Drop fixed broadband prices or face the music

  • Telcos
  • Wednesday, 29 Aug 2018

According to AmBank Research, competition in the local cellular telco segment is expected to remain intense over the medium term, as repackaged data plans make their way to the market while the fixed broadband segment is expected to see rising pressure to improve price and speed.

AFTER Maxis Bhd revised its fixed broadband pricing last week, Axiata Group Bhd says it will invest heavily into the fixed broadband space next year.

Axiata’s move can be understood as cellular margins are thinning. Unless mobile players get into the fixed broadband space, they will have to contend with a depressing average revenue per user (Arpu) or may be left out when 5G comes into play because its backhaul relies heavily on fibre. So, it is moving in the right direction just like Maxis.

However, before Axiata’s unit Celcom Axiata Bhd, which on Friday announced the appointment of new CEO Mohamad Idham Nawawi effective Sept 1, can dream big, it has to get its act right if it wants to be considered a serious player in the fixed broadband game.

Still, the entry of a new player will help as there is a serious lack of competition in the fixed broadband space.

Telekom Malaysia Bhd (TM) is the incumbent with its high-speed broadband (HSBB) network, but pockets of the population are still struggling with 1Mbps to 2Mbps.

TIME Dotcom Bhd, the other player in the game, seems just keen on wiring-up buildings and not really landed premises.

Maxis entered the fixed broadband space some years ago by riding on TM’s HSBB, but it really needs to go beyond the big cities.

With Axiata in the fibre space, the onus is now on Digi.com Bhd and U Mobile to declare if they want to join the bandwagon or stay on the sidelines and watch others having both fixed and mobile offerings at a time when lines are blurring between fixed and mobile. Experts have said that it is inevitable for players to offer both or be subject to erosion of Arpus.

The potential to wire-up Malaysia is huge and now even Tenaga Nasional Bhd’s fibre and ducts are available for use.

Maxis last week reduced its broadband pricing from a steep RM179 per month for 30Mbps to RM89 per month, and 100Mbps to RM129 per month from RM299 per month. The new pricing offers unlimited access and is also applicable to its existing users.

TM is offering RM79 per month for 30Mbps to the B40 households (with RM4,500 monthly income and below), and is raising speeds for the RM139 per month package from 30Mbps to 300Mbps, and RM329 per month plan from 100Mbps to 800Mbps.

Had it not been for Gobind Singh Deo’s insistence, we would still have to pay reasonably high prices for fixed broadband services. The Communications and Multimedia Minister had not just made it “sort of compulsory” to drop broadband prices by at least 25% by year end, but also made it mandatory for players to adopt the mandatory standard on access pricing (MSAP). With the MSAP, the overall prices should fall by up to 80%.

Despite the implementation of the MSAP, there are still some parties dragging their feet and not inking new commercial deals or wholesale access, basically not willing to give up the high Arpus. Up to yesterday, access seekers were still waiting to ink deals with the access provider and that dateline has been pushed from July to the end of this month.

Interestingly, Gobind said this week that the ministry would take action against players if they fail to adhere to the MSAP by end-August, and he seems serious about it.

Let’s see if there is a real rush to ink agreements and price announcements in the coming days. If they fail, the question is what possible action can Gobind take against them. It may be worth watching as for too long, users have been subject to high prices. It is time for a serious change.

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Business , broadband , Gobind Singh Deo , TM , Telekom , Axiata , Maxis , U Mobile , $G , 5G ,


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