FIRST
Following the footsteps of its Asian neighbours, IMDA offered 5G bids to the four major telco players.
5G’s success hangs on competition and consumer acceptance
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ince talks of 5G availability circulated in the Asia Pacific, Singapore and the Infocomm Media Development Authority (IMDA) have rolled out bids for four spectrum bands. The two nationwide and two local bands have been offered to the four major telco players: Singtel, StarHub, M1, and Australia-based TPG Telecom. “5G, with its high-speed, low-latency and private networking capabilities, will create massive opportunities for new applications and services that will impact our society and how everyone lives, works and plays,” Sebastian Tan, head of 5G Centre of Excellence at StarHub, said in a statement. “StarHub is conducting trials and proof-of-concepts with its 5G ecosystem of technology, business, institutes of higher learning and public agency partners. “A portion of StarHub’s network is 5G-ready today to facilitate trials in the lead up to eventual commercialisation. The company is broadcasting ‘live’ 5G signals from its headquarters and has identified areas at which to expand its initial 5G coverage,” Tan added. IMDA said that it wants a full-fledged 5G standalone capability covering at least half of Singapore by the end of 2022, but neither consumers or investors seem too keen on its 10
SINGAPORE BUSINESS REVIEW | JUNE 2020
impending arrival. In a survey conducted by Maybank Kim-Eng last 2019, 74.7% of the respondents were not willing to pay more for 5G connectivity against the current 4G network. The results are said to be consistent with telco service providers’ general stance that the retail consumer base case for 5G is “not developed to a degree that requires immediate major investment”. In a comment by another bank analyst, who did not wish to be identified, consumers’ willingness to pay more for 5G depended on more than just speed. “4G is already adequate for video
streaming, etc. Higher video standards and applications may eventually demand that, but as of today, especially in Singapore where both wireless and wired broadband is readily available and decently fast, the timing of commercial viability is not clear,” he further explained. Apart from not needing 5G at the moment, there is also the issue of the compatibility of many devices. The analyst said that 5G’s viability will rely on applications being developed against niche industrial applications, such as factories and robots. On the investors’ side, they see significant risk in the multiplayer competition. “With potential four-way competition in industrial areas, higher investment risks will be factored in by would-be mobile network operator (MNO) bidders. It may also dampen interest in the localised licenses,” said Luis Hilado, analyst at Maybank KimEng, in a note. Hilado added that investors are waiting for the returns on 5G capex, which creates an overhang in the sector. A separate report by Fitch Ratings notes that another issue in 5G is if Singapore will be able to have access to a sufficient and affordable spectrum. As of now, Singapore uses the 3.5GHz band for satellite communications which can only be freed up from 2021. Fitch Ratings stated that the $55m-base price for 100MHz of the 3.5GHz frequency translates to 9.5 cents (US$0.07) per MHz per capita, which is cheaper than Hong Kong’s recent 5G spectrum auction at 12 cents (US$0.09). Fitch Ratings cited South Korea as a case study, which is reportedly the most advanced 5G market, here even telcos are struggling to boost operating cash flows, as higher marketing cost from generous handset subsidies more than offset increased wireless revenue from the upselling of expensive unlimited 5G mobile plans.
TPG making its mark on its free trial service?
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