Increasing the price of a dying technology is a bad move

It seems like the recent hot topics between my dad and I is usually regarding which services just increased their pricing. From MRT, Bus, Newspaper to electricity. The latest item to add to the list is fixed line telephone from Singtel. The subscription for fixed line telephone went up from $25 per quarter to $27.50 per quarter. The peak hour charges went up from 0.7 cents per 30 seconds to 0.8 cent per 30 seconds. Off peak charges also went up from 0.7 cent per 60 seconds to 0.8 cent per 60 seconds.
A blog reader emailed me yesterday informing me that the fixed line telephone just increased its pricing when I just said few days ago that the local telco will not increase their pricing due to competitions. OK, I take back my words. But then, fixed line isn’t a major fighting ground among the 3 telco. In fact, only Singtel is providing fixed line services. (Starhub’s fixed line is more like a VOIP)
I was pretty surprised when I heard that Singtel is increasing its fixed line pricing. The reason behind the increase is fairly reasonable. The last rate revision was 18 years ago. Over the 18 years, Singtel managed to maintain the pricing despite the raising manpower and copper cost. But it is sad that they decided to increase the pricing on a dying technology. Wouldn’t that kill the technology faster?
While the older generations still insist on having a fixed line in the house, the younger generations begins to think otherwise. I know many friends who didn’t subscribe to a fixed line when they start a new home. Most of them feels that there isn’t a need for a fixed line. Mobile phone and internet is the new way to communicate. A fixed line is no longer a necessity in every home. With the rising cost of fixed line, we will see more and more younger generation opting not to have a fixed line in their new home. We will also see many people deciding to terminate their existing fixed line.
The increase is rather small, but it might have a ripple effects. Families will start to evaluate if there is a need to keep their fixed line services. Some of them might terminate their fixed line if their fixed line usage is low. This might cause a decrease in the number of fixed line customers.
Fixed line is the backbone of many Singtel services. Take Singnet for example. Singnet is the internet division of Singtel. They provide high speed broadband using Singtel Fixed line. If a home doesn’t have a fixed line, they are left with no other options but subscribe to cable from Singtel’s strongest competitor, Starhub. The broadband market is a hot fighting ground among the telco. Even M1 joined the bandwagon recently by offering home broadband services. By increasing the fixed line charges, Singtel might lose some market share to Starhub, which offers free VOIP services to all their broadband customers. Having VOIP is almost like having a fixed line at home.
Another Singtel service that is riding on fixed line is the oversea calls. A decrease in fixed line customer might also result in a decrease in the number of people using Singtel’s IDD/STD and v019 services. Although I feel that the impact will not be as strong as Singnet.
If you ask me, I would say that it is a reasonable price increase. Do note that I’ve been using the word “increase” instead of “hike” throughout the whole article. The increase is small and the last time there was an increase was 18 years. I applaud Singtel’s effort in maintaining the pricing.
But increasing the price now on a dying technology is a bad move. Not only will it affect the fix line customer base, it might also affect the customer base in other Singtel services. Especially on the highly competitive broadband market.

9 comments

  1. I need a fixed line because of my elderly parents-in-law. That is the only way they get to speak in their dialects to their relatives and Hainanese friends who lived far from us.
    Many elderly can’t afford or dunno how to use HP. It’s them who gets affected the most. I pity the less fortunate elders who have to bear the brunt of the increases when the money from welfare is already so little.

  2. ECL: True true. I think the reason why there are still so many fixed line is because of the older generations and those using ADSL.
    Actually, now is the best time for Starhub to increase their VOIP and Broadband market share.

  3. You just like to ramble. Since the last revision of the rate was 18 years ago, you just pick on it being an ‘dying technology’. But it’s only dying in ‘your’ world. It’s still the basic needs for many as it’s considerably cheaper than mobile. Sometimes you just talk for the sake of talking, can’t help but feeling you’re just trying to pick on little things to prove ‘i-also-can-debate-one-ok’. You can but no class. Got class lah, low class lor.

  4. Everything is just increasing in price. I am surprise that Singtel decided to raise the price on fixed telephone lines too. While having a fixed telephone line has its perks, its also facing a slow death, as more and more people rely on their mobile phone.
    I am already considering asking my parents to drop the fixed line, since every family member is holding onto a mobile phone. *Still a wait and see situation*
    Just my 2 cents.

  5. Why “kill” an old technology? Maybe it’s to SingTel’s long-term interest. First of all, it knows it can’t beat free offerings like StarHub’s which come with a cable modem. Secondly, maintenance is expensive – for a technology that is reaching the end of its usage – ADSL2+ at 24Mbps is nearly the best that they can pump over those copper lines. That’s not even enough for more than 10Mbps Web surfing if you got a few mioTV channels running. Why is SingTel “killing” the old phone line? Coz the new fibre-to-the-home network that it is building with the OpenNet consortium will pump everything over new lines to your homes. This will be all your Net surfing, Bittorrent, phone calls, video calls, etc. Wanna keep that old familar phone line? Can, but SingTel will make sure you pay more to maintain it over more efficient IP-based technologies.
    Alfred Siew´s last blog post..Phone keypad + Qwerty keyboard = HTC S740

  6. Nicole: Good for you. I can’t cancel my fixed line cause I’m using Singnet and I have 1 year contract left.
    Alfred: Good point. But it would be better if they “kill” it when the fibre to the home is ready. It’s too early now. I think they will lose the broadband market share to Starhub.

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