In 5.61 million-strong Singapore, the mobile subscription rate stands at nearly 150 per cent. The country has three major telcos, Singtel, M1 and StarHub (with MyRepublic eyeing to become the fourth). All of these are well-established companies equipped with deep pockets and the latest telecom infrastructures, and they have pretty much cornered the entire domestic subscriber base.
The Lion City is, therefore, a tough market to crack for new telco entrants. Under this circumstance, customer acquisition is not just about winning over the uninitiated; it is about selling them a plan so convincing and valuable they would be willing to sever business ties built over many years, and take a leap of faith in a new system that has not chalked up the mileage to warrant trust.
New Singapore-based virtual telco Circles.Life was launched barely half a year ago. A fairly fresh startup, it may not have the war chest or the experience incumbents have but it does have one unique advantage: nimbleness.
Based on that fundamental business strategy, it aims to deliver a model wired for the internet-savvy users. In a market that logs the highest smartphone utilisation rate in the world, it is clear that mobile data capability takes precedence over other functionalities among users.
And that means rethinking and deploying a whole new different telco model.
“We [Singapore] are at the forefront of technology and innovation in a lot of things; people refer to Singapore as a rose in the desert. But when it comes to telcos, we are behind. Yes, we are heavy users of smartphones and all the tech exists; but not all of them are being leveraged effectively,” says Circles.Life Co-founder Abishek Gupta, in an interview with e27.
Gupta was a former business consultant at Mackenzie, as well as an investor at Bain Capital. In both job capacities, he often travelled to US and Europe to provide consultation to telco CEOs. During his dealings with these executives, he was able to observe how the telcos were run and realised that Singapore’s telcos were not innovating enough, and that inadequacy should be addressed.
To bolster his business case, he started talking to various smartphone users.
“We [Gupta and his other co-founders, Rameez Ansar and Adeel Najam] started speaking to people in our age group and friends and conducted surveys. Through these, we realised there was a big data-savvy segment in Singapore. People ages between 20 – 45: they like to buy things online. This is the specific segment we would like to address,” he says.
So if the current telcos are not innovating, what is stopping them? With huge reserves of cash, they could easily afford a major upgrade, after all.
Advantages of being asset-light
Gupta posits that the incumbents’ vast resources could actually be a hindrance.
“It’s how existing telcos are set up. The folks are trying their best, but they are asset-heavy. The challenge of that, as I understand, is that they are on legacy network systems. Changing their entire systems right now is not going to be straightforward. For example, if some telco wants to provide a digital-only customer service, they can’t just get rid of their call centres tomorrow — it’s not possible. Even if that could be done, the other challenge would be retraining.”
Unlike traditional telcos, Circles.Life’s virtual telco set up means that it runs its service on existing telecommunications infrastructure, meaning it is able to laser-focus on building the customer-facing product.
“By leveraging existing infrastructure, we can provide a smoother experience on the customer layer — be it through the website or our applications,” says Gupta.
“We can leverage the latest tech. Our network is on the cloud, and our customer service happens off WhatsApp. Our billing sits inside the cloud, too. Current telcos can’t switch to these new technologies easily,” he adds.
Customer service on WhatsApp has several advantages, Gupta says. In traditional telcos, customer service officers have to be trained to speak in a certain accent for clarity — and even then, you hear horror stories of how communication breaks down because neither the customer nor the customer service officer understands each other.
Even if customer service agents are able to nail down their accents and pronunciations, the communication channel itself is a sluggish and frustrating. Customers often have to go through multiple personnels, repeat their stories over and over again, and be put on hold for minutes.
With WhatsApp, communication is smoother because customers can send screenshots, locations, explain their problems coherently through text and not have to worry about deciphering foreign accents. Customer service agents are also able to serve more customers at once (similar to an online live chat support framework).
Gupta says Circles.Life’s business model is analogous to Uber’s.
