So, telcos here will rein in their launches of high-end services for consumer broadband and mobile phones.
The three, SingTel, StarHub and M1, will also not risk a price war to woo or retain customers as they will be eyeing bottom lines like a hawk, says Foong King Yew, a research director with research firm Gartner.
'The bells and whistles won't work on consumers next year. Consumers will be gunning for good value and I expect telcos might offer even more bundling plans of basic services,' he adds.
The signs are already evident.
Traditionally, SingTel and StarHub would throw in expensive freebies every year-end - as they have done for the past few years - to entice potential customers to sign up for two- to three-year fixed broadband plans.
This year, the deals paled in comparison. Instead of the usual $2,500 to $3,000 high-end laptops, the sweeteners were mainstream desktops and sub-$1,000 netbooks.
Fewer dream deals could also be the result of a highly saturated sector.
Statistics from the Infocomm Development Authority (IDA) show that household broadband penetration here has hit 94 per cent as at October this year. The figure, however, includes subscriptions to 3.5G mobile broadband plans, which may inflate the picture as many users have both a fixed broadband and a mobile broadband service.
Upping revenue from broadband is tough: Increasing bandwidth for higher speeds calls for hefty investments that may not translate into a corresponding increase in revenue.
'They can't double the price by upgrading a customer from say a 5Mbps plan to a 10Mbps one. The telcos just don't have the pricing power,' adds King Yew.
However, the Next Generation National Broadband Network (next gen NBN) will change the playing field for broadband Internet.
With the high-speed fibre laid directly to homes - the IDA's deadline is 60 per cent of all households by 2010 - consumers will zip around on the Net on speeds from 100Mbps and soon after to 1Gbps and beyond.
Two large consortiums - the NetCo and the OpCo - will be in charge of owning, building and operating the next gen NBN.
What is crucial is that the next gen NBN has opened up the broadband market, breaking the pricing stranglehold of previous infrastructure owners, StarHub and SingTel. With it, any service provider can now buy bandwidth from the new fibre network at a fair pre-set price.
Senior analyst Soh Siow Ming at Current Analysis says: 'With next gen NBN, it's no longer a battle of who can offer the cheaper broadband plan but what kind of value-added services, applications and content the service providers can offer to the consumers.'
In addition, consumers can expect either lower prices or more bandwidth for the same price on the existing broadband packages using the telephone lines and cable modem when next gen NBN services are launched, he adds.
In the mobile phones space, the mobile number portability scheme launched in June this year has not caused any major consumer migration to different telcos.
The IDA's numbers show that 5,000 to 8,000 consumers hop to a different operator every month. That is a drop in the ocean of about six million mobile phone lines here.
An interesting technology called Femtocell was launched last month by StarHub.
It lets users make use of the cable broadband service to transmit mobile phone signals. Users have to connect a special box with a 3G SIM card inside - it acts like a mobile phone base station - to their broadband router. With it, users can make calls on their mobile phones through the broadband network.
'It cuts down on your mobile phone bills when you are at home and offers the convenience of using the mobile phone in place of your fixed line cordless phone,' says Siow Ming.
This story was first published in The Straits Times Digital Life on 31 December 2008.
