Connectivity to speed up national growth

  • Business
  • Saturday, 10 Apr 2010

IS your broadband service really as fast as advertised? In the United States, the Federal Communications Commission (FCC), equivalent to our industry regulator the Malaysian Communications and Multimedia Commission (MCMC), has a new tool that allows users to test the download and upload speeds of their broadband connections, which is then reported back to the FCC.

This is for both landline-based broadband connections and those with smartphones, the iPhone and Androids. A week after FCC announced the new gadget, about 150,000 people in the United States had stories to tell how their connections were doing. The purpose of the tool and the project to consolidate the information was to educate consumers about whether they are getting the service they are paying for, and hopefully to highlight areas where advertised speeds may fall short, the FCC said.

This is a process of transparency and a move to eliminate confusion, and since it is real time information, it is a channel for the regulator to track the services across the country.

Broadband speed tests have been around for a long time. Back here in Malaysia, Internet speeds may not be as promised.

And so let’s be honest. Speed, pricing and quality are the three big issues affecting our broadband industry.

Nonethessless, we have recently moved up a few notches with the entry of high speed broadband (HSBB) services. Should we then take it that the era of short-changing users, choked networks and users suffering downtime is a thing of the past?

Enter fast speed broadband

A dream pipe that can carry more data, voice and images that was conceptualised a few years ago is now firmly planted in the ground. Unfortunately only a small pocket of users can access it for now. This new pipe or fibre-to-the-home (FTTH) connection, which carries HSBB services, is able to deliver fast down- and uplink connectivity with data speeds from 1Megabits per second (Mbps) to 50 Mbps. In a blink of an eye you can download heavy files and even a movie!

The landmark launch of UniFi was on March 24.

The connectivity is via fibre-optics and that marks the beginning of the end of the copper era. The pipe opens new opportunities for new and old players, and expands revenue streams for existing players. The once-flat revenue of fixed line voice business is expected to change with fast speed broadband.

With Malaysia trying to turn into a k-economy, the pipe is vital. The business sector gets a lift with faster connectivity and that makes Malaysia more competitive.

In essence, this dream pipe heralds a new era of fast connectivity and a change in the broadband landscape. With that, comes a host of challenges and opportunities, which excite TELEKOM MALAYSIA BHD group CEO Datuk Zamzamzairani Mohd Isa. For one, he can expect fixed line broadband revenues to rise and TM gets entry into new areas of business which it could have only dreamed about a decade ago.

“This is the first time we can have triple play in this country,’’ he says. Triple play is essentially a single access subscription that provides video, voice and data.

For him the “transformation process for TM’’ has begun. But it is not just TM. The transformation gives the country the needed push in speeds from 1-50Mbps.

When UniFi roll-out is complete, Zamzamzairani says TM will have a single IP (Internet protocol) platform that is more efficient, capable for delivery of a variety of new services and fast speeds. UniFi is TM’s branding for its HSBB.

Even the Government wanted a share of the pie and committed the RM2.4bil investment in UniFi. Thus far, it has put in RM990mil into the project and TM RM1.9bil.

TM’s portion of the UniFi is RM8.9bil, bringing the total cost to RM11.3bil, where 1.3 million premises passed gets the fast access over three years ending 2011. TM says it already has 900 customers on its UniFi network.

But let’s not forget that TM’s rival, TIME DOTCOM BHD (TDC) was the first to roll out FTTH in Mont Kiara weeks before UniFi was launched. It is only one area but TM’s UniFi is available in four areas – Bangsar, Taman Tun Dr Ismail, Subang Jaya and Shah Alam – in the Klang Valley.

TM and TDC are not the only two players in the game. Over on the east coast, Kuantan seems to be a favourite spot for Jalur Lebar Nasional Sdn Bhd (Jalenas), which is rolling FTTH too. Jalenas claims to be the first to offer an open-access FTTH HSBB project in Putra Square. The truth is, they should not stay in Kuantan forever. They should move to the Klang Valley and other areas so that there is big time competition in the fast speed broadband sector and to give consumers a choice.

Co-existence of fixed and wireless

Competition exists but there is room for both mobile and fixed broadband players as the market is big enough for both even though TDC CEO Afzal Abdul Rahim is of the view that novelty of mobility is gone and essentially margins for mobile will start to come down while that of fixed broadband will rise.

