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  • 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 position.

    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)

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    Updated: Mon Oct 26 16:44:29 1998 PDT