information adapted from The Straits Times, Thursday 17April 2008
"New round of competition as mobile numbers go portable- from June, a big hurdle to switching operators will be removed, prompting more intense fight to retain customers."


1988 to 1997: Singtel monopoly

Then, Singtel was the only producer (single seller) who is supplying the whole telecommunications market. Therefore the market demand curve is also the firm's demand curve as the monopolist also represents the industry. Moreover, as neither M1 nor Starhub existed back then, there are no close substitutes for Singtel's telecommunication services provided. Thus its monopoly power is very huge.

Singtel was then a price setter as it can raise the price and consumers have no choice but to pay or go without the good as they have no other alternatives. Then, a basic cellphone plan for a month was $47 in 1997.

However, in April 1997, m1 enters the market and as a result, mobile phone bills halved due to competition.

It is evident that a price war between Singtel and m1 had taken place at that point of time. In this case, we can introduce the concept of Cross Elasticity of demand (its application is to follow suit when market leader/rivals lower price). Thus when m1 joined the market and offered mobile plans at lower rates, Singtel has no choice but to follow suit and as a result mobile phone bills were significantly lowered.

April 2000 saw starhub entering the market. Starhub introduced free incoming calls and per-second billing plans. This can be seen as starhub's strategy to try to differentiate its products (i.e. mobile plans) in an attempt to reduce the positive cross elasticity with Singtel or M1's mobile plans such that there will be a smaller change in quantity of the first good as the result of a change in the price of a substitute.