President and CEO of SingTel, Lee Hsien Yang

Courtesy SingTel

Call it a craze or a phenomenon, but it’s certainly more than a passing fad. While the technology has yet to catch on in the United States, sending SMSs (short text messages) is more than a trend in Singapore. It’s become a way of life.

All across the region, Asians are quite extraordinary users of SMS services, stealthily and rapidly conveying brief messages to one another via the screens of their mobile phones, without having to dial a number or producing an oft disruptive ring.

According to Lee Hsien Yang, president and CEO of SingTel , the region’s largest provider of telecommunications services, while Filipinos are the most prolific users, an average Singaporean customer sends around five SMSs per day. “There are some Singaporeans who send and receive 700 to 2,500 messages per month,” Lee hastens to add.

“On average I’d say I receive and reply to about 20 per day,” says Matthew Ma, a local restaurateur, “but some of my colleagues get up into the hundreds daily.” Users like these, says Lee, “generate a lot of traffic.” A typical SingTel wireless services subscriber gets 360-700 free local SMSs per month included in their mobile subscription package.

One reason SMS is so attractive is because it’s “ubiquitous.” Everybody with a mobile phone has it. As of July 2002, 74.7 percent of Singapore’s population owned a mobile phone. In the United States, the corresponding figure is under 40 percent. Forty-two percent of all mobile phone users in Singapore contract through SingTel.

“You do nothing; you buy your mobile phone, you plug in your SIM card, and it’s there,” says Lee. SIM cards store individuals’ mobile numbers and personal phonebooks, enabling incoming and outgoing calls from all over the world, to a consistent phone number, but to and from any SIM-compatible phone.

Several issues limit take off of SMS services in the United States, explains Lee. Most notably the U.S. suffers a handicap from the “difference of standards and fragmentation in the marketplace.”

The U.S. mobile communication market has been traditionally very fragmented. The way in which licenses were awarded, explains Lee, tended to encourage multiple operators engaging customer bases in disparate geographical locations. Until fairly recently the United States did not even have nation-wide coverage.

Another discouraging factor has been the numerous competing standards in the digital world, few of which interoperate. The U.S. market’s fragmentation is in stark contrast with the European market, and a large part of Asia, in which GSM (Global System for Mobile Communications) has become the de-facto standard. “Standardization has encouraged interoperability; it has permitted roaming, and allowed systems to send messages across different operators,” explains Lee. Thus, an operator like SingTel is able to reach a wider audience. As of June 2002, SingTel had close to 25 million mobile subscribers in the Asia Pacific region, spanning Singapore, Australia, India, Indonesia, Philippines and Thailand.

Lee also explains why the highly-anticipated 3G services, such as web browsing and access email via mobile phones, have failed to take off. “Technologically it could be done today. The U.S. is plugged.” The systems are available; “a solution could be sold.”

The downside of today’s 3G offering is that it is not yet “instantly plug and play; [it] requires a great bit of configuration. We in the industry are trying to simplify some of that process so that it becomes much more user friendly,” assures Lee.

While the technology “could almost conceivably do anything. It is (only) when you get widespread acceptance that you have economies of scale.” Video phones, Lee recalls, were a possibility for face-to-face phone conversations. Yet the service never took off because not enough people bought into the concept. It wasn’t possible to use the video capability unless the receiver of your phone call also had the equipment. “You have to have enough people on the system to make it attractive. The question is when will it become widespread.”

Over the past several years, SingTel has grown into the region’s largest telecommunications provider and the largest single company in Singapore. Lee attributes the company’s success to its “capability to look outwards.” Expansion was driven by the recognition that the domestic market is constrained. To seek growth opportunities, SingTel has had to seek wider markets.

A lot of effort has been put into “building the SingTel network in terms of equipment, switches, and routers, as well as putting people on the ground to make sure we can serve our customers.” SingTel offers telecom service provision, IT services, and systems integration consulting to over 90 percent of Fortune 500 companies through its 29 offices in Asia, Europe, and the U.S.

Despite SingTel’s vast global presence, Lee maintains a particularly watchful eye on the Asia Pacific region. “It’s very easy to forget that beneath the bad news, parts of the Asian economies are doing very well.” Although headlines are often foreboding, SingTel has experienced “very good growth in Indonesia, the Philippines, and Thailand.” In his opinion, it is important to “look beneath the surface to find opportunities. Yes there are risks involved in investing in and working in those countries, but risk and return go hand in hand. Because it’s high risk, it means that some of the opportunities are greater and with potentially higher return.”

For more information, see www.singtel.com.sg.