SINGAPORE-Falling margins, cheaper alternatives and technological obsolescence have combined to deal a major blow to Singapore’s four paging operators.
From an all-time high of 1.36 million subscribers in June 1998-representing a penetration of more than 40 percent, the world’s highest-the paging market in the small island state shrunk to 1.16 million customers as of February.
And with each passing month, the number keeps falling.
The decline of the paging business in Singapore can be blamed on the phenomenal rise of the mobile phone industry there during the last two-and-a-half years.
In April 1997, the cellular market saw the entry of the nation’s second operator, M1. Its arrival sparked a price war, not only in subscription fees, but also in the handset market.
As a result, mobile phone ownership exploded. Now, one in two Singaporeans owns a cell phone-representing one of the highest penetration rates in Asia.
The stunning growth in the mobile phone sector meant that something else had to give. That something was paging. People no longer rely on the beeper as the primary mode of mobile communications given cellular ownership is so cheap.
The declining popularity of the pager has become increasingly apparent, and for the first time in Singapore’s telecommunications history, mobile-phone penetration surpassed that of paging in August 1999. Competition is only increasing as the country’s fourth cellular operator, StarHub, started service 1 April.
Paging operators SingTel Paging, M1, ST SunPage and Hutchison IntraPage have been challenged to stay afloat. Earlier this year, the Singapore government announced all telecommunications services are open to full competition, so many paging carriers are capitalizing on this by diversifying into other telecommunications fields.
ST SunPage, the nation’s second-biggest paging operator with 183,000 subscribers as of December 1999, started a callback business in late 1998 and has now obtained an international simple resale (ISR) license. This will enable it to start offering international direct dialing services soon.
It is also looking to enter the online business by setting up an Internet portal some time this year to focus on “lifestyle-based services.”
According to Tay Kiong Hong, general manager and vice president of ST Telemedia, which owns ST SunPage, the decline of the paging business was inevitable “because people will move into higher-cost technologies.”
Having said that, he insists that the paging business will not be completely wiped out since there will always be some demand for it.
He said liberalization was an opportunity for the company to reinvent itself with its strong customer base and channels of distribution.
Hutchison IntraPage, the nation’s smallest operator, is also looking to diversify.
It was recently awarded a license to offer ISR services and is expected to start offering international call services soon.
M1, which operates both a mobile phone and paging business, has just applied for a full-service license. It wants to offer a panoply of telecommunications services, including fixed wireless offerings.
Even the market leader, SingTel Paging, is not resting on its laurels.
The company, which is a wholly owned subsidiary of former monopoly Singapore Telecom, had about 800,000 subscribers in February. It says it is looking to introduce more value-added services for its paging customers to keep abreast of competition.
According to SingTel, its paging business continues to be a “very profitable business, especially because its infrastructure and technology have already been paid for.”
Indeed, given the low maintenance cost of running a paging service, operators in Singapore still have some time before the market faces serious threat. Meanwhile, they will need to revisit their business plans and come up with new strategies. Only then will they be able to escape technological Darwinism.
