The builder of Singapore's nationwide broadband network has been slapped with its largest fine yet at S$750,000 for falling behind schedule in wiring up premises and activitating connections to users.
There are two components to the financial penalty: S$550,000 for failure to comply with its Universal Service Obligation (USO), and S$200,000 for failing to comply with its Quality of Service (QoS) standards in Q2 2013.
OpenNet's failure to meet its USO for six months was a "serious breach" adversely affecting the industry downstream, according to the telecoms regulator, Infocomm Development Authority of Singapore (IDA). The USO is a licence condition that kicked in on January 1, 2013, requiring OpenNet to provide optical fibre services to any location in Singapore on request, within a specified timeframe--3 working days for residential and 10 days for non-residential.
The company was unable to provide services to certain physical addresses in the first two quarters of 2013, said IDA. Approximately 120,000 residential premises and about 760 non-residential buildings were potentially affected by OpenNet's failure to comply with its USO during this period, as they could not have ordered high-speed fiber broadband if they had wanted to, explained the regulator.
Separately, OpenNet is also obligated to meet QoS standards for timely provisioning, where it has to fulfil a minimum percentage of its orders received. This requires OpenNet to fulfill 98 percent of residential orders within 3 working days, and to fulfill all orders within 7 days. For non-residential buildings, the requirement is 80 percent of orders within four weeks, and all orders within eight weeks. Each breach can attract a fine of up to S$10,000 (US$8,022) per breach each month, with additional penalties for serious or repeated breaches.
IDA found that OpenNet failed to do so in both Q1 and Q2 this year, mainly because it did not have enough capacity to meet the strong demand from the residential segment particulary in the second quarter. It noted this was partly due to a spike from promotional activities by retail service providers in May, and the IT fair in June.
Proposals to improve situation
In response, OpenNet told ZDNet the demand spikes saw orders hit a record of 31,000 in June, compared with an average of 17,000 in the previous six months. Despite moves to raise capacity including working on Saturdays, OpenNet pointed out its contracters needed time to hire and train new teams.
The company has been given until the end of the year to rectify its QoS performance for residential end-user connection services, which will be reviewed again in Q1 2014. Its performance for the non-residential segment is still assessment.
In response to the S$750,000 fine, OpenNet told ZDNet it was still evaluating IDA's decision and would focus in improving its service delivery process. Part of its proposed initiatives include a new fiber hand-over process that involves service providers handing-over a fiber connection when the subscriber switches service providers. This will help shorten the required installation time and optimize network resources, OpenNet said.
OpenNet is currently subject to a proposed S$126 million buyout by SingTel, which is being reviewed by authorities for approval. The deal has been pitched to improve operational efficiencies but has come under much public scrutiny amid industry criticism of anti-competitiveness. A decision is expected by December 19, 2013.