=DJ INTERVIEW: SingTel Builds Wi-Fi Dream On A Shoestring
By Sai Man
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--For a company with a market capitalization of S$27 billion (US$1=S$1.7301), Singapore Telecommunications Ltd.'s (P.SGT) move into wireless broadband services, better known as Wi-Fi or wireless fidelity, is being carried out for next to nothing.
Over the past year, the incumbent telecom operator has spent just S$1 million on rolling out Wi-Fi, dotting the 650-square kilometer island with about 150 hotspots, close proximity to which will allow users to surf the Internet on their laptops for 20 Singapore cents a minute, says Andrew Buay, SingTel's vice president for consumer marketing.
This wireless technology takes broadband surfing out of the home and the office and into densely-populated public areas including Starbucks Corp. (SBUX) and Burger King Corp. (X.BKG) outlets, where SingTel has installed hotspots.
By the end of the year, finding a hotspot will be even easier when SingTel expects to have more than 200 hotspots, Buay told Dow Jones Newswires in an interview.
"The next stage of the rollout is a lot more focused, like hotels, where we can increase the proximity and density of hotspots," Buay said, who described the rollout so far as a "basic mapping" of Singapore.
The cost of rolling out more hotspots is getting cheaper for companies like SingTel, he says.
"The cost of equipment has dropped significantly" over the past year, he says. "Wi-Fi is (a small) incremental cost to us."
The race to roll out more hotspots is intensifying, with rivals like StarHub Pte. Ltd. now running three monster-sized hotspots, including an exclusive Wi-Fi deal in January covering Changi airport.
The number of hotspots in Internet-savvy Singapore is expected to jump 2.5 times to 480 by the end of 2003 from 193 in 2002, according to Adrian Ho, an analyst at technology research firm IDC.
By 2005, he estimates the tiny island - where about one-third of the population are broadband users - will be wired up with over 1,000 hotspots.
3G Worries
But some analysts are worried that as Wi-Fi becomes more pervasive, it will undermine SingTel's costlier third-generation mobile plans, which will also allow SingTel's army of mobile users to zap wireless data across invisible networks - but at vastly slower speeds than Wi-Fi.
SingTel is expected to award a contract to build its 3G network later in June, and although the size of the contract isn't known, SingTel previously said it expects to spend some S$350 million over three years.
But Buay dismissed fears users will plump for cheaper Wi-Fi services rather than pay for 3G, saying these services are meant to complement each other.
Wi-Fi users are tied to a 50-100 meter radius of the hotspot whereas 3G users will be able to roam freely, and be able to surf and watch video clips while on the move, he says. Eventually, he hopes, each wireless service will encourage the use of another.
"We don't see Wi-Fi as a standalone service. We see Wi-Fi as a single component of our vision of seamless communications, with 3G another access tool," he says.
But while Wi-Fi is getting increasingly popular in Singapore, with about 2,000 users logging onto SingTel's service every month, Buay says Wi-Fi isn't going to make a huge impact on SingTel's overall business.
"I don't think it's going to be contributing a significant revenue, but we feel it's important to (have) because it's a complementary service," Buay says. Data and Internet services contributed S$1.9 billion or about 18% of SingTel's total revenue in the financial year to March 2002.
3G networks are more expensive because they are developed as a proprietary technology out of the laboratories of mobile equipment makers, whereas Wi-Fi grew up in the public domain.
As a result, 3G services will likely be more expensive in order to justify the higher investment outlay, say analysts.
But Buay was reticent on how SingTel plans to charge for its 3G services. "Pricing of 3G is potentially very different."
-By Sai Man, Dow Jones Newswires, 65-6415 4155; sai.man@dowjones.com
(END) Dow Jones Newswires
06-02-03 0435ET
