Jun 30, 2014

    MyRepublic shaping up to be a thorn for telcos

    EARLIER this month, broadband upstart MyRepublic became a larger thorn in the side of the telco establishment.

    It announced ambitions to be Singapore's fourth full-fledged telco and offer future subscribers unlimited mobile data bundles - the very concept the present players have been trying to phase out.

    But while buffet data pricing might set off warning signals for the great telco triumvirate of SingTel, StarHub and M1, what they should be more worried about is the business model that MyRepublic might bring to the mobile sector.

    If regulation and funding go according to plan, MyRepublic might just make for a lean, hungry rival vying for a share of the mobile pie.

    "The incumbents are stuck in a cost structure - they have a lot of people, a lot of expensive systems and legacy technology," Malcolm Rodrigues, MyRepublic's chief executive officer, told The Business Times last week.

    MyRepublic, he believes, will be able to build and operate infrastructure at a fraction of the cost of the established players. The firm will need $300 million in its first year.

    The firm also wants to steer clear of the plethora of price plans that operators currently offer to keep its billing-system cost down.

    Since smaller service providers - like MyRepublic - began making a play for the fixed broadband market, the established players have seen falls in either overall broadband revenue or the segment's average revenue per user.

    Now, MyRepublic wants to offer the mobile sector unlimited data bundling.

    Mr Rodrigues said the firm might take its cue from the neighbourhood of $50 that most people are comfortable paying for fixed broadband.

    However, the stakes are higher in the mobile market. The telcos stopped offering virtually unlimited data to new customers for a good reason, analysts said.

    "MyRepublic might run into the same problem where they get the wrong type of customers - people who will hog their bandwidth," said Carey Wong from OCBC Investment Research.

    While MyRepublic plans to build a network that is scalable in response to more traffic, how long this can be kept up as mobile data usage increases is unclear, especially if the firm offers unlimited data indefinitely.

    Also, there is the question of whether the three incumbents will retaliate and bring back unlimited data, but this is largely academic. "Not a snowball's chance in hell," was what an industry player told BT.

    The telcos might either be unable or unwilling - the former because so much money has already been spent, or the latter because their pockets are deep enough for them to wait out a new rival.

    For MyRepublic to be the kind of contender that it wants to be, it has to get the amount of spectrum that it needs, for one thing.

    It also has to convince the regulators to support a national roaming agreement, which allows MyRepublic customers to roam onto a rival telco's network in areas here where the former has no coverage yet.

    This will give MyRepublic time to match its rivals' level of coverage, which could take at least three years.

    Getting these things in place will be a feat, but if the way is paved for MyRepublic's entry, the incumbents might just have to shed some weight.