SingTel chief’s comments highlight telcos’ struggle

SingTel has found itself in the midst of another PR storm as latest comments by CEO Chua Sock Koong on charging over-the-top (OTT) players such as WhatsApp and Skype draw an avalanche of online protests.

According to Yahoo News, there has been a public outcry on blogs and social media.

On the article it reported comments from users such as the following.

“Come on SingTel. Don’t be greedy. Indirectly, we are already paying to use WhatsApp and Skype. You’re already charging us for 3G/4G data usage and at home and work, we are already paying you for Internet access through broadband and fibre optics,” said Facebook user Violet Lim-Leong, responding to a Facebook post by local blog The Real Singapore.

“What a joke! They should charge the whole world for using the internet. Why not charge apple for iTunes and charge Google and charge everyone. Time to reinvent Singtel business model,” said another, Leonard Koh.

However, SingTel has clarified that it does not plan to charge customers separately for the use of services such as WhatsApp. A SingTel spokesperson clarified to local news outlets that SingTel was not planning to charge consumers separately for WhatsApp or Skype but was calling on regulators to let telcos charge such players for using its networks.

Skype and Facebook could not be reached in time for this article.

Telcos’ woes

Chua’s call only highlights the severity of the struggle telcos are having as messaging services eat into their revenues.

“The main problem we have as an industry is we have been unable to monetise this increased demand . . . and [average revenue per user] has fallen over time,” Chua was quoted as saying in the Financial Review.  “If we are not careful we could stand the risk of being totally disintermediated,” she said.

At present, regulators such as the Australian Competition and Consumer Commission consider such a move to be anti-competitive.

Chua had suggested the solution was not to simply levy companies like WhatsApp but to become their partners. “Our ambition must be to become the preferred network partners of customers and OTT players,” she said.

“We must create sustainable revenue models,” she said.

Just several weeks after Facebook’s high profile acquisition of WhatsApp and Rakuten’s of Viber, it is understandable that telcos are spooked. (Read also Should you be creeped out when Facebook buys WhatsApp)

Forrester’s principal analyst Dan Bieler illustrated the threat this way.

“…The fact that Facebook put US$19 billion on the table, of which US$4 billion is in cash, for a global messaging service with 55 staff should scare telcos, with their millions of employees and high-cost structures.”

Bieler painted a bleak future for telcos, as a result. He thinks they may be left selling “flat-rate data plans and throwing in unlimited SMSes for free.”

“The heyday of big profits from high SMS margins is coming to a close. There’s little reason to assume that telcos are regaining ground in the battle for closer customer relationships, given the painfully slow progress they’re making with RCS or in developing their own network-agnostic over-the-top messaging apps,” he said.

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