Singtel

From Business times 21 Dec 2011

SingTel launches 4G plan and battleship in data war

Shift in pricing strategy will help telco charge heavy data users in ways that current plans don't allow

By JOYCE HOOI

(SINGAPORE) The days of virtually unlimited mobile data usage are numbered. SingTel will be launching Singapore's first fourth-generation (4G) - or Long Term Evolution (LTE) - mobile broadband service for both consumers and businesses tomorrow, as the first of a three-part pricing strategy.

For now, network coverage will be mainly in the Central Business District - alongside pockets of coverage in Bukit Panjang, Boon Lay, Bedok and Changi. It will expand to 80 per cent of mobile data users by end-2012 and to 95 per cent by the first quarter of 2013.The new 4G plan - known as Broadband on Mobile Prestige 75 - heralds a shift in pricing strategy that will help SingTel gain revenue on heavy data usage in ways that it has not been able to with current 3G price plans.
The new 4G plan will bundle 10 gigabytes (GB) of LTE data along with 50GB of 3G data for $69.90 a month. It is only for dongle modems, not smartphones or tablets.
This is essentially SingTel's priciest 3G plan - the Premium 21 with a priority pass - with LTE data and speed thrown in for an additional $10. Existing users of Premium 21 will be able to upgrade to this plan for $10 a month,
When a user of the new plan uses 3G services in areas not covered by the LTE network, he will experience typical download ranges of 1.7-4.8 megabits per second (Mbps).
In comparison, the LTE service that kicks in when the user is within range of the LTE network offers typical download speeds that are about three times faster of 3.4-12 Mbps.
While the Prestige 75 has a theoretical download speed of up to 75 Mbps, the typical download speed range better reflects what a consumer experiences under actual loaded network conditions.
When subscribers use up their 10GB LTE data allocation in areas covered by the LTE network, they do not switch to the 3G network and consume their 3G data quota.
Instead, they will be charged for additional LTE data usage at $0.512 per megabyte (MB), the same rate levied for current 3G plans. This is capped at $94.16 per month.
This pricing structure will change by the end of next year when LTE coverage hits 80 per cent of users. Then, the 50GB 3G data quota will shrink for new subscribers of this plan.
When coverage reaches 95 per cent of its users in 2013, the divide between 3G and LTE will be made explicit - the price plan will most likely drop the 3G component altogether, leaving new subscribers with a 10GB quota of LTE data, as opposed to a combined data quota of 60GB (3G and LTE) for people who had subscribed during the first leg of the new plan.
This will have significant implications for SingTel's long-ranging plans to monetise data usage. Currently, the data cap for all of its 3G plans stands at 50GB.
The pool of people paying for additional data is tiny. Less than 1 per cent of dongle and tablet users consume more than 50GB a month, according to data that SingTel released yesterday. In fact, 89 per cent of them use less than 10GB of data.
The price plan set-up is not much different for its rival, StarHub's. It has one 3G plan with a 30GB cap and three other costlier plans with no data limit. M1, however, has plans with 5GB, 12GB and 50GB caps.
Yuen Kuan Moon, executive vice-president of SingTel's digital consumer group, likened 3G consumer habits to a 'buffet-style consuming behaviour' in which consumers pay a flat fee in return for consuming almost all they can.
Consequently, the telco has found itself in a situation where 11 per cent of its subscribers account for 60 per cent of data traffic, even as marginal revenue has not kept up with increasing data usage.
'Many operators in the world have looked at repricing 3G because the way data has been used and offered in the market encourages a very weird sort of usage behaviour. This has affected the entire quality of the network,' said Mr Yuen.
With users of the LTE network, at least, SingTel will eventually be able to make heavy users of data pay for what they consume beyond the 10GB point, as opposed to the 50GB point which forms its current cap.
Even some of the 89 per cent of users who consume less than 10GB of data might find themselves venturing into paying-per-MB territory, as higher speeds tend to encourage more data usage.
The same principles will apply to LTE price plans for smartphones and tablets when they are eventually launched, SingTel said.
StarHub said yesterday that it will likely launch its LTE services in the second half of 2012, 'given the device roadmaps of most device manufacturers'.
When it does, the accompanying price plans are bound to be different in a similar vein. StarHub previously told BT that it 'will look at how we price LTE subscription plans closely so as to help us monetise mobile data. Hence, it will be different from the current 3G/HSPA+ mobile data pricing plans'.
M1 was the first to offer any form of LTE service in June, limited to its enterprise customers. It had previously said: 'Nationwide LTE network is currently being rolled out and will be launched in the second half of 2012.'