As smartphones get cheaper, Singapore telcos rethink old strategies

August 3rd, 2015 | by Alfred Siew
As smartphones get cheaper, Singapore telcos rethink old strategies
Cellphones
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Xiaomi Mi Note

Xiaomi’s Mi Note offers users most of the features of a top-end phone, but at a fraction of the cost.

When Xiaomi phones started appearing in Singapore last year, not that many Singapore users still toting a Samsung or Apple gadget might have heard of the Chinese phone maker.

This month, its new Mi Note turns up in town as one of the hottest models to own. The S$569 phone has most of the features of a top-end Samsung model, but at a hefty discount over the usual S$1,000 asking price.

And Xiaomi has competition. Last week, another China-designed phone, the OnePlus 2, was launched here with much fanfare. Taiwan’s Asus also has a good following for its Zenfone brand of low-cost models.

In just over a year, this geek-driven trend of high-end smartphones at mid-end prices is forcing telcom operators here to rethink how best to win over and retain customers.

In the past, this meant selling the latest phone cheapest. Whether it was an iPhone or Samsung Galaxy Note, the three telcos would dig into their war chest to subsidise its cost. In exchange, they could tie down users with two-year subscription contracts.

What happens when phones become so cheap, like with a Xiaomi, that users prefer to pay for them without any strings attached? When they prefer to do away with any subsidies?

The answer comes in the form of SIM-only plans. Singtel and StarHub already have such offerings. They usually provide more data or minutes, or offer a price discount, in exchange for a short-term contract.

What if you commit for, say, a year without asking for a phone subsidy? Well, there are even better deals.

Last week, M1 introduced what it called the “best value” postpaid mobile plan to capture such users. For S$30 a month, you get 300 minutes of calls, 1,000 SMSes and 5GB of data. You sign up for a year and don’t get any phone discounts.

A regular M1 plan that lets you buy a new phone at a discount every two years will set you back by a lot more. For 300 minutes, 1,200 SMSes and 4GB of data, you will have to pay S$61 a month.

The good news here is flexibility. If you prefer to buy your own phones without any telco discounts, you can now get a much better monthly subscription.

In the past, this wasn’t an attractive option. Now, with so much competition among smartphone makers, you can get a high-end model at a mid-end price, like a Xiaomi Mi Note or Asus Zenfone 2.

Thus, it makes a lot more sense to sign up for a no-frills deal with a telco instead of loading the price of the phone into your monthly cost.

That change has already happened with broadband plans over the years. When Singtel and StarHub were the only two players in town in the 2000s, they regularly dangled freebies such as laptops in exchange for tying down users.

Today, such deals are still available to fibre broadband users, but many will find the much lower monthly cost more attractive. After all, getting a “free” laptop is like paying for it through instalments that are hidden in your monthly bill.

Clearly, the catalyst for change is competition.

With smartphones, mid- and low-priced models will become more common in the years ahead, say experts. Among telcos, the days of being cosy may be over, as a new player is expected to enter the fray.

For consumers, this means better deals. And that’s good news after seeing prices go up and free data bundles cut in recent years.

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