction held in 2013 failed to attract a fourth operator.