Sometime in the last five years, the data plans that local telcos offered began to shrink. There was a golden age of unlimited mobile data and a silver age of sufficiently ample 12GB data plans, but those were gradually phased out. Today, what’s left to us as the norm are the 2GB data bundles we all know and loathe — until MyRepublic came along in March to shake up the telco space by promising, among other goodies, unlimited mobile data.
Amidst all our cries of “Finally!” and “I’m so jumping ship”, something curious occurred to me. If, quite unsurprisingly, we all loved those huge data bundles of yesteryear, why did our telcos phase them out? (And no, it’s not because they just wanted to fill their pockets.) Why was it that when Singtel stopped offering 12GB plans back in July 2012, StarHub and M1 followed suit within months — instead of capitalising on it to, say, lure customers over? I did a bit of investigation, and here’s what I found.
Unlimited Data Means Network Congestion
Sometime in the last five years, telcos found that a surge in mobile data users was reducing network quality and speed. As we all know, smartphones have become increasingly ubiquitous, and if you can’t already guess from a quick glance around an MRT, Singaporeans are unrivalled when it comes to smartphone usage. We have the world’s highest mobile smartphone penetration rate in the world at 85%, and there’s a pretty good chance that you’re reading this on a smartphone right now.
The popularity of smartphones created a steep increase in mobile data traffic, in turn putting “a strain on the limited radio spectrum”. In 2011, following M1’s phasing out of its unlimited data plans, StarHub’s Vice-President of Personal Solutions Joanna Chan commented:
“Globally, mobile operators expect the usage of data to grow with the rising popularity of smartphones… In view of this trend, Singapore operators may have to review current pricing plans and consider introducing usage-based data pricing, to ensure that network quality for customers remains optimal.”
(Source: Singapore Business Review)
The rest, as they say, is history. In 2012, StarHub discontinued their unlimited and 12GB data bundles. In a move which analysts labelled inevitable, our three telcos began to phase out not only unlimited data, but 12GB plans. And this certainly wasn’t unique to Singapore; globally, telcos like At&T and Verizon Wireless began to stop offering unlimited data bundles, citing network congestion as the main reason for the switch.
So in a toss-up between faster network connection and smaller data bundles, or unlimited data and a clogged network, it looks like SingTel, StarHub and M1 decided to go with the former. It’s certainly up for debate whether that was the best choice, but at least now you know it wasn’t just for the sake of making our lives miserable.
Tiered Data Plans Weed Out Data Hoggers
Take a step back and consider this: do most of us really need unlimited data? Statistics reveal that the answer might be no.
According to a DBS commentary made in 2011, it was a “well-known fact that 2% of heavy users congest the network for the remaining 98%”. Similarly, when Singtel introduced usage-based data pricing four years ago, it revealed that a staggering 60% of its data traffic came from only 11% of its 3G customers.
What do these stats mean? Essentially, there was a small group of Singaporeans guzzling a lot of data, with the rest using comparatively little — and all paying the same amount for unlimited plans. Or as IT data analyst Daryl Chiam put it:
[According to Chiam], the move away from unlimited data plans will not affect many subscribers, as most smartphone users still consume very little data…most “don’t download more than 5GB” per month.
[The] telcos’ move away from unlimited data plans should also come as good news to mobile broadband subscribers as they will no longer need to “subsidize heavy data users”, he pointed out.
It only makes sense to pick a plan — and pay — based on how much data you need, a concept which M1 highlighted when it announced its plan to discontinue unlimited data. A one-size-fits-all approach was tempting, but unsustainable in the long run; tiered data plans effectively separated the wallets of light data users and data hoggers.
Once again, Singapore’s telcos weren’t alone in facing and addressing this issue. Notably, Hong Kong’s SmarTone Telecom introduced data caps around the same time that our local telcos did so. Since 85% of their mobile subscribers used less than 2GB a month, SmarTone CEO Douglas Li explained, “why should the majority of users subsidize a few who use a lot?”
MyRepublic’s Unlimited Data — Is It Sustainable?
Given that there’re some pretty good reasons why telcos stopped offering us unlimited mobile data, it might be too soon to celebrate MyRepublic’s famous promise to make unlimited plans the norm. Enticing though huge data bundles might sound, sceptics suggest that they might not be able to last for long.
“MyRepublic might run into the same problem where they get the wrong type of customers — people who will hog their bandwidth,” said Carey Wong from OCBC Investment Research.
Ever the maverick of the telco industry, though, MyRepublic seems confident that it can figure out a way to do what many telcos all over the world could not. According to MyRepublic managing director Yap Yong Teck, the startup is hellbent on making unlimited mobile data viable:
“We’ll look to prioritise our traffic, so people will be able to use (the network) depending on the traffic or application they’re using…their speed will slow down, but they will still get unlimited data, and their experience will be relatively still good.”
Time will tell whether — should it become Singapore’s fourth telco — MyRepublic can pull off all that it’s promised. Given that MyRepublic plans to corner only about 10% of the 4G market, it might just be able to escape the issues that forced our local telco giants to phase out unlimited data. It would be a huge pity if MyRepublic eventually went the way of Virgin Mobile’s ill-fated venture into Singapore. One thing’s for sure, though: as the ambitious upstart continues its drive to bring Singaporeans a better data experience, we’ll all be cheering them on.