CNA Explains: What could happen to Simba customers if IMDA takes action against alleged unauthorised spectrum use?

SINGAPORE: Although Simba customers have been told their services, plans and wallet balances would remain unaffected while authorities investigate the telco, things could change if allegations of unauthorised spectrum use are found to be true.The telco could face financial penalties, or the suspension or cancellation of relevant licences, if the regulator determines that it breached regulatory requirements.Experts said cancelling Simba’s licence would be unlikely, with one suggesting that a financial penalty or changes to its licence conditions were more probable.While a fine would have no immediate impact on services, restrictions on spectrum use could affect network capacity and service quality. The Infocomm Media Development Authority (IMDA) has issued Simba – one of the four major telcos in Singapore – a notice setting out six allegations. Besides alleged unauthorised spectrum use, other points mentioned include breaches of telecommunication regulations and concerns about the company’s governance and compliance practices.Simba said customers’ services, plans and wallet balances are “100 per cent unaffected” while the investigations are ongoing. Parent company Tuas said on Oct 26 that IMDA has not reached any conclusions on whether regulatory action should be taken against Simba or what form such action might take.Why is Simba under investigation?Mobile operators are assigned specific frequency bands, and using spectrum beyond those assigned bands without IMDA approval would fall foul of the rules.Spectrum is a limited resource and is essential for mobile network operators, which use it to carry voice and data traffic, said Ms Asha Hemrajani, a senior fellow at the S Rajaratnam School of International Studies.IMDA alleged that Simba deployed dynamic spectrum sharing technology at about 133 sites for intermittent periods in 2022 and 2023. This allowed the telco to use the 2100 megahertz (MHz) frequency band for both 4G and 5G services, even though it was authorised to use the band only for 5G.Dynamic spectrum sharing is a technology that allows different generations of mobile networks, such as 4G and 5G, to share the same frequency band.IMDA also alleged that Simba used spectrum in the 2340MHz to 2360MHz band at about 92 sites for intermittent periods between 2023 and 2026, despite not having authorisation to do so.The regulator alleged that both instances of unauthorised spectrum use were intentional and approved by Simba's senior management.IMDA also alleged that Simba deployed 5G indoor radio access network equipment at two locations before being authorised. The regulator also accused Simba of not fully complying with an order to produce documents, and that its failure to do so was deliberate and intentional.How likely is it that Simba loses its licence?A cancellation of Simba’s licence would be an unprecedented step for a major telco in Singapore, according to the experts.Triangle Legal director Sean Lee said: "For IMDA to cancel a licence would be unheard of. In practical terms, it would cause a lot of problems for telecom users."In all likelihood, I think what would happen is a fine or a modification of the licence conditions – for example, restrictions on the use of certain spectrum, or heavier penalties if there is another breach."He noted that Simba, Singtel, StarHub and M1 are Singapore's four main mobile network operators, which operate their own networks and hold spectrum rights allocated by IMDA.Other cases involving some of Simba's competitors have also led to financial penalties, he said.Mr Hussaini Saifee, head of ASEAN telecom media and technology at Maybank Securities, said he had not come across a telco being ordered to shut its network because of a spectrum breach.Ms Hemrajani also said the alleged spectrum misuse was serious but, in her view, not serious enough on its own to warrant cancelling Simba’s licence.What could the different penalties mean for customers?A financial penalty would be the least disruptive for customers.It would have "no immediate effect on the coverage or service that Simba subscribers would enjoy", Ms Hemrajani said.The consequences could be more significant if IMDA suspends or cancels some of Simba’s spectrum rights.Ms Hemrajani said losing one spectrum assignment would not necessarily force the entire network to shut down – Simba could continue operating on frequencies that it remained authorised to use.However, the less spectrum an operator has, the less voice and data traffic a mobile network can support, she added.She said: “Spectrum is like the number of lanes on a highway. Reduce the number of lanes, and traffic can still move, but congestion increases when there are too many vehicles."For users, that could mean slower data speeds, congestion or poorer service quality, particularly during peak periods. The extent of the impact would depend on which frequency bands were affected and how much spectrum was withdrawn. What would happen to phone plans and balances?The most serious outcome would be suspension or cancellation of Simba’s operating licence. If Simba were forced to stop operating, customers would likely need to move to another telco.Based on his observations of other markets, Mr Saifee expects customers would be given a grace period to switch providers if Simba were forced to stop operating. Other telcos would also be given time to “beef up” their networks to accommodate the additional subscribers.What happens to prepaid plans or wallet balances is less clear – wallet balances and network connectivity are separate matters, Ms Hemrajani said. This means a customer could still be owed an unused prepaid balance even if Simba were no longer authorised to provide telecommunication services.However, in a "worst-case scenario", Simba’s licence could be revoked, and it may need to close down, said Mr Lee."If the company is solvent enough, it could refund customers and wind up the company. If it is not, it could go into liquidation," he added."In that situation, customers who have paid money into their accounts may not necessarily recover everything. Depending on what happens in the liquidation, they may recover only part of what they are owed."He emphasised that such a scenario was unlikely and that there was "no real precedent" for it. What about customers of other telcos?Customers of other major telcos could also feel the effects if Simba were forced to stop operating.If a large number of Simba subscribers moved to Singtel, StarHub or M1 over a short period, the additional load could put pressure on their networks and potentially cause congestion for existing customers, Mr Saifee said.Mr Saifee said competition in Singapore's mobile market was at a "very elevated level", driven to a large extent by Simba’s cheaper plans."So if there is some rationalisation in the market, in terms of either consolidation or Simba exiting the market, then we should expect to see some improvement in competition, either in terms of higher pricing or telcos cutting down on data quotas and things like that," he added.He said that such consolidation and price rationalisation have been due for quite some time, and it should happen irrespective of consolidation or Simba exiting the market. Want an issue or topic explained? 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