Allow More Competition

I refer to the recent debate concerning the so-called "price war" between Singtel Mobile and M1. While the actions of TAS as a regulatory body have been justified as necessary to ensure "fair, aggresive competition" (Straits Times, 2 February 1999), there is a need for careful examination of this claim.

There is no denying the need for some form of policing to ensure that predatory pricing does not proliferate in the lucrative Singapore communications market. Several questions immediately emerge.

First, is M1's position in the market so fragile that it requires such protection? M1 is not an infant industry, having been actively operating in the Singapore market for some time now. Through aggresive marketing and pricing, M1 has managed to successfully capture a fair slice of the telecommunications pie. Therefore, the additional babysitting on the part of the TAS would need some additional justification, beyond "protection of the consumers' choice".

Second, is there a truly a price war being waged? The current rates for telecommunication in Singapore are highly favourable, no doubt. How do these compare with the more deregulated markets of America and Hong Kong? If Singtel is truly encroaching on levels that would be non-viable in the long-run, wouldn't a better option be to allow easier entry to potential multinational providers, such that the threat of their entry acts as a deterrent, instead of nannying on the part of the TAS? These foreign providers would no doubt have the clout to engage Singtel head-on, should it attempt to bleed out competition.

There is a definite need for the TAS to strive for a fair and aggressive market. But as the antitrust fiasco concerning Microsoft and Netscape so vividly demonstrates, there is also the danger that regulation may be used as just another anti-competition tool, to the detriment of the ultimate loser, the consumer.

A slightly edited version of this article was published in the Straits Times on the 3rd February 1999.