Three WiMAX licensees fined

PETALING JAYA: Three of the four WiMAX licensees have been slapped with fines for not rolling out their networks on time, industry sources said.

The Malaysian Communications and Multimedia Commission (MCMC) is said to have issued letters on the fines to the WiMAX operators more than a week ago.

The players fined are YTL e-Solutions (RM1.9mil), AsiaSpace (RM1.7mil) and REDtone International (RM200,000) for failure to meet the 25% population coverage by the end of March.

The quantum correlates to the level of coverage achieved as at the deadline. However, all three players are appealing against their fines.

Tan Sri Francis Yeoh, head of the YTL Group, told StarBiz that YTL e-Solutions would appeal against the decision on the basis that the company would be ahead of the next roll-out target of 40% by mid-2011.

“We believe in having an extensive network up and running as we don’t see the point in having incremental coverage.

“We take this business seriously. We will have 60% coverage (more than the needed 40%) by the next deadline,” he said.

Another industry player, who declined to be named, said his company had faced a myriad of issues in rolling out its network, especially in relation to obtaining approvals and the land needed to put up the base stations.

“It takes a long time for these government approvals. And if the land is privately owned, prices can be prohibitive for us. This makes it almost impossible to roll out.

“If we were helped with these issues, then it would be fair to impose a fine on us. But these problems are beyond our control,” he said.

REDtone CEO Zainal Amanshah said the company had written to the MCMC numerous times complaining that the block of spectrum allocated to it was not ideal as it was closer to the WiFi frequency and hence there were technical difficulties in its roll-out.

“Only after two years were we provided the correct spectrum,” he said.

REDtone, which is licensed to only operate in east Malaysia, also had to contend with difficulties in securing backhaul services from TELEKOM MALAYSIA BHD, he said.

As at March, REDtone’s roll-out had covered about 13% of the population of Sabah and 19.3% of Sarawak, according to Zainal.

But it is understood that MCMC’s findings show a lower rate of coverage.

Sources close to the MCMC said the regulator has been reviewing the appeals made.

But for payment of the fines, the regulator has already cashed in bank guarantees these companies had provided when they received their licences in 2007.

Each of the WiMAX licensees had provided the MCMC with a RM1mil bank guarantee.

Their bankers are now said to be nervous about this development and are reviewing existing facilities.

The decision of the MCMC to fine the players has been widely speculated.

Last December, then Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said the Government would withdraw licences from players who could not show good reasons why they are not able to roll out according to proposed plans.

More recently, Information, Communications, Culture and Arts Minister Datuk Seri Dr Rais Yatim said the MCMC should ensure that providers had delivered on what they had promised.

To be sure, the fines imposed will not seriously dent the balance sheets of the companies involved, considering the huge amounts of money involved in the WiMAX business.

YTL plans to invest up to RM2.5bil over the next five years for its WiMAX roll-out while AsiaSpace is looking at raising RM300mil, having invested close to RM100mil so far. REDtone is looking at raising RM40mil.

What these players worry more about is losing their licence altogether. It is unclear if the MCMC will reach that stage, considering that the small fines they have imposed have drawn lengthy appeals from all three players.

Spectrum management has long been a contentious issue, with questions having been asked on whether the right parties were picked.

It has also been questioned whether the authorities had been lackadaisical in enforcing deadlines and withdrawing the spectrum rights from those who did not use them.

However, as this case indicates, rolling out a telecommunications network can be fraught with difficulties and complications.

It will be just as challenging to manage that spectrum.

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