Singapore ISPs Compromise Profits For Market Share
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To get a bigger slice of the Internet Service Provider market in Singapore this year, SingNet and Pacific Internet are prepared to suffer loss in profits through the introduction of their respective toll free and toll plus schemes.
Beginning this year, SingNet has announced that it will absorb all its subscribers' Internet phone charges, passing up to S$40 million (US$23 million) worth of savings to them.
After the launch, SingNet experienced a 64 percent increase in subscription from 7,000 in December last year to 11,5000 in January, according to Yasmeen Hameed, marketing communications manager of SingTel Multimedia.
"The number of 'switchers' from competitors since the launch is around 2,000," said Hameed.
Through this scheme, Pacific Internet will reimburse its subscribers 45 cents (US$.26)for every hour they surf. Every three months, users can redeem their toll savings for shopping vouchers for any purchase at Takashimaya Departmental Store, Best, and Cold Storage at Ngee Ann City.
Alternatively, subscribers can use the reimbursed money to pay their Internet access bills for the next month.
"Basically, providing Toll Plus is very expansive. It will take away a significant amount of our profit. Of course it is doing the same thing for SingNet but \\[it\\] is not interested in profit," said Nicholas Lee, CEO of Pacific Internet Ltd.
However, the Toll Plus scheme has not so far helped Pacific Internet gain more market share, according to Lee.
"It hasn't helped us gain the market share because in general, at any one time, the new subscriber [distribution], until recently, is pretty much 60 percent for Pacific Internet and 40 percent for SingNet," he said. "What we've been able to do is prevent the erosion of market share to SingNet because of its Toll Free promotion."
The promotions announced by the two competitors will end with the year. They have not announced plans to continue the existing schemes for next year.
"It really depends on our other competitor's positioning," Lee said.