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Oo Gin Lee
Tuesday, Apr 29, 2014

News, Asian Opinions

So who's to blame for flap over 4G add-on fee

The Straits Times | Oo Gin Lee | Tuesday, Apr 29, 2014

SINGAPORE - It may sound like small change, but StarHub stirred the hornet's nest two weeks ago when it said it would start charging its 4G customers an extra $2.17 every month from June.

It suddenly became clear that telcos here treat 4G as a value-added service. So in addition to the monthly phone subscription for a bundle of talk time, SMS and data, you are expected to pay an add-on fee to be on the 4G data network, which is up to four times faster than 3G.

Like M1 and SingTel, StarHub had been waiving the monthly $10.70 value-added service charge since 4G launched in 2012. But StarHub's move to start charging $2.17 raised the hackles of consumers who viewed it as an extension of "bait-and-switch" tactics to drastically slash their mobile data access.

After the Infocomm Development Authority (IDA) intervened, all three telcos agreed last Wednesday not to impose the 4G value-added service charge on customers with current contracts.

But the heart of the issue remains - how consumers were persuaded to switch from 3G to 4G, and whether it is right to declare 4G an "extra" that brings a value-added service charge.

All this goes back to 2007 and the game-changing iPhone.

The first iPhone did not arrive here but SingTel stole a march on its competitors in 2008 when it won exclusive rights for the second - the iPhone 3G. It was a roaring success, with some consumers here queueing over 12 hours to get one. So when the third iPhone - the 3GS - arrived in December 2009 for all three telcos, StarHub and M1 were determined to get a slice of the action.

It was an all-out war as the telcos bumped up the amount of bundled data exponentially to lure consumers.

Checking e-mail and Facebook entries and Web browsing might keep users under 2GB of data use a month, but video streaming and large file downloads will require more. Streaming an hour of video in high definition alone uses about 1.2GB of data.

In that battle for customers, SingTel increased its free 512MB bundled data to 12GB in its entry-level mobile phone plans to match its rivals' offerings. M1 and StarHub even offered unlimited data usage for high- end plans. At the time, 3G network speed was still relatively slow, apps were immature and most consumers would not use up even one-tenth of their free data, the telcos thought.

But the hunger for video streaming and finger-swiping apps exploded soon after and telcos were forced to upgrade their mobile network infrastructure, at significant cost, to meet demand. It became clear that the telcos had given out too much data for too little money. None dared to be the first to trim the bloated data bundle, for fear of seeing its customers walk away.

The 4G network gave telcos the opportunity to start anew, on their own terms.

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