Broadband price war 'not sustainable'

Broadband price war 'not sustainable'

A PRICE war kept fibre broadband sign-ups at a high level last year, but consumers should not expect such good deals to last forever, said analysts.

More than 183,000 fibre broadband subscribers were added in the first 11 months of last year, bringing the total to 692,000, according to the latest subscription figures on the Infocomm Development Authority's website.

The figure is comparable to the whole of 2013, which had an all-time high of more than 223,000 fibre broadband sign- ups.

The price war last year was triggered by MyRepublic, whose 1Gbps plan, at $49.99 a month, was the cheapest in terms of megabit per second when it was announced in January last year.

In 12 months, MyRepublic doubled its broadband subscribers to 30,000 - more than two-thirds of whom are on its 1Gbps plan, the Internet service provider (ISP) told The Straits Times.

In February last year, a month after MyRepublic's move, other ISPs lowered the prices of their mid-tier 300Mbps and 500Mbps plans, although no one matched MyRepublic's 1Gbps offer.

It was only in August that Singtel slashed the price of its 1Gbps plan by 30 per cent to $69.90 a month. A month later, M1 halved the price of its 1Gbps plan to $49 a month.

In November, StarHub slashed the price of its 1Gbps plan by 30 per cent to $69.90 a month and threw in a free 100Mbps cable broadband connection.

These cuts ate into the broadband revenue of StarHub and Singtel, even though they added more subscribers.

StarHub's broadband revenue plunged 16.5 per cent last year, compared with 2013. Its broadband revenue last year was $201.9 million.

Still, it added 21,000 customers to end the year with 469,000 broadband users. StarHub does not disclose the split between its cable and fibre broadband users.

In the nine months to Dec 31 last year, Singtel's broadband revenue dipped 3.6 per cent to $154 million from the same period a year ago.

Singtel added 18,000 broadband customers last year to bring its total base to 585,000 by year end - of which 390,000 were fibre broadband users.

M1 does not break down its broadband revenue, but added 18,000 fibre broadband subscribers last year to reach 103,000 as at December.

Analysts said the price cuts are only short-term measures to capture or retain market share.

"The low prices are not sustainable in the long term," said senior analyst Clement Teo of US-based market research firm Forrester.

ISPs have ongoing manpower, marketing and infrastructure costs such as those incurred for international bandwidth, he added. This is why two ISPs - SuperInternet and ViewQwest - have stayed out of the price war.

Their broadband packages are by far the priciest among the six major ISPs here.

"Quality and service would have to suffer at such low prices," said Mr Vignesa Moorthy, ViewQwest's chief executive.

Mr Naveen Mishra, industry principal of telecoms at market research firm Frost and Sullivan Asia-Pacific, expects broadband prices to inch up over time, although not to the levels before the price war.

"Some plans have a limited promotional time period that is tied to a season when most customers' contracts are up for renewal," he said.

This article was first published on March 03, 2015.
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