Starhub to use Singapore's NBN to solve mobile data
After a gap year, Neil Montefiore is back in Singapore running
Starhub, which plans to cope with the iPhone-fuelled data
explosion by using the country's new national next-generation
broadband network - and the NBN will also allow Starhub to
offer IPTV services in place of its existing TV cable operation
Former M1 CEO Neil Montefiore took a year off
the world before he was able to take over at the top of
rival operator Starhub
Come to Singapore if you want advance information on how the
data explosion is going to affect mobile operators. Half of the
phones Starhub sells every month in Singapore are Apple iPhones
- and 75% of all Singapore's new phones are smartphones.
"Phones have an average life of 13-14 months," says new CEO,
Neil Montefiore. So, at the current rate of sale, by the middle
of 2011 a substantial proportion of terminals in use on his
network will be iPhones. That means Starhub needs to ensure its
network is ready for the data volumes: operators the world over
have told of the pressure that iPhones in particular put on
their backhaul - but at Starhub, the backhaul is going to be
even more stressed.
Fortunately the island republic of Singapore is building its
own national broadband network - which should help to cope with
the demand. A Starhub sister company, Nucleus Connect, will be
in charge of running services on the network for all Singapore
operators - though rules about neutrality mean that Montefiore
is unable to talk about Nucleus's operations.
This all means that Montefiore is back at work with a vengeance
after a gap year - a contractual requirement when he resigned
from Singapore mobile operator M1 at the end of 2008 in order
to take up a similar post with its competitor. Starhub began
life as a cable TV operator but now offers fixed and mobile
telephony as well as internet access.
"I spent the year travelling the world," he recalls. "A lot
round Asia, India by train and car. Southern California,
France, Spain - by train - and the UK. Now I'm back after a
year of change for telecoms: not just fixed telecoms but this
is the year of the smartphone."
The national broadband network - 60% of which should be in
operation by the end of 2010 - should be able to deliver
symmetrical 100 megabits access to Singapore homes. The network
is being built by an associate of SingTel, another rival, but
Nucleus "will light up the fibres and put the boxes in homes",
but it will be a carrier-neutral network that will deliver
access on behalf of all competing companies.
"I'm excited" about the launch of the service, says Montefiore,
because Starhub will be one of those using the NBN to connect
fixed customers. "We're getting everything ready." Starhub has
had limited fixed access until now to the residential and
commercial market. "There are a lot of buildings we can't
access," and SingTel, the incumbent has had "a virtual
monopoly" before the arrival of the NBN.
Operators such as Starhub will be competing with one another to
deliver attractive services. "To compete with us and SingTel
you'd need to have content as well," says Montefiore. "We have
all our pay-TV services and we will move to IPTV delivery.
We'll have a common set-top box so the customer doesn't have
two or three boxes. We already do mobile TV."
Montefiore is enthusiastic about the way Singapore, which has
4.6 million people in just 650 square kilometres, has tackled
its broadband strategy. "I think Singapore will take the world
lead," he says. The combination of a network installation
company, a network services company and a set of competing
retail service operators "is unique", he adds. "No one else is
doing it quite the same way. We've got to make it a success."
The national broadband network will not be a monopoly, and he
thinks that SingTel may well opt to remain a vertically
integrated company with its own network.
Provision of symmetrical broadband is unusual. "It changes the
use of the internet," says Montefiore. "You get a dramatic
increase in sharing of content." Starhub's cable network
already provides 100 megabits a second downstream, but the
uplink speed is a more modest, and more conventional, five
megs. SingTel, by comparison, provides ADSL at 25 megs. "It's
going to be interesting to see how it all works out."
This will all go to make Singapore as competitive in the fixed
market as it already is in mobile, with penetration at 137%.
"We have a 29% share," says Montefiore. "Our growth is coming
from new services. In 2010 we are increasing our ARPU from
S$70." That's equivalent to US $50. Smartphone ARPU is around
$10 a month higher than that, he notes.
Advertising is one way to increase income, he believes, but any
service needs to be location based and it needs to be across
all operators in a market - which means there will be a role
for a clearinghouse. "Advertising has a real future but you
need to make it easy."
Montefiore - a former Cable & Wireless executive who has
been in Singapore since 1991 - has an international perspective
but Starhub retains a Singapore focus. "It will remain that
way," he says. "I've seen a lot of companies destroy
shareholder value on the acquisition trail."
First quarter revenue was up 5% on the same period of 2009,
though profit was down because of the cost of investing in the
network for smartphones. The company pays a fairly regular 5
cents a share dividend per quarter: shares are around S$2.24,
so that produces a shade under 20 cents a year. "We have a
9-10% dividend yield and that's pretty safe," says Montefiore.
Mobile broadband runs at 21 megabits a second, using Huawei
equipment, with the rate heading up in 42 megabits in the
middle of 2010. "We're doing LTE trials, also with Huawei. And
we want more customer experience management, measuring what the
customer is doing."
Almost all backhaul from the base stations is IP. "Singapore
took that leap a year ago," he says. Most of the traffic is
generated by USB modems on laptops "and 80% of the data comes
from that", but that was before the explosion of the iPhone,
which went on the Singapore market in December 2009, just
before Montefiore's return from his gap year.
And then? Content, he repeats. Operators in Singapore's
competitive market will need to offer content. "We want to do
co-production. We've started a local sports channel and we're
looking at co-producing relevant content."
Which leads to the inevitable question about over-the-top
content and how that will affect the opportunities in
Singapore, especially once the NBN is in operation. "Our
customers like dealing with the carrier," says Montefiore.
But there are a lot of carriers in Singapore. It's a dynamic
market and no one has yet seen what the reality of a national
carrier-neutral next-generation broadband network can do.
Singapore is one of the world's testing grounds. We will see.