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Singapore’s Cutthroat Gigabit Broadband Price War Shows Real Competition Saves Consumers $

Phillip Dampier September 23, 2014 Broadband Speed, Competition, Consumer News, Data Caps, Online Video No Comments

bnr_reg_1gbpsThree competing telephone companies in Singapore have launched an all-out price war on gigabit fiber to the home Internet access that shows what real competition can do for broadband pricing.

Last week, M1 took a butcher knife to its monthly rate for 1Gbps service that used to cost $101.75 a month. Today, anyone can order service price-locked for 24 months at a promotional price of $38.65 a month — less than what most cable companies in the United States charge for 10Mbps service. It is the cheapest gigabit plan in Singapore and when the promotion ends, the price may or may not increase to $78 a month. Competitive pressure in Singapore may make M1’s post-promotional price untenable.

Competition is the reason M1 may not be able to raise prices. MyRepublic slashed the price for gigabit service to just under $40 a month in January.

SingaporeSingapore’s largest phone company, SingTel, has its own unlimited gigabit offering for $55.13 a month, a price the company is now re-evaluating.

“We’re happy to see Singapore move towards the 1Gbps standard,” a MyRepublic spokesman said, noting it has no immediate plans to further lower its rates. But it has sweetened its offer by throwing in a free smartphone for every customer signing up for 1Gbps service.

With broadband prices so low, providers are now switching to beefing up extras to entice customers. SingTel promises customers they will never encounter traffic shaping that might cut their broadband speeds when networks get congested. It also offers a 25 percent discount on a virtual private network (VPN) add-on, a common feature used in Singapore to get past geographical restrictions on video streaming. VPN users in Singapore rely on the service to reach Hulu, Netflix and other North American video services that only allow domestic audiences to watch.

A fourth competitor – StarHub – is late to the gigabit battle and is presently working on a revamped offer to be introduced by October. StarHub’s original gigabit broadband offer was expensive at more than $400 a month. That plan has been discontinued.

Wall Street and other trading centers are not happy that falling prices have sliced into telecom profits. Average revenue per user (ARPU) collected by Singapore’s ISPs have dropped 15-20 percent since MyRepublic launched the price war. Investors are being warned that profits will be affected by the robust competition. In Singapore, broadband prices are falling, but so are the costs to provide the service. In North America, it is a much different picture, where a lack of competition has allowed providers to increase prices, constrict usage, and avoid dramatic speed upgrades, even though wholesale broadband costs in North America are among the cheapest in the world.

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