SingTel draws flak for proposal to charge challengers WhatsApp, Skype for network usage

SingTel’s call on regulators to give telco carriers the right to charge WhatsApp and Skype for using their networks has not gone down too well with Singaporeans. 

“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.

Another Facebook comment by Richard Lim said, “Whichever app any user wants to utilize or to download for their own use is none of her darn business. The use of WhatsApp and other msging apps are reliant on internet services, and aren't people already paying for the internet services provided by the telcos?”

“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.

The outcry began on Wednesday after SingTel chief Chua Sock Koong was quoted in the Sydney Morning Herald as saying, “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…I think the pace of change in our industry is relentless so clearly we can't afford to stand still.”

Speaking at the ongoing Mobile World Congress in Barcelona, she used the example of Optus and praised Australia’s regulatory market as one of the few countries in the world to allow a foreign player to have total ownership of a telco provider. In 2013, SingTel invested almost S$1 billion dollars in Optus, Australia’s second largest provider of telecommunications services, boosting its fixed-line and mobile networks.

But she warned such investments would be slashed and would not continue unless regulators allowed them to start charging for growing over-the-top (OTT) services provided by non-telco challengers such as WhatsApp for using their networks.

In response to consumer outcry, SingTel clarified on Thursday it does not plan to charge consumers separately for the use of services such as WhatsApp, Singapore daily Today reported

In a statement, SingTel said it recognises that OTT services such as WhatsApp are popular communication tools with subscribers and it aims to be the preferred network partner of OTT service providers.

However, in the larger picture, Chua is not the only one calling for such a move. Optus head of networks Vic McClelland also told The Australian Financial Review earlier this year the company was working to provide priority services at a cost for customers wanting better access to streaming video services like YouTube.

Rival Australian carrier Telstra also experimented with such moves but the Australian Competition and Consumer Commission ruled it to be anti-competitive.

Similarly, consumer groups recently expressed “grave concerns” about a landmark pact by the world's largest video-on-demand service Netflix with US cable giant Comcast for improved internet service. Under the deal, Netflix would play an undisclosed fee to Comcast for direct access to the cable company's broadband network to ensure smoother delivery of its content.

The deal came just 10 days after Comcast, the biggest US cable firm, announced a takeover of Time Warner Cable, the second biggest, in a US$45 billion deal.

WhatsApp and Skype are two of the most popular cross-platform communication apps -- WhatsApp has over 450 million users, while Skype has over 250 million monthly users – which allow users to engage in real-time conversations via text and voice calls for free. WhatsApp, which was acquired by Facebook for a whopping US$19 billion last week, charges customers US$1 a year to use its app while Skype video and voice calls between users are free. Skype was acquired by Microsoft in 2011 for US$8.5 billion.

The rise of such companies have decimated revenues traditional carriers receive from phone calls and text messaging. Chua clarified that charging  WhatsApp and Skype for delivering its services over telcos’ broadband networks was not the only solution.

“Our ambition must be to become the preferred network partners of customers and OTT players...We must create sustainable revenue models,” she said.