Celcos: Nationwide coverage costly


  • Business
  • Friday, 09 Jul 2004

BY B.K. SIDHU

INDUSTRY players are of the view that the government’s push for nationwide cellular coverage is unnecessary because it would involve huge investments, is uneconomical as 50% of the areas to be covered are remote, and there is already a viable wireless technology that could provide such extensive coverage. 

Maxis Communications Bhd chief executive officer (CEO) Datuk Jamaludin Ibrahim estimates that the three cellular operators could well have to invest RM5bil to RM7bil to set up about 7,000 to 9,000 new cellular sites by end-2005 if they are to provide nationwide cellular coverage. 

“But we are committed to provide the additional coverage requirement,” Jamaludin told StarBiz

Not only are the investments going to be huge but the bulk of the cellular equipment needed for the expansion has to be imported and that has raised questions over the outflow of funds that would take place from now to end-2005. 

Datuk Jamaludin Ibrahim

There are over 9,000 sites in the country currently, of which the three operators share only a small percentage. To provide the required coverage, about 8,000 new sites are needed. That means having to hasten the entire build-up in 1.5 years, which is in stark contrast to the 16 years they took to put up the initial 9,000. 

“If it took the water and electricity bodies decades to meet the needs of the population although there are still pockets without it, why the rush to communicate via cellular when wireless is the ideal option for remote areas?  

“It boils down to priorities. The approach should be pragmatic,” an industry player commented.  

The government wants all blind spots in Kuala Lumpur, Cyberjaya and Putrajaya to be filled by end October, also known within the industry as Time 1; and to provide nationwide coverage by end 2005 (Time 2).  

Celcom (M) Bhd group CEO Datuk Ramli Abbas said “we take heed of the government’s call to provide coverage to populated areas and are co-operating with other operators to bridge the digital divide in the country.”  

The problems in implementing the two timelines are aplenty. The issue surrounding Time 1 is that of securing sites and approvals, which is a long and winding process involving 10 bodies/agencies and 15 to 40 signatories; for Time 2 the issue is “sheer size and economies of scale.”  

Datuk Ramli Abbas

“We welcome the speed-up and we would roll out to provide more coverage even if we have to spend a lot of money but we need to discuss (with the government) how to fund the expansion to the remote areas,” Digi.com Bhd outgoing CEO Tore Johnsen said.  

But the biggest mystery remains what the government means by nationwide coverage.  

That definition has not been explained, claim the players.  

Johnsen’s understanding of nationwide coverage is that it should only cover populated areas, as is the practice abroad; and Jamaludin’s suggestion for Time 2 is that it should only cover certain routes such as highways and expressways, tourist spots, industrial areas and major towns, certainly not the entire country.  

When contacted yesterday, Malaysian Communications and Multimedia Commission (MCMC) chairman Datuk V. Danapalan shed some light on the issue.  

He said the coverage for Time 2 should not be blanket nationwide but areas such as highways, tourist spots, major towns and industrial zones.  

Tore Johnsen

The operators are also keen to use the Universal Service Provision (USP) fund to which they contribute 6% of their net profit every year to be used for cellular coverage under Time 2.  

They want the government or the industry regulator to consider that.  

The fund size was RM594.9mil as at February, with an additional inflow of RM200mil expected this month from the players. 

However, the government has its own plan for the USP: it is to provide access to very remote areas, using mostly wireless technology.  

MCMC, which manages the fund, expects 86 new remote areas to be connected and this will cost RM795.8mil.  

Given the size of investment and magnitude of work involved in providing cellular nationwide coverage, the operators are wondering why this is not considered a national infrastructure project the same way the North-South Expressway was built where the government helped in land acquisitions and other facilitation.  

“The challenge (for the operators) is to secure suitable sites from the owners and get approval from the local authorities,” Ramli said. 

With such “aggressive timelines” as DiGi’s Johnsen puts it, it is going to be a real hassle for the operators to meet the two timelines set by the government although they are willing parties to expanding coverage.  

That is why the operators want the government to consider the project under the national infrastructure plan so that the land acquisition from private owners to state-owned companies can be expedited. 

Related Stories:Benefits in sharing cellular site for celcos MCMC: All celcos committed to sharing infrastructureMaxis aims to improve coverage Celcom needs only 80 sites for major hotspots DVM tipped to secure RM80mil Atlas One jobDiGi: Difficult to get land for transmission sites 

 MAXIS :  [Stock Watch]  [NewsCELCOM :  [Stock Watch]  [NewsDIGI :  [Stock Watch]  [NewsTELEKOM :  [Stock Watch]  [News]


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