Singapore ISPs Compromise Profits For Market Share

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.

In the other camp, Pacific Internet has announced a counter-scheme,
Toll Plus, in March this year to all its subscribers.

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.

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