Several months before starting its full service telecoms operation, Singapore’s second full-license telco StarHub is causing problems for incumbent Singapore Telecom following its launch last weekend of a free internet access service.
In its first two days StarHub Internet (SI) signed up 38,000 subscribers for Singapore’s first unlimited free-surfing plan. SI, formerly known as Cyberway under its previous ownership, says it plans to sign up to 200,000 users in the shortest possible time according to chief executive Terry Clontz.
We have taken into account the possibility of paid subscribers migrating to surf-for-free in our business model and plan to offer free surfing on a permanent basis. From an overall perspective, internet access revenue will drop, but will be made up by advertising and e-commerce revenues, he said.
SI has 50,000 paying dial-up modem subscribers who require services such as internet roaming, web page hosting and email. These do not come with the free surfing package. Clontz expects to retain this group of users.
Looking at traditional business models, internet access revenues have been dropping in line with PC bundling programs and from even our own promotions. Over the next few years it is going to drop even further. We will move away from an internet access service provider to becoming an internet service provider, generating revenues based on e-commerce transaction volumes and advertising, he said.
Looking ahead to the impact of StarHub’s entry as a fixed-line telephone operator next year, he said, our business model assumes all users are SingTel subscribers and when StarHub enters the market, consumers will make the decision to choose the vendor with the most attractive rates.
