(Nikkei BP Group)
(No.1 High-Tech News Site in Japanese)
| Singapore Widens Internet Service Provider Market
October 27, 1998 (SINGAPORE) -- The Telecommunication Authority of Singapore
(TAS), a government regulatory body, is liberalizing the market for
Internet service providers.
|It now is allowing any company to apply for a license instead of the
earlier system of bidding.
Under this "open market" approach, any interested party meeting TAS'
minimum set of criteria would be able to obtain an ISP license, it said.
The duration of the license will be five years, renewable for three-year
terms after that.
"We have taken another major step towards further liberalizing our telecommunications
industry. We will not stop here. We will continue to monitor the development
in the other market segments and we will further liberalize when the
timing is right," Communications Minister Mah Bow Tan said when the
liberalization plan was announced.
The license fee will be an initial one-time fee of S$450,000 (US$277,000)
and an annual recurrent fee of 1 percent of the audited annual gross
turnover subject to a minimum of S$10,000.
Singapore currently has three ISPs: Singnet, which is part of national
telephone company Singapore Telecommunications Ltd.; Cyberway, which
is part of publishing group Singapore Press Holdings Ltd.; and Pacific
Internet, which is part of government-linked Sembcorp Industries Ltd.
TAS head Leong Keng Tai said at a press briefing that Singapore aims
to achieve Internet penetration rates comparable to Australia, the
United States, Japan and Finland. At the end of August 1998, Singapore
had about 352,000 dial-up customers, achieving a penetration rate of
11.36 per 100 population.
If the number of users served by leased circuits is included, the penetration
rate is about 17 per 100.
"TAS sees a significant unfulfilled potential in the market. There is
a gap between residential household PC penetration and the Internet
dial-up subscription," said Leong.
Another key reason why TAS is trying to open the market is because it
expects a strong take-up rate for Singapore ONE, the country's multimedia
broadband network. This network is the vehicle for the government's
move to make Singapore the hub for electronic commerce in the region.
Leong said one of the key factors that will be used to judge potential
applicants is whether they are committed to enhancing Singapore's regional/global
Internet connectivity so as to reinforce the country's Internet hubbing
To achieve this, TAS expects potential ISPs, like their existing licensees,
to execute a S$1 million performance bond to ensure that this commitment
will be met. Also, as with all other public licenses, TAS will continue
to maintain the maximum direct foreign equity limit at 49 percent.
Leong said that there has been some interest from potential ISPs but
they should provide a business plan to TAS, including a detailed financial
plan for the first five years of operation, which will contain a breakdown
of the proposed capital expenditure, a projected gross and loss account
and details of revenue streams, budgeted cash flow statements and the
amounts that will be invested on a yearly basis.
While a spokeswoman TAS declined to comment on potential candidates,
there reportedly are a few interested companies. But industry sources
told BizTech that one of the most likely candidates will be Mississippi-based
WorldCom Inc., which failed in its bid to secure a basic telephone license
earlier this year.
(Joseph Rajendran, Asia BizTech Correspondent)