Mr Leong Keng Thai: Having a competitive telecom sector will lead to more competitive facilities and services which will allow businesses to thrive.

From corporatisation in 1992 to full liberalisation in 2000 to the vibrant and competitive infocomm landscape of today, Mr Leong Keng Thai, Deputy Chief Executive and Director-General (Telecoms & Post), Infocomm Development Authority of Singapore (IDA), recounts the exciting journey of telecommunications liberalisation in Singapore and discusses the challenges of balancing commercial and consumer interests in a fast-changing infocomm environment.

The overarching goals

“IDA’s main goal as a regulator is to have a competitive telecoms sector which will attract businesses to Singapore and facilitate those that are already operating here. Singapore is a business hub, and having a competitive telecom sector will lead to more competitive facilities and services which will allow businesses to thrive. For the consumers, a competitive environment means more choices, more innovation and lower prices, which will allow them to enjoy the benefits of new innovations that are appearing rapidly in this sector.”

Freeing up the telecoms arena

“We started on the journey of liberalisation as far back as 1992 with the corporatisation of the Telecommunications Authority of Singapore (TAS). During the first few years, however, the pace of liberalisation was measured. All this changed with the emergence of the Internet in the mid-1990s. The Internet drove so much innovation from the mid-1990s that it seemed pointless to continue with the measured approach to liberalisation and so in 2000, we decided to fully liberalise the market.

It was a major milestone. In one fell swoop, we decided to open the doors totally. That created a very changed environment. To manage this new landscape, we needed to have supporting rules and regulations, we needed boundary conditions, a referee. If not, it was unlikely that we could have a vibrant and competitive environment because the strong players would remain very strong, making it difficult for newcomers to enter the market.”

Drawing up the rules of the game

Codes of practice were established to facilitate access to buildings for service providers to deploy their equipment.

“When we made the decision to liberalise, one of the key things we had to do was to put in place a competition code. A liberalised environment always starts off having dominant big players, but we want new players to come into the market. We had to look at the rules, terms and conditions that should be imposed on the incumbents to lower the barriers for new entrants.

For example, one area we looked at was predatory pricing: What if the strong players priced their services below cost such that they eliminate the competitors? When services were sold to competitors, should there be rules to make sure that the terms and conditions were fair and that consumer interests were not compromised? What were the consumer protection measures that we have to put in place? At the same time, other codes of practice were also being established. For example, we looked at when to allow the digging of roads for cabling work, facilitating access to buildings for service providers to deploy their equipment, etc. There were several levels of details that we had to look at, and all these rules of the game had to be put in place almost overnight.

The market was liberalised on 1 April 2000. By the end of 2000, the competition code was in place, spelling out the rules, regulations and guidelines for all these issues. We were proud of our achievement – to be able to put things in place very quickly.”

The changing role of the referee

“Since 2000, there have been many shifts in trends. When we started to liberalise the market, our first task was to regulate the incumbents to facilitate market entry for new players. Over time, as the market became more competitive and more choices came into play, our focus shifted to overseeing competition. Today, we allow market forces to play out as much as possible and intervene only when there was market failure, to safeguard market interests or when specific consumer interests had to be addressed.

Our scope has also evolved. Where we used to have largely only fixed line telephony, today we have to look at the mobile space, the Internet space, the Next Generation Nationwide Broadband Network (Next Gen NBN) and so on. For example, when we first introduced Quality of Service (QoS) on operators, our focus was on fixed lines because people depended on the telephone lines they had at home and office. Today, the mobile smartphones and tablets have become so important in our daily lives and for the users of these devices, mobile QoS is also priority. We recently stepped up the QoS requirements for 3G services and we are now looking into introducing QoS for mobile data services as well.”

Managing competition

“When it comes to managing competition amongst industry players, our general approach is to leave it to the market and if the market is working, we do not intervene. One exception has been in the deployment of the Next Gen NBN, where we needed to push for more competition at the services layer. To achieve this, we decided to separate the services layer, the active layer and the passive layer of the network.

The reason is this: There may be people out there with good ideas but traditionally if you had a good idea and wanted to be a player in the telecom industry, you needed to invest a lot in infrastructure, so it was tough for new players to enter the market. By separating the different layers of the Next Gen NBN, new entrants do not have to worry about upstream investments like putting in the fibre. They can just buy services from those who provide them. This is a big transformation. Where previously, players in the telecom sector were vertically integrated, today we have de-layered them to bring about greater innovation.”

The role of public consultation

“One of our key principles in regulation is to have transparent and reasoned decision-making. When we make major policy decisions, we want to create opportunities for people to give their views and suggestions. Public consultation is not new to IDA; the practice goes as far back as 2000. When we finally issue our decisions, we always accompany our decisions with a memorandum. We will explain all the issues brought up by various parties, and why we should or should not take a certain approach. If we do not agree with a certain suggestion, we will explain why it does not work. We have to take all factors into consideration and justify our decisions. Another principle is timeliness. We need to impose this self-discipline. If parties are not happy with a decision, they can appeal, and we will have a prescribed timeline for us to get back to them. This time element is important in a sector where changes are taking place so quickly.”

The infocomm landscape today

“We have made good progress over the past decade or so. From a handful of service providers we had back in 2000, today we have several hundreds. Competition is much more vibrant now, and prices are a far cry from what they used to be. You only have to look at the kinds of innovation and the number of new devices that are being introduced all the time.

The market has converged, with players starting to bundle application services with mobile phones.

Singapore today is often seen as a thought leader, small as we may be. Vendors and the industry see us as a good market to launch their products because we have a base of savvy users, and a vibrant market and sufficient competition to drive innovation and technology adoption.”

Challenges on the table

“One of the key challenges is spectrum management, especially with the exponential growth in mobile services. For a big country, one set of frequencies can be reused in another region. In Singapore, being geographically small, the ability to reuse frequencies is limited. We have to be careful about managing spectrum effectively and look at how we can deploy new technologies such as TV whitespace to optimise our use of available frequencies.

The other major challenge is the blurring of lines between traditional telco business and applications. Current telco operators still derive significant value from the transport communication traffic. However, a lot of them are beginning to add value by going into applications. The market has converged and the lines have been blurred. Players are starting to bundle application services with telecom services. This is a natural move when we have competition. However, the question then is: How do you treat this as a market? How do you regulate this? And when people say this can be anti-competitive, what does it mean? Our challenge is to facilitate all these innovations and, at the same time, have sufficient safeguards to ensure a competitive market that is not compromised by the blurring of traditional market boundaries.”