Do telcos need more time to prep 5G bids?

THE regulator made waves when it opened up the 5G wireless market to not just two nationwide networks, as was already expected, but also included up to two smaller-scale licensees.

Amid expectations that 5G will be a lucrative catalyst for the telecom industry, this twist has spurred hot chatter on which mobile network operators (MNOs) will gun for which type of licence.

But with the two-tiered licensing model coming as a surprise barely two months ago, will industry players - already squeezed by a challenging consumer scene - need more time to put together convincing 5G bids?

And as countries race to prove the economic value of 5G, will an extension to the proposal deadline throw a spanner in the works of Singapore's connectivity and industry ambitions?

After a public consultation, the Infocomm Media Development Authority (IMDA) released firmed-up plans on Oct 17 for Singapore's 5G roll-out.

Its timetable calls on mobile network operators (MNOs) to submit proposals by Jan 21, 2020, with awards of licences to be made by mid-2020.

On its part, the IMDA will free up the frequency needed for nationwide coverage from 2021 onwards. MNOs must then have outdoor coverage for at least half the island by end-2022, and full outdoor coverage by end-2025.

But there is precedent for a little bit of leeway to be given to the timeframe, at least when it comes to 5G.

The deadline for the IMDA consultation was extended - at the eleventh hour - from June 19 to July 9 this year, with the authority citing "requests from the industry for more time" to submit their comments.

It is true that local industry players may end up with egg on their faces from having to ask for more time on not one but both 5G-related exercises in the same year.

But one industry watcher told The Business Times that "for something so complex, it's better not to do it in a rush", since the smaller-scale licences were a new development unveiled only in October and not apparent from earlier consultation documents.

Beauty contest

In fact, Singtel's management has, since early on, dubbed the competition for licences a "beauty contest". That is because 5G proposals will be graded not on bid size alone, but also network design, resilience, roll-out and performance, and bidders' financial capability, in a weighted assessment, the IMDA said, reflects each aspect's "relative importance vis-à-vis IMDA's 5G policy outcomes".

Yet the plethora of factors in play - including room for MNOs to form consortia in bidding for 5G, as well as the regulator's network-wholesaling requirement - may be a case of too many irons in the fire.

Indeed, a top executive at a local telco recently told BT that "we still need a little bit more time, because discussions with other parties to collaborate on building one, two networks - they're not simple".

Given how negotiations over sharing equipment in tunnels were bogged down over the years, talks on how to go in together or back-and-forth discussions over rates for wholesale access seem likely to drag out the process.

The other elephant in the room is cost, of course, with various operators having suggested in the past that they be given spectrum for free.

The IMDA shut the door on this pipe dream when it set a minimum bid of S$55 million for nationwide spectrum, as well as annual fees for localised airwaves, but it remains no secret that the industry has fought shrinking revenues and earnings.

"If you look at the industry globally, wherever 5G has been launched, the pricing is very, very close to 4G," one of the telco execs told BT. "So you're investing so much capex but the revenue coming back is not growing...how are you going to get the right return on investment?"

To be sure, it would be naive to under-state the difficulties facing the industry that might make an extension necessary for would-be bidders.

So sympathy from the regulator would not be surprising - as long as telcos can prove that they have a game plan and aren't just stalling.

Singapore's leaders have indicated that the 5G network will be built to support the Republic's economic and digital future. Such a long-term mandate demands that the ecosystem tread with care - but not too slowly.