“If you look at Uber, they were not buying cars at the start. It involved leveraging existing infrastructure and providing the layer on top. It was providing payment gateways, providing an easy access to cars. [In the same regard], we are not trying to innovate on the physical side; we are trying to innovate on the customer facing side, because that is where the pain point is.”
And on the point of physical infrastructure, Circles.Life does not have a brick-and-mortar store. It operates on an e-commerce-driven model where customers purchase the phones and mobile plans. Doing away with physical outlets does not only cut down on business expenses, it also means the company can process transactions 24/7.
Customers also do not have to queue up to be attended to. They can instead have their phones delivered to their doorstep.
The move to embrace a full e-commerce model is not the only innovative aspect this virtual telco has to offer.
In fact, Gupta says its fully-online sales channel is peripheral to its USP — its Unique Selling Proposition — which is its ability to offer highly customised pay-for-only-what-you-need mobile plans.
“Once you get your SIM card, you are no longer tied to a two-year contract. You can use the apps to change your plans every month. We also have a boost philosophy where we reward you with additional data if you perform some kind of favourable behaviour [such as the loyalty data scheme]. If you run out of data, you do not have to buy an entire GB of data; you can buy 100MB, 250MB or 500MB,” says Gupta.
Some other bonuses include 2GB Bonus Data a month when they port-in from another telco or 200MB a month when referring friends to sign up for a line with Circles.Life.
There is even a quirky reward scheme wherein subscribers earn 1GB bonus data per month by filming a reaction video when they run out of data and using the hashtag #NeverRunOutOfData.
Gupta says this flexibility appeals to the web-savvy demographic, which he says is between the ages of 20 to 45. Given this, all its marketing campaigns have been conducted online.
“Our marketing is very aggressive in the online space. We have already touched close to a million customers at least a couple of times, on Facebook and Twitter.
He is also giving this demographic — many of whom rely primarily on WhatsApp for communication– the option of having no outgoing SMS plans.
“No telco has ever provided that because SMS provide a lot of revenue. But because we don’t have to make legacy changes around this system, we do not face this challenge. We don’t have the problem of managing how the internet world collides with how telcos traditionally operate. We can look at it afresh and bring the right sections from the telco world and the internet world together.”
To replace SMS, Circles.Life has partnered with WhatsApp to provide unlimited data usage for the platform.
Challenges of relying on existing infrastructure
Relying on existing infrastructure is paradoxical in the sense that it allows for the business to remain flexible, yet at the same time, also places limits on its technological growth and operations.
“The big challenge is we don’t own the network so we can’t upgrade it. So if we wanted to build a tower to get better quality WiFi, we can’t do that,” says Gupta.
“But we have a lot of faith in the regulator and the kind of guidelines they set to ensure good quality of service. IDA (now IMDA) regulations require telcos to meet a certain standard of quality, so that gives us a lot of comfort,” he adds.
Circles.Life has raised several rounds of funding but Gupta declined to disclose any further details. It has struck up a partnership with Grab to provide its drivers with mobile data service.
In the near future, it is also exploring OTT (over-the-top content) add-ons.
With just six months into its operation, it is difficult to predict whether Circles.Life will be a genuine disruptor in the local telco scene, especially since no revenue or user MoM growth statistics have been released. And even if there was, it would be a couple of years at least before it can qualify as a sustainable business model.
Additionally, Circles.Life has not had experienced dealing with network breakdowns similar to the recent StarHub outage. Would its system be robust enough to recover from such an attack?
And what’s stopping existing telcos from taking a risk by cannibalising their own service with a virtual telco of their own? It’s a far-fetched scenario, perhaps. But it is always prudent to consider all possible outcomes.
Many of these questions can only be answered in due time. But one thing for sure is that, at a price point of S$28 (US$20) for a 6GB plan with no obligation to commit to any timeframe, the risk of toying around with this virtual telco is negligible.
Image Credit: Circles.Life