Contractless mobile plans yet to catch on here

Singapore

SIM-ONLY plans have yet to catch on in Singapore, even as they are the most current and innovative plans in mobile flexibility today. And it's for good reason, The Business Times has learnt.

Such plans - which do not bind customers to a two-year contract or early termination fees, are customisable, and offer the usual minutes, texts and data - really took off here only last year, says DBS analyst Sachin Mittal. "It's in 2015 that all three telcos launched SIM-only plans . . . (while such plans) have been available in most other countries for a long time."

It has taken the local telcos this long because, desiring "low customer churn", they have been less excited about plans that do not give customers a reason to sign a two-year contract with them, said Mr Mittal.

Moreover, customers still prefer traditional plans that allow them to enjoy subsidies on premium handsets - such as Apple's iPhone 6s Plus and Samsung's Galaxy S7 Edge - which they continue to prefer to lower-cost models of brands such as Xiaomi or Huawei.

Going by second quarter 2015 data from market research firm IDC, Apple dominated the local smartphone market, constituting some 38 per cent of the 1.1 million smartphones shipped here. Samsung came in second at 26 per cent, followed by Xiaomi and the like.

StarHub said: "The majority of customers still prefer . . . a contract to lower the upfront costs of premium handsets."

As a result, competition has traditionally been on which telco can offer the most attractive handset subsidies, said Mr Mittal, given how price plans have hardly changed. "As long as there are attractive smartphone launches, we will continue to see demand for two-year contract plans."

Customers who appreciate SIM-only plans are those less keen to replace their existing handsets or those who are happy to go for the Xiaomi-type models - and are usually price-conscious or older, said the Big Three telcos.

SIM-only plans are apropos now, in part because Chinese smartphone makers such as Xiaomi and Huawei have now launched products "similar" to those of Apple and Samsung that are 40-50 per cent cheaper, said Mr Mittal.

A Xiaomi spokeswoman added: "We have likely shaken up the market here. Part of our overall strategy is great products at amazing prices. So this means customers can purchase our smartphones even without a mobile contract that provides subsidies."

Xiaomi phones (which came to Singapore in March 2014) range from S$149 to S$569. In comparison, a 16GB iPhone 6s Plus retails from zero to S$858 with Singtel's 24-month contract plans, and for S$1,048 without a contract. And a 32GB Samsung S7 Edge goes from zero to S$799 with StarHub's 24-month contract plans, and for S$1,098 without a contract - indicating both the extent of premium pricing and subsidies.

M1, the first to introduce SIM-only plans in 1997, said: "We created mySIM plans to give customers who prefer to buy their own smartphones better value in their postpaid plans. As we do not subsidise these customers' smartphones, we pass these savings back to them via larger data, call and message bundles." M1's mySIM plans (which have a 12-month contract option) offer as much as 20GB of data a month, along with unlimited calls and texts. StarHub's SIM Only plans (which debuted in 2013) peak at 12GB of data, while Singtel's go up to 35GB, the highest of the three telcos. The average mobile customer reportedly uses about 3.3GB of data each month.

Singtel, which last September introduced its range of SIM-only plans, said that the plans are data-centric, contract-free and "fully customisable", allowing customers to add extra data, talktime and messages at any time.

For instance, a customer can opt for the S$20 SIM-only starter pack and add S$5.35 for 1,200 texts and S$5.35 for 200 minutes of voice calls. It's at least S$20 cheaper than what he has to pay for an equivalent 24-month plan (Combo 3) under Singtel.

StarHub's SIM Only plans cost exactly half of its equivalent 24-month plans, while M1's mySIM plans are significantly cheaper than their corresponding bundled plans.

To make things interesting, M1 and Singtel now dangle exclusive handset discounts and even instalment plans for SIM-only customers - a move that, analysts suggest, telcos are playing catch-up and reacting to user behaviour to retain customers.

While it's just a matter of time before data-centric, contractless plans become popular in Singapore, BNP Paribas analyst Wu Wei Shi said that an "attractively priced, data-focused" product can help a new entrant acquire customers.

Fourth telco hopeful MyRepublic has announced two indicative SIM-only plans - priced at S$8 a month for 2GB and S$80 a month for unlimited data - ahead of its bid to win the fourth local telco licence. It told BT: "Data-centric, SIM-only plans will attract customers who want more control and transparency on what they're paying for. We believe consumers like freedom and transparency."

Consistel, which has declared that it would challenge MyRepublic for the fourth telco licence, said that it was too early to unveil its proposed mobile plans.