M1 sees small cell networks as alternative to costly spectrum

M1 sees small cell networks as alternative to costly spectrum
Ms Kooi: "Today we have a lot of traffic statistics ... which tells us which are the areas where there is high data usage and we can put small cells networks there."
PHOTO: Rendy Aryanto

M1 is banking on smart utilisation of its existing spectrum and new technology, like "small cell" networks - which are already being deployed in public spaces like MRT stations - to provide the best possible quality of service to its customers.

Last week's telecommunication spectrum auction surprised the market by becoming the most expensive such auction in history for Singapore. M1, and the other three telcos, Singapore Telecommunications (Singtel), StarHub, and Australian company TPG Telecom, which will start services by September next year, collectively committed to paying S$1.14 billion for the 175 MHz (megahertz) of spectrum that was on offer. During the last major spectrum auction exercise in 2013, the regulator raised a total of S$360 million for the 4G auction.

There has been a market perception that, in comparison to to Singtel and StarHub, M1, which had a 23.7 per cent market share as on December 31, 2016, was less aggressive in its bidding. M1 committed S$208 million for 30 Mhz of spectrum while StarHub's commitment was S$349.6 million for 60 Mhz and Singtel's S$563.7 million for 75 MHz of spectrum. TPG Telecom spent S$23.8 million for 10 MHz of spectrum. The telcos will pay for the spectrum as and when they become available in different lots and bandwidths.

In an interview with The Business Times, Karen Kooi, M1's CEO, said the telco's bidding strategy was very considered as it felt that it had alternatives to costly spectrum when it came to providing quality coverage and service to its customers.

"We knew we had an effective alternative (to costly spectrum) as we are the largest HetNet (heterogenous network) operator at the moment. We are way ahead of the others in terms of 'densification' and laying the foundation for a future 5G network."

By "densification" Ms Kooi was referring to what is known as small cells network in which devices or antennas, around the size of a A4 sheet of paper, are set up within crowded environments to supplement the mobile network signals. This allows for signal boost for a high quality connection, even if the signal strength from the nearest telecom tower is weak.

She said "densification" was an effective alternative to acquiring an extra 700Mhz spectrum lot. "We estimate that it will cost us less than S$50 million (to develop an effective islandwide small cell network) and we don't have to spend any more. If we had gone after the third pair of 700Mhz spectrum it would have pushed up the price way above the S$92 million for each lot." During the auction, M1 picked up two spectrum lots (20Mhz) of the 700Mhz spectrum, while StarHub picked up three lots and Singtel four lots. One of the main purposes of the 700 MHz spectrum allocation is to allow the telcos to provide better quality indoor coverage.

Ms Kooi said: "Today we have a lot of traffic statistics complemented by our analysis platforms which tell us which are the areas where there is high data usage and we can put small cells networks there."

She added that M1's small cells network rode on the 1800 MHz and 2.6 GHz (giga hertz) spectrum which M1 already owns. "We have also used small cells outdoors during the New Year's Day countdown and F1. We observed that they were able to absorb the spike in traffic during these events."

Ms Kooi added that M1 was progressively deploying small cells in the MRT-LRT network and at the moment had already covered more than 80 per cent of the stations, major bus interchanges, big shopping malls and public places in government buildings.

The M1 CEO also noted that the telco was looking to "re-farm" existing spectrum that is now being used to provide third generation mobile telephony (3G) services to around 20 per cent of its customers who are yet to migrate to 4G.

The reason the telco hasn't yet started the "re-farming" exercise is because it is in the process of migrating its existing 2G customers to 3G since the discontinuation of 2G in Singapore. "We will watch how this goes before we start to re-farm the 3G spectrum for 4G."

Ms Kooi, however, added: "We do encourage people to upgrade but not just from the spectrum perspective but also to enhance the service experience."

To a question with regards to the possibility of a price war once TPG starts its services, Ms Kooi said: "We are very customer focussed and we like to give customers what they want and so we have evolved from a voice-centric network to a data-centric network.

"So all these recent introduction of large data plans is at one level to pre-empt the fourth telco but more importantly we want to give the customers what they want. We want them to know very early on that we value them and we want to keep them."

In response to a question, Ms Kooi said she was not in a position to discuss the actual strategy that M1 will adopt to protect market share, "I want to keep the actual strategy close to our chests at this point of time".

She, however added: "Having said that we do not believe in competing on price. We always competed on customer service and quality. We believe we are a premium service provider and as a premium service provider we will be able to command a premium on our prices."

This article was first published on Apr 13, 2017.
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