Telcos From A Consumer’s Point of View
Telco charges (inclusive of handphone, mobile data, broadband and fixed line) have been one of the biggest bugbears for my monthly expenses. Part of the reasons is that the combination of lines have been fairly unsatisfactory. I have 2 handphones, 2 mobile data lines, 1 wired broadband and 1 digital home line. The other part of the reasons is that telco charges have been increasing, especially in recent years. The figure below shows the approximate monthly telco expenses since 2004 (using January's figures).
|Fig. 1: Telco Expenses Since 2004|
If you read Starhub's latest financial report for the broadband segment, it said "Broadband service revenue for 4Q2016 and full year increased by 3.9% and 8.2% respectively, mainly due to the higher mix of customers on fibre and take-up of higher speed cable plans". So, when you read the underlined portion, you can relate to what is actually happening on the ground. And it is as if I have options not to take up the higher speed cable plans!
Needless to say, I am very upset when Starhub upgraded my plan to 100Mbps and increased the price. If Starhub were to repeat the same trick again, I will definitely switch to some other forms of broadband. Thus, if Starhub's next financial results report that the number of cable broadband subscribers has continued to drop, perhaps I would be one of the subscribers who switch out of cable broadband!
I subscribed to a mobile data line in 2009 and again in 2014. If I recall correctly, the earlier plan was a 2Mbps line, while the later plan is a 3G line with data bundle of 2GB. Notice the key difference between the 2 plans. The earlier one had unlimited data transfer, while the later one caps the data transfer to 2GB. This explains why telcos have been able to collect more money from the increased data usage and pay better dividends in recent years (until 2016). As an example, M1 increased its annual dividends from 13.4 cents in 2008 and 2009 to 14.5-21.0 cents from 2010 to 2015.
If you have recently subscribed or renewed your mobile data plan, you would notice that the 3G plans have quietly disappeared from the telcos' offerings. Only the 4G plans remained. Needlessly to say, the 4G plans are more expensive than the 3G plans. Using M1 as an example, the lowest 3G plan for 2GB data bundle costs $12, while the equivalent 4G plan costs $19.90.
Perhaps, at some point in time, M1 might repeat the same trick that Starhub did with cable broadband and offer to upgrade me to 4G for faster data transfer at higher cost!
I have 2 handphones, one corporate line and another personal line. The corporate line is paid by the company, so I will only talk about the personal line. I first subscribed to the line in 2009 at a cost of $28.91 per month. This cost increased to $35.63 in 2011 as I subscribed to multi-SIM to share the mobile data packaged with the line. In 2014, I switched my telco from Singtel to M1 and lowered the cost by subscribing to the lowest plan (but adding a new mobile data line to replace the multi-SIM). In 2016, I switched from the regular plans that provide a subsidy for new handphones but at higher monthly costs to the SIM-only plans that have lower monthly costs. For more information about the impact of SIM-only plans on telcos, you can refer to Impact of SIM-Only Plans on Telcos.
Similar to the case with mobile data plans, telcos had retired the old mobile plans with unlimited data and replaced them with 4G plans with data caps. Not only that, 4G plans cost more than previous plans.
When telcos upgraded from 3G to 4G technology, they increased the price of mobile plans. When 5G comes on-board, they will likely do the same.
Firstly, by looking at our own dealings with telcos as consumers, we can relate the financial results reported by telcos to what is happening on the ground. Not only that, we might even be able to estimate whether telcos are going to generate more or less revenue in the coming quarters.
Secondly, the entry of a fourth telco may potentially lead to a price war. But when the dust on the fourth telco settles and all of them are in a steady-state equilibrium, when 5G comes on-board, they will all raise charges again. Every upgrade is an opportunity for telcos to raise charges and increase revenue.
P.S. I am vested in M1 and Singtel.
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