2012 NYJC_Prelim H1_CSQ 1 (Mark Scheme)

1 Question 1 The Mobile Network Industry Table 1: Real GDP Growth Rate and Mobile Phone Penetration Rate for Singapore Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Real GDP growth rate (%) 9.0 -1.2 4.2 4.6 9.2 7.4 8.8 8.9 11.7 -1.0 14.8 4.9 Mobile Phone Penetration Rate (%) 74.8 69.2 77.8 84.5 92.7 99.8 105.4 122.5 131.0 137.4 143.6 149.6 Figure 1 17.2 0 8.1 12.1

2 Extract 1: ‘Cut-throat’ competition among telcos likely to hurt margins INTENSE competition within the local telecommunication industry is driving the service providers to adopt strategies to increase their share of the market. While competition is healthy for the industry, the ongoing price war among the telcos may hurt profit margins. An analyst points out that competition now is a different game. The price war is confined to the growing prepaid* segment. The prepaid market segment has a high churn rate or low brand loyalty. To increase the stickiness or loyalty of subscribers, mobile service providers will have to offer very competitive tariffs for same network calls. The mobile operators are increasingly tying subscribers to long-term contracts and subsidies for handsets, especially for the popular range of smartphones. * prepaid: A prepaid mobile phone is a mobile phone for which credit is purchased in advance of service use. Users are able to top up their credit at any time using a variety of payment mechanisms. Source: The Star July 7, 2012 Extract 2: The Hidden Dangers of Electromagnetic Radiation The cellular phone industry was born in the early 1980s, when communications technology that had been developed for the Department of Defense was put into commerce by companies focusing on profits. This group, with big ideas but limited resources, pressured government regulatory agencies—particularly the Food and Drug Administration (FDA)—to allow cell phones to be sold without pre-market testing. According to a scientist named Dr. George Carlo, “Mobile cellular phones are low-powered radio frequency transmitters which produce microwave radiation. Cell phone users are being exposed every day to the dangers of electromagnetic radiation (EMR). Those phones and the signals from the tower-based antennas are slowly prompting a host of health problems.” Studies have linked the radiation from the handsets and from the tower-based antennas carrying the signals to development of brain tumors, genetic damage, and other exposure- related conditions like sleep disorders and headaches. The debate over the cancer risks from this radiation has been going on for years. Yet the lack of any conclusive evidence has allowed the industry to claim phones and the tower- based antennas are safe and led to skeptics being dismissed as scaremongers. A well- funded cell phone industry media machine continues to mislead the unwary public about the dangers of a product used by billions of people although they are