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BusinessWeek: January 10, 2000 |
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International -- Int'l Business: Singapore
So This Is Asia's Net Hub? (int'l edition) Singapore's technocrats wired the island for broadband, but so far, few are logging on
But like many other Web pioneers in Singapore, Cheong has yet to catch broadband fever. The reason is simple: There isn't enough interesting content to justify its high price--especially now that residents can get Web access for free with conventional narrowband service. While the new technology is impressive, "it has not yet caught on with residents," says Cheong. He hasn't even signed up himself. What if they wired an island and nobody logged on? That is what government technocrats must be asking themselves after the tepid response to Singapore ONE, the highly promoted initiative to position the country on the cutting edge of the multimedia age. Under the Singapore ONE umbrella, a host of agencies and state-linked companies since 1996 have been collaborating on a high-speed phone and cable network and to create specialized Web sites. After its mid-1998 launch, the government projected 100,000 users by the end of 1999. So far, just 25,000 of Singapore's 710,000 Web users have signed up. The take-up rate "has been a bit slower than we had wanted it to be," concedes Paul Chong, chief executive for multimedia at Singapore Telecommunications Ltd., one of two broadband providers. Chong Huai Seng, vice-chairman of local online magazine publisher Panpac Media.com Ltd., is more blunt: Broadband "is growing at snail-mail pace," he says. That doesn't bode well for Singapore's ambitions to make itself the Internet hub of Asia. It also raises questions about the state's penchant for heavy intervention in key industries. Whereas neighbors such as Hong Kong have sparked an online explosion by leaving telecom to the private sector, Singapore ONE--short for One Network for Everyone--has been a government baby from the outset. Agencies such as the National Science & Technology Board and the National Computer Board invested millions developing the technology and services. Singapore became the first country where all homes and offices can connect to broadband. The government created much of the content, too, with everything from the military to the weather service offering sites. But while the Singapore Inc. approach has worked well over the decades in developing first-rate container terminals, subways, and industrial estates, critics say it is ill-suited for the fleet-footed Digital Age. When they first envisioned the project in the mid-1990s, the technocrats didn't anticipate that Net services would become so plentiful and cheap so soon--and that demand for quality content would be so crushing. So they sanctioned only SingTel and Singapore Cable Vision (SCV), both stodgy state-controlled companies, to provide broadband service. To protect SingTel, the former telecom monopoly, the government forbade foreign telecom companies from connecting their own undersea cables to Singapore. Thanks to this protectionist zeal, there is a shortage of high-density bandwidth from Singapore to the U.S. That means while the broadband highway is very fast inside Singapore itself, it's slow going when users access overseas sites. That's because data must travel via overtaxed conventional cables. The lack of competition also keeps prices high: The cheapest package is $20 for 10 hours of broadband usage a month, with each additional hour costing $1.80. Regular Net access costs a fraction of that. Since Singapore deregulated normal Web service, outfits such as Pacific Internet and Star Hub have been offering free dial-up access. That's an especially good deal considering that the content on Singapore ONE isn't much better. Consumers in wide-open Hong Kong, by contrast, will soon be able to get affordable broadband service through a number of providers, such as a new joint venture between Star TV and Cable & Wireless HKT. Big developers such as Sun Hung Kai Properties also plan to supply high-speed service, while budding Net power Pacific Century CyberWorks aims to offer broadband via satellite. It doesn't help that the two state-linked providers seem obsessed with breaking even from the get-go. Cable-TV company SCV, which plans to launch its broadband service soon, expects to have only 20,000 users by yearend. After investing $300 million on its islandwide cable network, explains President Yong Lum Sung, SCV must charge a lot for broadband because "we need to recover the costs that were incurred." That's not the kind of thinking that launched successes such as Netscape, Yahoo!, or Amazon.com. Programming is another problem. Many industry executives say Singapore ONE's news shows, music videos, and restaurant ads aren't compelling. And because of the limited broadband audience, few content providers are racing to produce more interesting fare. Singapore ONE "is a big pipe with water trickling through it," says Larry Ang, group general manager of e-business at Pacific Internet, Singapore's second-largest provider of narrow-band service. There are signs the government is starting to get the message. To make the service more appealing, it is considering opening broadband to new players by this summer. Among the possible entrants are Cable & Wireless, which formed an ISP with local electronics power Creative Technology Corp. More competition should force prices to fall. The Infocomm Development Authority, a new state agency in charge of promoting broadband, is urging SingTel and SCV to offer low-cost service for families and to make it cheaper for foreign firms to base sites in Singapore, reducing the need for trans-Pacific links. "We will see some explosive growth over the next year," pledges agency Deputy Director Ng Kin Yee. Many outsiders remain skeptical. To succeed, suggests Panpac Media's Chong, SingTel and SCV should drop prices dramatically and get used to swallowing losses until they build the market. "At the end of the day, the government will have to come in and say we will provide this for free," Chong predicts. That calls for a major change in mind-set. Until Singapore allows its telecom industry to be shaped by the market, rather than by bureaucrats, the vision of a truly "intelligent island" is likely to remain elusive. Return to top | |
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 TABLE A Sluggish Start THE VISION By investing lavishly in an island-wide broadband network and its own content, the government hoped to provide Asia's most advanced telecom infrastructure and multimedia services. THE PROBLEM Due to government protection and broadband providers' determination to break even from the start, Web users complain service is too expensive, too slow, and lacks content. And competition from regular ISPs like Pacific Internet, where a price war has broken out, is intense. THE RESULT Singapore One has only one-fifth of the 100,000 users envisioned by the end of 1999. Many content providers are staying with narrowband, avoiding broadband. Return to top |
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