Insight

The three telcos in Singapore have reported good results for the past year, largely on the back of a booming local, and in the case of Singtel - booming local, Australian and Indian economies. 

It is an admirable achievement. None the less, I feel the need to reiterate the global trends that are affecting the competitiveness of the carriers. 

One of these major trends is that voice services continue to get cheaper and in some situations voice is already free. I constantly meet people in the corporate world who gleefully boast that their teleconferences are now on Skype. Voice revenues have been saved by the phenomenal growth of mobile communications. However, as mobile reaches saturation point as in the case of Singapore, revenue growth slows down quickly and may even decline.  Investing in emerging economies allows carriers to extend this bull run in mobile revenues. However, the emerging economies are quickly reaching saturation points in the major cities. As an example, cities in India grew from a mobile telephone density of 2 per hundred population to 50 per hundred in the past five years. It won't be long before they reach 100 per cent and beyond. This is a similar trend in most emerging economies. What this really means is that the best years of making the big bucks from mobile revenue are fast coming to an end. 

A second trend that is clear is that price to consumers for broadband access is artificially high. One reason for this is that the community here does not get its act together. Go to any office, condominium or HDB flat in Singapore and you will find at least a dozen WIFI networks - these days mostly protected. If we were real neighbors, only one of us need to have a broadband access (at the highest speed) and we should share it and the cost with say, five of our neighbors. If that is against the regulation then the rules are outdated. Granted, getting the community to work together on this is probably a difficult thing to happen. It really requires us to go back to our traditional values , in the this case our neighborliness or lack thereof. But, I think it will happen when our current generation of teens and 20 somethings become a commercial force. The point really is that we pay too much for the broadband speeds we get – especially compared to Hong Kong, Japan and Korea where competition is driving up access speed and content but not the prices. Our local carriers need to offer much more to justify current prices. 

Finally, we have a generation, for whom the idea of paying for access and content (mainly music, videos) is a strange idea. Most young people up to their early 20s laugh at the idea that older people would actually pay 16 dollars for a music CD and use expensive voice calls to communicate. This is a generation that chats, blogs, emails and even speak online but will pay very little if at all. If they do pay for anything at it will be for a fancy phone or a computer game, revenues that don't really contribute much to a carrier's bottom line. People will still pay for good content, especially live sport, but that content is a major cost to the carriers, especially those who are in the television business. 

It continues to be challenging times for our carriers. I think this year will be telling. Slower economic growth will cause consumers to look at what they are paying especially for mobile services and broadband and television access. The scenario is also getting more competitive with such long overdue initiatives such as “real” number portability and an independently (independent of the carriers) run local high speed broadband network. The public and businesses expectations of more value at lower cost will rise rapidly and emerging economies are maturing into developed mobile voice markets. If the carriers are to sustain their current profits they will have to give us much more for our money. We won’t always have such a limited choice.