Singapore to Test "Three or Four" Market Structure

With the caveat that it is unnatural to expect market leaders to welcome new competition, even less to welcome fierce competition, Singapore Telecom says it is concerned that issuing a fourth mobile license for Singapore will damage supplier sustainability over the long term.

The reason is obvious: the new provider is expected to spark a “lower price” battle that will damage service provider gross revenues and profit margins.

Would-be licensee MyRepublic says it will focus on innovation, not price competition.

Few observers likely believe that will initially prove to be the case. Most attacks by upstart mobile carriers globally have involved “innovation” around price, even if other elements, such as a reliance on Wi-Fi access, device bundling, contracts or zero rating sometimes also are introduced.

There is yet no consensus on “ideal” mobile market structures that encourage rapid innovation and yet also produce enough revenue and profit that all the suppliers can exist on an on-going basis. Some believe the “best” number is three; others believe “four” is the optimal number.

Those beliefs are unlikely to be changed much as we move towards 5G, which will mix and match access methods in new ways that blur the differences between fixed and mobile operators.

As always, how one defines a particular market is key. Over time, various “mixes” of virtualized mobile access and retail packages will increase the number of potential competitors able to enter and compete in “mobile” markets.

Though the ultimate sustainable market might still entail a small number of share leaders, a larger number of smaller sustainable competitors might be conceivable. And, for shorter periods of time, a larger number of leading contestants might also exist, until market pressures force a few from the market.

In the U.S. fixed network market, as well as a growing number of European markets, there is a parallel development. Where it once was believed only a single operator was viable, it now is seen that, in some markets, at least two providers can sustain themselves.

The latest issue is whether, in some markets, the number might actually be “three.”
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