Singapore buys time with 3G-auction delay

Singapore’s telecommunications regulator, the Infocomm Development Authority (IDA), has decided to delay the country’s auction of 3G (third-generation) mobile phone licenses by two months from February to April, IDA said in a statement Wednesday.

IDA said the delay was caused by several interested companies asking for further time to study a draft of the auction document and submit comments about the draft auction rules. Publication of a final version of the auction document has been delayed by one month until the end of January.

“The consultation process will be valuable, and for this reason, the auction process has been lengthened,” IDA said in its statement, which was issued to rebut media suggestions that the auction was failing for lack of interest.

More probably, IDA is buying time to figure out the best way to allocate spectrum in a way that is fair to both the local carriers and outside entrants, according to Sandra Ng, vice-president of communications and peripherals research for the Asia-Pacific region at International Data Corp. (IDC).

“Nobody really knows what the 3G market will be like, and IDA is looking for the optimal way to hold the auction,” Ng said in a telephone interview. “IDA may be coming under pressure from the telecoms companies – lots of carriers have become unhappy with auctions.”

In October, IDA said four licenses would be granted on a straight auction basis with a reserve price of S$150 million (US$85.5 million) per license, without any preferential treatment for existing mobile phone operators in Singapore.

Mobile operator StarHub Pte Ltd. publicly criticized this stance and said the price needed to win a license would be reflected in higher end-user costs.

The straight auction process must also be unfavorable to the former monopoly carrier, Singapore Telecommunications Ltd. (SingTel), according to IDC’s Ng.

“SingTel has simply got to have a 3G license, and so it would have to bid very high in order to be sure,” she said. “There is enough spectrum in Singapore to give all three current operators a license and then encourage competition through (capacity) resale.”

IDA admitted in the statement that “market sentiment is weaker than a few months ago” for 3G but said that potential bidders, both local and international, had responded positively to the licensing exercise.

When announcing the auction plans, IDA said it had rejected the idea of running a pre-qualification “beauty contest”, saying that would be unfair given that nobody is yet sure how the 3G market will play out, and which technologies and services will prove to be winners. A straight auction is the fairest and most transparent way to allocate licenses, IDA said at the time.

That free-market stance is now coming under pressure, as potential 3G operators re-evaluate the balance between definite up-front license costs and uncertain revenue streams further down the line.

More information about Singapore’s 3G-auction can be found on the Web at