Telcos wage bruising fibre broadband war

M1 slashes 1Gbps plan monthly rate to lowest yet in market; ARPUs seen falling more

[SINGAPORE] In the cutthroat world of high-speed and low-cost fibre broadband, the Big Three telcos are sharpening their knives.

On Thursday, M1 slashed the monthly rate for its one gigabit per second (Gbps) fibre broadband plan from S$129 to S$49 as part of a promotion for a 24-month contract, making it the cheapest plan of its kind in Singapore.

At this rate, it is almost a dollar cheaper than broadband rival MyRepublic's 1Gbps plan which upended the market when it was introduced in January for S$49.99 - the cheapest plan then.

After M1's promotion ends - the telco did not say when that might be - the 1Gbps plan's non-promotional price will still be lower than its pre-promotion one, at S$99. Even as M1's plan now resembles MyRepublic's in price, it is also starting to resemble it in feature, with a promise not to throttle BitTorrent traffic - a guarantee that MyRepublic already offers its subscribers.

MyRepublic is unfazed by M1's latest move and told The Business Times that it has no plans to lower its own 1Gbps rate. "We're happy to see Singapore move towards the 1Gbps standard," a MyRepublic spokesman said.

"Our experience with 1Gbps is also still vastly ahead of our competitors', ensuring a more stable service and smoother installations."

M1's promotion comes weeks after SingTel launched an Unlimited Fibre plan that offers speeds of up to 1Gbps, for S$69.90 a month.

In addition to not throttling BitTorrent traffic, SingTel's plan offers a 25 per cent discount on a third-party virtual private network (VPN) service - an unprecedented move by the telco. A VPN is typically used to access services that are not offered here, such as video-streaming sites Netflix and Hulu, among other things.

According to a SingTel spokesman, response to the Unlimited Fibre plan has been "very good". It has no plans to change the promotional price at the moment, but added that it regularly reviews price plans.

While the larger players have cut fibre broadband rates before, the latest moves are the boldest excursion yet into their smaller rivals' territory.

M1's 1Gbps price plan puts it a hair's breadth ahead of MyRepublic's offering, price-wise. At the same time, SingTel's VPN option mimics the feature that smaller players such as ViewQwest have been offering.

M1, when asked if it would consider offering VPN services, said it is "currently evaluating services that will enable access to legitimate content services and that improve (customers') connectivity and security".

StarHub, too, is "working on a new 1Gbps home broadband offer", its spokeswoman said on Thursday. More details will be announced in the coming weeks. The telco had previously offered a 1Gbps package priced at S$395.90 a month but had discontinued it "recently" in preparation for the new offer, it said.

It is unclear how much good being more competitive will do the telcos. Already, the incumbent players are estimated to have suffered a decline of 15-20 per cent in broadband average revenue per user (ARPU) since MyRepublic appeared on the scene, according to a Nomura report last month.

And while M1 reckons that its new offering will have a "positive impact" on its fixed segment, at least one analyst begged to differ, calling the telco's latest pricing move a "drastic" one on Thursday.

"I don't think there's any upside in this. The only upside is probably in keeping their market share," he said.

Now, the industry's price war - already a bloody one - appears set to be prolonged as well, even as analysts had hoped for a bottoming out of broadband prices.

Earlier this week, in a harbinger of things to come, OCBC Investment Research analyst Carey Wong noted that the smaller players - including M1 - have been "using low pricing to snatch market share away from the incumbents".

"As such, sliding ARPUs are seen across the board in Q2 2014 and could continue to edge lower in the coming quarters," he warned.

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