Government keen on improving broadband services, says analyst


  • Business
  • Saturday, 17 Mar 2007

PETALING JAYA: With 3G rollout in the country barely off the ground, spectrum licences for WiMax were announced yesterday and Digi.com Bhd has again been left out of the game. 

Arguably competing technologies, WiMax is considered superior with higher Internet speeds of 70 megabits per second versus 3G's High-Speed Downlink Packet Access speed of 15 megabits per second. 

The 3G, on the other hand, is superior to WiMax in voice communications. 

On the winners' list, an OSK Investment Bank telecommunications sector analyst said: “It is clear that the Government feels that communications spectrum is a scarce resource and would rather give it to local providers. 

“The idea of releasing the WiMax licences so soon after the new 3G licences is to accelerate competition in the broadband space.” 

The Government was keen to improve the penetration of Internet broadband services in the country, he said, adding that with only about 500,000 3G users in the country, the service had definitely not taken off. 

“The move is very negative for DiGi. With all four spectrum blocks announced in one day, there is no guarantee that the Government will make further spectrum allocations in the future,” he said. 

A telco analyst at HLG Research said with the 3G rollout, cost had been a major barrier. 

WiMax had a much lower cost of deployment of about RM300mil compared with 3G's RM1.2bil to RM1.3bil, said a TA Securities report. 

However, the HLG Research analyst said: “With the low global 3G penetration rate, such as in the US at only 10%, it is hard to really say if the service has taken off or not in Malaysia.” 

The Malaysian Communications and Multi-media Commission was probably not too happy about the take-up rate, which was why WiMax licences had been given to content providers instead, with the hope of improving broadband penetration in the country, he added. 

The downside for WiMax, however, is that compatible devices are not readily available in the country as yet. Ultimately, it will depend on which is finally accepted by end-users,” he said. 

TA Securities said on the broader scale, the Wimax service remained a longer-term prospect and would not have any impact on its “neutral” call on the sector. 

On the move not to include DiGi, it said: “This would be rather perplexing and disappointing given the earlier fiasco over the 3G licence, not to mention the financial strength and commitment by DiGi if they were successful. 

“We believe that these two technologies will co-exist, given the superiority of 3G in voice and WiMax will only carve a niche within the broadband wireless platform of the operators.”  

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