Commentary: StarHub starts charging for 4G

Much of the unhappiness with StarHub charging for 4G services has nothing to do with the seemingly small S$2 hike, but the surprise that it brought to customers.

They never expected to pay more for the faster speeds promised over existing 3G services. Like free incoming calls, the new service was not expected to cost extra, despite StarHub quite clearly stating that possibility in its terms when people sign up.

It’s not that consumers are daft, for not reading the fine print. They just don’t expect the cellphone market to be less competitive over time. 

Free call minutes should increase, not decrease. Internet data bundles should be more generous, not less. Similarly, how can a service that is run on more efficient technology – 4G lets operators serve more users more easily – become more expensive over time?

All that points to the bigger issue – competition in the market. Besides getting upset, consumers have to ask if the keen competition among operators that had brought such great deals in the past is now being eroded, one way or another.

Many users will remember how all three cellphone operators in Singapore cut the free data bundles from a generous 12GB to as low as 2GB in 2012.

It wasn’t a surprise that they tore up the deal, especially when operators worldwide had to scale back to handle increasing amounts of data from smartphone-toting users.

What was worrying was how closely StarHub and M1 followed SingTel, which had almost half the market here, in changing the deal together. Suddenly, there was no alternative even if you wanted to change operators.

At that time, the government regulator turned a blind eye to what some may call the first signs of cartel-like behaviour among cellphone operators here.

Later, when all three of them rolled out 4G, they all had a new, similar deal. Buy a new phone or recontract with us and you have to cut your data bundle down from 12GB, to anything from 1GB to 4GB, depending on your plan.

This doesn’t mean they are changing your existing deal – you can still enjoy 12GB as long as you don’t recontract. Nothing wrong with that, except that there was little competition among the telcos. No operator was rushing in with a better offer.

Unfortunately, the next round of bad deals seems to be here now. StarHub has taken the lead to make 4G more expensive by charging an additional S$2 from June. And that’s a promotion rate too; you may have to pay the “standard” S$10 when it decides to stop the offer at a later date.

Smartly, SingTel and M1 have not immediately followed StarHub this time. SingTel says its offer is on until a date to be determined later, while M1 says its deal is up by the end of this year.

Consumers are right to worry that eventually all the operators will charge extra for 4G services, whether this is S$2, S$10 or even more. That just means a poorer deal over the years for consumers, even as technology has become more efficient and thus cheaper.

If the changes are a result of the market correcting itself after telcos went crazy and competed like never before a few years ago, then there’s little to argue against.

However, the Infocomm Development Authority (IDA) has to examine if there is any cartel-like behaviour here. Are telcos fattening their profits while scaling back the competition? Are they trying to make over-the-top services so expensive to access to protect their own content offerings?

If that’s the case, the regulator may have to start bringing out the whip to keep these telcos in line. Right now, with a lack of stiffer competition, consumers are getting poorer deals than before.