For providing smooth access to the Internet and to support the operations of intelligent enterprises, it is essential for the telecommunications operators to lease progressively large amounts of international bandwidth at the Internet gateway as subscriber numbers increase. Bottlenecks and service deterioration will result if this correspondence is not well established.
The principal direction of Internet traffic is the U.S. There are large numbers of websites catering to varied interests in the U.S. than in any other country. It has been estimated that 80 percent of Internet traffic from Singapore is to the U.S.
Singapore's Internet bandwidth to the world has increased phenomenally over the years — 8 Mbps in 1996, 400 Mbps in May 2000, 800 Mbps in June 2000 and 1.2 Gbps in May 2001.
The major reason why tariffs for broadband access are still relatively high in Singapore, despite the reduction of costs with the entry of more players, is that the cost of international bandwidth is very expensive. Telecommunication costs to the U.S. are borne solely by Singapore, despite the need for an equitable sharing of costs. There is official recognition that such high bandwidth pricing is not conducive for the rapid growth of a vibrant broadband market and, in turn, the e-economy.
To make the cost of Internet access more affordable, the government has been cosharing the cost of leased lines to the U.S. with various operators. It has also provided subsidies to these telcos to defray part of the costs of access equipment such as modems and switches so that the accruing savings can be passed on to subscribers in the form of lower fees. This has been an important consideration in enlarging the broadband subscriber base through reduction of tariffs.
The national telco, Singtel, has also invested in several submarine cable networks to boost Singapore's Internet bandwidth capabilities so that more affordable access can be offered to consumers and businesses (http://home.singtel.com/about_singtel/network_n_infrastructure/submarine_cable_systems/networkinfra_submarinecablesystems.asp). It has so far set up 9xDs-3s, consisting of seven submarine optical fibre networks, with these providing 400 Mbps bandwidth to the Internet backbone in the US and an aggregate 443 Mbps bandwidth to the Asia-Pacific region. The Singtelled C2C consortium has also built a 17,000 km long cable system, costing US$2 billion, in the Asia-Pacific region so as to provide competitively priced bandwidth to regional telcos. This network linking Japan to Singapore also connects Hong Kong, China, Taiwan, South Korea and the Philippines. The sagacity of this move can be gauged from the fact that the consortium has secured pre-sales orders worth over US$1.4 billion from other Internet service providers. Another cable network has been built between Singapore and India by the Singtel-Bharti alliance; completed in September 2002, the 11,800 km long Aquanet provides a world-record 8.4 tbps bandwidth—this is equivalent to 200 million people conversing simultaneously on telephones using the network. Yet another investment is the Nava-1, a new submarine cable network linking Singapore with Indonesia and Australia—the 9000 km long cable provides 2.56 tbps of bandwidth.
To promote competition to Singtel, the government has granted a license to U.S.- based Internet service provider, UUNET, to operate another Internet gateway in Singapore.
The new cabling initiatives as well as the entry of UUNET have provided more competitively priced international bandwidth to the local telcos, thus helping to fuel the broadband revolution in Singapore. At the same time, it ensures that adequate international connectivity is available to support the needs of the new economy. Singapore is also hoping that its investments in undersea submarine cabling will help to facilitate the introduction of broadband in other countries along the cable chain as well as stimulate the development of e-commerce activities between Singapore and these nations.