Home Asia-Pacific I 2002 Challenges and Opportunities for Singapore’s Telecommunication Industry

Challenges and Opportunities for Singapore’s Telecommunication Industry

by david.nunes
Leong Keng ThaiIssue:Asia-Pacific I 2002
Article no.:1
Topic:Challenges and Opportunities for Singapore’s Telecommunication Industry
Author:Leong Keng Thai
Title:Acting Chief Executive & Director-General (Telecoms)
Organisation:Infocomm Development Authority of Singapore
PDF size:20KB

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Article abstract

The Global economic downturn had a strong impact upon the infocomm sector, which in recent times buoyed many Asian economies, forcing many countries into recession in 2001. GDP forecasts for this year, though, are promising. Singapore has long recognized the importance of telecommunications to its long-term growth. In recent years, it has reorganized its ministerial structure and revamped its industrial development and regulatory approaches to fostering innovation and collaboration among the country’s information and communications technology businesses.

Full Article

The global economy was hit, first by the bursting of the dot-com bubble, and then by the tragic events of September 11. The strong growth in the infocomm sector, which buoyed many Asian economies in 1999 – 2000, was not spared. The negative spill over on the Asian infocomm industry forced many Asian countries into recession in 2001. This year, however, has started on a much more promising note. The average GDP growth forecasts for Asia, according to the Asian Development Bank, have risen to 4.8 per cent, with Infocomm as a key sector fuelling this economic recovery. Singapore too, is starting to feel the effects of this renewed growth, with the Government’s full-year growth forecast now standing at 2 to 4 per cent, up from its previous estimate of 1 to 3 per cent. Amidst this renewed growth, what does this mean for the telecommunication industry in Singapore? Firstly, the boom and bust dot-com cycle and the early signs of economic recovery, show that there is now an even greater need to innovate and re-align directions so as to leverage new emerging opportunities. Singapore constantly recognizes this need. For instance, in November 2001, the infocommunications technology portfolio, which also includes the governance of the telecommunications sector, was transferred to the Ministry of Information, Communication and the Arts. The need to restructure arose because of the changing global environment. The traditional boundaries that used to separate the telecommunications, IT and broadcasting industries have blurred and overlapping markets have begun to emerge. Restructuring would allow us to revamp the industry development and regulatory approach to keep pace with new developments and the changing market environment. Going forward, this will ensure better coordination and consistency in policy implementation as well as promote greater market activity. Similarly, at the industry level, businesses will also need to constantly innovate and reinvent themselves. Although the opportunity to grow is tremendous, the challenge lies in how innovative these businesses are in making themselves relevant in today’s new global economy. For instance, they could push innovation boundaries and find new uses and applications for traditional services. They could also tap into the potential brought on by the overlap of Infocomm technologies in the IT, broadcast and telecommunication industries. After all, today’s distribution and flow of economic activities are possible only because of advances in Infocomm technology and telecommunications. Telecommunication players can be a key component in this new economic proposition. In catalyzing greater growth opportunities for the Infocomm sector, the government and industry adopted an open partnership approach. Programmes such as IDA’s Pilot and Trial Hotspots, or PATH in short, funds industry ideas for innovative applications of ICT technologies and services. US$26.5 million has been set aside for this initiative, with some 50 per cent of funds already committed to various projects such as trials for location-based services led by SingTel and Cambridge Positioning. However, the value of such trials is not so much in its own success, but the opportunity for businesses to be innovative and to hone products and services that meet customers’ needs. The IDA also promotes partnership with industry through projects such as Singapore ONE. This project aims to accelerate the research, development and deployment of broadband technologies and services. Commercially launched in 1998, Singapore ONE sees the collaboration of the government and industry in laying out a broadband infrastructure that provides high-speed, interactive and multimedia applications and services for users. Singapore ONE has already achieved initial success. Today, the number of broadband service providers has grown from two to twelve. One-in-three or 950,000 Singapore residents now have broadband. Broadband access cost has decreased by as much as five times over the last two years, while the number of users grew more than four times during the same period. In promoting opportunities for industry growth, Singapore also decided to fully liberalise its telecom market in April 2000. The policy has paid off. International Direct Dial (IDD) rates have fallen by 60 per cent on average, and other international telephone call services by as much as 80 per cent. The lower prices have resulted in cost savings of about US$551.8 million, and stimulated usage substantially such that total international call minutes grew by 56 per cent since April 2000. By year end 2001, some 2,500 new jobs had been created. More than US$1.7 billion worth of investment is now expected over a period of three years. Today, new submarine cable capacity stands at a staggering 21 terabits per second. However, despite the benefits of liberalization, whether businesses – or the market as a whole – stagnate or pick up depends on the ability of service providers to innovate, take advantage of new technologies to create attractive services and applications, and find new value propositions. Today, sizeable populations in many Asian countries do not yet have access to telecommunications networks and Internet services. Local players can look towards partnering with other countries to tap into this tremendous opportunity for market growth and expansion. Against this backdrop, the Asian market should be looked at as a whole, rather than as a number of individual markets in each country. There is no doubt that there is a digital divide within the region but Asia is indeed a very big market comprising the markets of China, Korea, Japan, India and a group of countries in ASEAN. As a region, we have a market of more than 3 billion people – or more than half of the world’s population. If we look at the region as a whole, we will find the various strengths and the market potentials of each country. If we map the strengths and market potential of the different countries in the region, Asia will be extremely attractive to investors. Herein lies another opportunity. Conclusion For Singapore, although our strong fundamentals have helped the nation survive the downturn, we recognize the main driver that will help us achieve growth in an increasingly globalised economy of converged industries and markets will be our capacity to innovate and collaborate. As we ride out the economic doldrums, promising times are ahead for those who embrace this proposition.

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