Saturday, February 12, 2005

The Illusion Of ISP Speed Claims

An article in the Straits Times covers what broadband users in Singapore had already figured out - the speed ratings used by the ISP's are a joke. At best, speeds are only applicable to local sites, which are practically non-existent. Bandwidth to reach overseas is never specified or explained.

To put this all in context, Singapore realized early on that having a wired infrastructure to the home was going to provide economic benefits. The government put in place policies to subsidize connections and to encourage infrastructural roll-out. A significant amount of fibre optic cable was installed, but much of it remains dark.

A basic flaw also exists in the government's failure to regulate use of the existing in-ground conduit network. Other jurisdictions have realized that forcing new entrants to dig up all the roads to create a new distribution network is pointless. Since those conduits were created while the dominant telco was a monopoly, it makes far more sense to separate the physical manholes and conduits from the wires. The conduits are on public land and represent a public good. Access should be open to all licensed telcos so that competition is real and possible.

With a small market and a dominant, government owned telco in place however, progress has been slow. The original broadband offering was from the cable monopoly, SCV. Speed was advertised at 1.5mbps, but that was only for local sites, and download only. Upload was capped at 128kbps, which made it next to useless for connecting back to corporate LANs using IP VPN.

SCV was encouraged/forced to merge with Starhub, leaving only two primary suppliers of ISP services to retail users. Unlike Japan or Korea where true 20mb speeds are on offer at low cost, Singapore continues to limp along with 512K ADSL from Sin
gTel, and the 1.5/6.5 mbps notional speeds offered by Starhub, at relatively high cost.

And the economic results are clear to see. Korea has seen an explosion of Internet based services and companies because of the ubiquity of high speed connections. Although Singapore professes to want to be an IT hub, the high cost of local and overseas connectivity discourage firms from making Singapore their base of operations.

I doubt there will be much change to this comfortable duopoly until either the government uses regulation to force meaningful competition, or disruptive technology enters the scene. With the track record of the IDA to date, I have little hope of the former, but there is a glimmer of hope that broadband wireless will allow a new operator to bypass the strangle hold on homes that now exists. That will solve the last mile problem, but the overseas access problem remains in need of a solution.

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