The Giffgaff effect in Singapore for mobile plans

It’s coming. Myrepublic has hit the pain point. Customers are on the brink of being released from costly data plans. It does seem like the 4th telco understands the need to alter the existing value system. In this era, we use mobile for everything.

Mobile data helps alleviate the pain for travel on public transport and helps Singaporeans execute complex tasks that used to be physically troublesome (pay fines, banking, shop etc).

Hardware has caught up. Our iPhones and new android machines have the same if not more computing power than PCs 5 to 10 years ago. But Singaporean data plan providers have chosen to be milk customers instead of rethinking their value proposition.

Our business models have not caught up. We are still trap with the minimum 300 mins and 1000 sms. Those are base fees that force you to commit $15 dollars for nothing. Hardly anyone uses calls and sms. Above that, they layer prohibitive fees for data — especially if you exceed the amount of data you contracted for. That’s not pay per use. That’s a fine.

The government has generally stood by these telcos because frankly they are local champions. They employ a lot of Singaporeans and higher profitability means good pay and good returns to Singaporean workers and investor. But the lack of competition prohibits innovation.

We badly need cheaper mobile data plans. Kids and students need to consume more data. We don’t want to micro manage what they do with it. But we want kids to be at the forefront of technology. Be exposed. That’s the first step. We also need every Singaporean to be mobile ready so we can implement smart nation initiatives. We could possibly be using mobile phones to tap on MRTs, we could mass adopt smarter payments systems and we could help formulate better policies with data.

The current pricing model is unsustainable. The Giffgaff effect has arrived. We will see a telco serve an entirely different segment (I believe this is the new majority) of customers who want cheaper mobile data and little or less other value added service. It’s a battle of pricing model. Check out our peers in Taiwan, Japan and even the medieval UK.

One day we will see no frill plans like this

• 10 gb, 15 mins talk time, 100 sms — $60
• Unlimited data — $80 to $100

If you read this, share it or respond so our politicians know what we want and can reflect this in parliament. Takes too long for our conglomerates to understand the shifting grounds globally. Perhaps they already do, but they prefer you be exploited.

BreadTalk and Trust

We recall how Bread Talk represented that the soya milk they sold were fresh. But we later found out it was Yeo's soya milk. Arguably, not as fresh as they want it to sound. Post this incident, I have hardly purchased anything from Bread Talk.

Businesses that can win the trust of consumers develop competitive advantages. Consumers are happier to be associated with the brand and they are prouder to share their purchases with their friends in person and on social media platforms.

A firm needs to build moral capital in order to lead effectively in their respective sector. Moral leadership gives legitimacy for the firm to transform their businesses. Especially in Asia, a virtuous company must understand that it cannot pursue profit at the expense of its customers.

The basic elements of a virtuous organisation comprises courage, perseverance and discipline. In recent news, BreadTalk seems to lack all three of these elements. They lack the courage to come clean about your mistakes, they show a clear lack of perseverance and discipline to grow their business the right way.

I am skeptical about the future growth of a firm that chooses to lie about their products to their customers. I am skeptical about BreadTalk as a symbol of success in Singapore.

Change or be changed

Singapore must take a leadership role in so-called disruptive technologies like third-party apps such as Uber and GrabCar. If we do not innovate and create disruptive technologies, we may not be well placed to react to global trends in time, to our detriment. We have seen how Uber disrupted the taxi industry. Years earlier, data-based messaging services such as WhatsApp disrupted the SMS business. Paypal and mobile payment systems eroded the retail businesses of banks.

Some countries with more resources and a larger domestic market may be able to withstand such blows, and mitigate these effects of disruption at later stages. Singapore does not enjoy such luxury. We must be at the forefront of these disruptive technologies. In the case of Uber for example, it would be very much in line with our economic strategy to persuade Uber to move its Asian headquarters to Singapore.

Some still hold the view that we can resist such technological disruptions, such as through regulatory legislation, in order to protect local interests. We would only be creating inefficiencies, and allow the world around us to move ahead.

The process of technological disruption will be painful. Admittedly, disruption may threaten some jobs. But if we can lead the way, we create for ourselves more time to mitigate the effects of any such negative socio-economic situations. This is a crucial learning process helps to boost our resilience towards potentially catastrophic changes, which are beyond Singapore’s control anyway.

The next frontier for disruption would be the service industry, especially within the F&B sector. Eatsa, a high-tech fast food restaurant recently opened in San Francisco. Eatsa revolutionaries the dining experience with full automation of almost all processes in a F&B business, especially in serving food and cashiering. With the exception of a few kitchen staff, there is not a human in sight. The restaurant has received good reviews. This marks a new era — technology has begun disrupting the low skilled service industries.

Singapore’s service industries currently requires a considerable low-skilled labour force. This has all sorts of political ramifications with regard to debates on immigration, which sometimes borders on xenophobia. Disruptive technologies like what Eastsa is pioneering is therefore the natural way forward.

Policy makers cannot shield Singaporeans from these changes. Singapore and Singaporeans will be worse off, if we over-regulate such technological innovations. It makes more sense for us instead to adapt to such changes. Beyond adapting to changes, we will also need to take the lead in the disruption of established industries.

Regression to the mean

I want to talk about regression to the mean because this will transform the investment industry.

Look at the table above. Well performing funds do not stay at the top. They revert to the mean. This implies if you had bought a fund simply because it made good results in the past, you are more likely to lose. Simply put, if you came first, overtime you will underperform to emerge somewhere in the middle (the mean).

I get it that many professionals tell you they have insights. They print beautiful brochures. Anyone can report good results. Think about it this way, you came in 20th in a class of 40th. How do you show you did well? Well, you can say you were top 5 of those who went to the same club as you did. You could also say you were first in the entire neighborhood you stay in. These could be facts. But it does not take away the fact that you only came in 20th.

• Fund performance is hypothesized to be random
• Cost and fees are everything. Buy the cheapest that gives you the broadest diversification
• Please buy funds yourself, direct, not through advisors. They take a big cut