=DJ EXCLUSIVE: Singapore's MobileOne Dumps Wi-Fi, Bets On 3G
By Sai Man
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--MobileOne Ltd. (D.MON), Singapore's second-largest mobile operator, has dropped its high-speed wireless broadband plans, known as Wi-Fi, after a disappointing trial run earlier this year.
"We've shut it down," MobileOne Chief Executive Neil Montefiore told Dow Jones Newswires in an interview Tuesday. "We've discontinued trials because we found customer feedback was not positive."
That decision leaves MobileOne without a foot in the nascent but fast-growing Wi-Fi business, which allows users to surf the Internet on laptop computers or mobile phones when they are near a basestation, or a hotspot, which are set up in places such as cafes and airports. This wireless technology, which shares the same radio spectrum as microwave ovens, is less secure but faster than the new mobile phone networks being developed, called third-generation, or 3G.
Wi-Fi is also much cheaper to roll out. Singapore Telecommunications Ltd. (P.SGT) has only spent about S$1 million (US$1=S$1.7256) to roll out 150 hotspots across the 650-square-kilometer island, and plans to have more than 200 by the end of the year.
While SingTel talks of convergence of multimedia technology, where users will use all sorts of devices to access information and communicate with one another, MobileOne is staying focused on 3G.
"Our customers didn't like the services. It's not a market we want to get into. It's not really mobile," Montefiore said.
For Wi-Fi, a user must stay within a coverage area of 50-100 meters to the hotspot, whereas mobile phones allow users can roam freely when communicating, he said. With Wi-Fi, "you're temporarily fixed," he said.
But Montefiore is a rarity in Asia where fixed-line operators are jumping on the Wi-Fi bandwagon in droves in a bid to tap into the fast-growing market. Wi-Fi is expected to be a US$800 million business by 2007 in the Asia Pacific for Wi-Fi service operators, from a mere US$15 million last year.
Hotspots in Singapore alone are expected to vault to more than 1,000 by 2005, from 193 last year, according to research firm IDC Corp., essentially enabling people to surf in virtually all population-dense public places across the island.
Part of the problem for MobileOne lies in its inherent disadvantage of not having its own fixed-line network on which to connect its hotspots. To overcome this, MobileOne worked with local hotspot operator Bluengine, which connects its hotspots to a fixed-line network, but even then, the costs weren't feasible.
"The cost of backhaul is quite high. We didn't want to put the MobileOne brand on it," Montefiore said.
It's All On 3G
This strategy leaves MobileOne betting on 3G to pay off - in a big way. MobileOne is spending S$75 million this year on 3G, and another S$75 million next year to complete island-wide coverage.
It's a bet that analysts said MobileOne can't afford to lose.
Some fear that by making hotspots pervasive, users may prefer to find a nearby hotspot to check e-mail or make a video call than over 3G networks. 3G services will likely be more expensive, not only because of large license costs, but also because mobile equipment makers like Nokia Corp. (NOK) are passing on development costs to operators through infrastructure prices.
But MobileOne is confident: Montefiore reckons its mobile subscribers will on average spend as much as 25% of their monthly bills on data services, whether sending short messages or using 3G-like services including watching live news on their phones, in two or three years' time. At the moment, each MobileOne postpaid subscriber pays S$62 a month, of which 14% are data services. By the end of this year, he believes data revenue will be around 15%, a "relatively conservative estimate."
Montefiore said it is gunning to launch 3G trials in September or October this year, which will be limited to the central business and shopping areas. This will be followed by a commercial launch around the middle of next year, he said.
"We're still ironing out the bugs in the software," he said, adding, "We should only be charging customers when we're absolutely sure" the services will work.
The second stage of the rollout, which will broaden the coverage to the entire island, will be in place before the end-2004 regulatory deadline, he said.
Under the terms of the S$100 million 3G license MobileOne bought from the Singapore government, the operator must offer 3G services island-wide by the end of 2004, as do its rivals SingTel and StarHub Pte. Ltd.
-By Sai Man, Dow Jones Newswires, 65-6415 4155; sai.man@dowjones.com
-Edited by Mary de Wet
(END) Dow Jones Newswires
06-03-03 0212ET