“There is clear division of what fixed and wireless can do and as fixed become more ubiquitous, wireless will become less prevalent. There will be clear distinguishing factors between the two,’’ Afzal says.

However, Bhd outgoing CEO Johan Dennelind believes that mass migration to the Internet will begin with the smartphones, that’s the first stop before people buy computers and get into the fixed business, so there is a big enough market for wireless connectivity for now. As people get used to speed, the migration to fast speed will escalate.

“Mobile and fixed broadband should co-exist since consumers have different user behaviour,’’ Dennelind says.

The truth is that fast speed broadband is still in its early stages in the country and only a small percentage of the population has been able to taste fast speed so smartphones are seen to be the first tool for many to the World Wide Web.

Dennelind believes his company has got the right approach to broadband and the iPhone that it just began selling is going to increase revenue the next three years.

Maxis Communications Bhd is also into the fixed line and wireless broadband game. Its ambition is to dislodge Celcom Axiata Bhd from the top spot in wireless broadband in a few years.

“We are clear that we want to be the number one in broadband.’’ Maxis CEO Sandip Das said recently. The company is investing RM700mil to expand its nation-wide broadband coverage to hit nearly 80%.

But Axiata is not going to give up without a fight.

Axiata Group Bhd president & group CEO Datuk Seri Jamaludin Ibrahim said “for Celcom, the game is about strategising its product offering, pricing, coverage and distribution. We will continue to improve on the quality and coverage of our services, and ensure consistency. We are also working with some parties on bundling our products.’’

The only other cellular player with a 3G spectum that can offer broadband, U Mobile Sdn Bhd, is still trying to get its direction right.

But the game does not stop at 3G. There are four WiMAX players also offering broadband connectivity. Packet One Networks (M) Sdn Bhd has the widest coverage of the three for now. The other three are REDTONE INTERNATIONAL BHD, Asiaspace Sdn Bhd and YTL Communications Bhd. YTL aims to take the market by storm when it makes its debut with WiMAX 4G in July, but let’s wait for the time.

To wire up Malaysia

Going forward in the wireless and fixed broadband war, Maxis chief operating officer Jean-Pascal Van Overbeke says pricing in the short term will remain aggressive as multiple players try to gain a foothold.

“Maxis is focused on balancing price and investment considerations in its broadband pricing strategy so that ultimately consumers enjoy high quality experiences,’’ he said. He adds that investing in network infrastructure is key and those companies with stamina and commitment to continuously invest will succeed in the medium to long term.

There were a total of 30.3 million mobile subscribers in the country as at the end of 2009.

Malaysia has fast speed broadband and FTTH in some areas but what is the gameplan for the rest of the nation? Surely, people in the rural areas must have the same services as those in the urban centres. This is where the National Broadband Initiative (NBI) come in and it was launched the same day when UniFi came online. The NBI plan is to use up the RM4.6bil of the universal service provision (USP) fund which has been sitting in MCMC’s coffers for a long time to wire up parts of the country.

The NBI is in two parts – the first is HSBB, which raises speed to 10Mbps and beyond and covers high growth areas. Next is the broadband for the general population (BBGP), with speeds of less than 10Mbps.

To implement NBI, the areas are zoned into three, depending on population densities, economic activities and existing telecoms infrastructure. Zone 1 is HSBB. Zone 2 covers urban and semi-urban areas. Zone 3 is meant for rural areas and this is where the RM4.6bil will go into, according to Information, Communications and Culture Minister Datuk Seri Utama Dr Rais Yatim.

The MCMC has identified 462 under-served areas in the country for the roll out of telephony, broadband and cellular access. The funds have to be managed properly to avoid possible pilferage and leakages. The MCMC claims it has been transparent in its management of the USP fund.

Rais says there is a new approach to the USP to include services provided for the disabled, women under rehabilitation and low cost residential areas and underpriviledged children.

“It is our social responsibility to ensure that everyone, be they rich or poor, young or old, is empowered with basic telephony and Internet services in any part of the country,’’ Rais says.

The target is to reach 50% broadband penetration by year-end; the country achieved 33.2% or 2.07 million homes by the end of last year.

Rais says “we are on track.’’

Related Stories: The broadband catalyst Voice, video and data convergence has finally arrived in Malaysia Broadband – new way to communicate Online – speed rules TM has 900 UniFi customers

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