Fitch Solutions positive on govt broadband push

  • Telcos
  • Friday, 12 Oct 2018

KUALA LUMPUR: Fitch Solutions Macro Research is positive on the government's new broadband initiatives to improve penetration and the country’s standing as a regional ICT hub.

In its research note issued on Friday, it said major Malaysian internet service providers (ISPs) –  Telekom Malaysia (TM), Maxis, Time dotcom and Celcom – have reduced their wireline broadband tariffs.

The reduction in tariffs, which came into effect in October, was in line with the government's Mandatory Standard on Access Pricing (MSAP) directive. 

Under the directive, operators increased bandwidth on high-speed fibre services by as much as 10 times while retaining prices. They also slashed prices on entry-level fibre packages by as much as 54%. 

The government also announced, as part of its upcoming National Fiberisation and Connectivity Plan (NFCP), the aim of phasing out copper infrastructure by 2023.

Telecoms regulatory reform by the Malaysia Communications and Multimedia Commission (MCMC) has been rapid since the new Pakatan Harapan (PH) government swept into power in May 2018.

Fitch Research said MCMC had moved rapidly to improve affordability of communications services in the country through the MSAP and also reforming the licensing regime to accommodate new network service providers and facilities providers. 

Under the previous government, the public-private Hig h Speed Broadband (HSBB) initiative launched by the previous government had put TM in control of access infrastructure, affording it a certain level of control over wholesale charges which had forced smaller ISPs out of the market.

“Reforms will certainly be a boon to growth of fixed broadband connections, which we expect will reach 4.5 million by 2027, 6 1% of which will be fibre-based (FTTx),”  it said.

Commenting on the government's plan to boost Malaysia’s position as a leading ICT hub in Southeast Asia, Fitch Research said a significant improvement in access network quality will be attractive to tech players, such as cloud services providers to set up operations in the country.

Malaysia has lost ground to Singapore owing to the city-state’s favourable reg ulation and advanced network infras tructure. 

The research house said the government’s plan to combine the National Connectivity Plan (NCP) with the National Fiberisation Plan (NFP) – which stalled owing to difficulties laying out cable in topog raphically challenging areas – would help in the adoption of multiple advanced technologies to deliver broadband. 

“The government has further confirmed that it is in talks with foreign operators to roll-out fixed wireless services in the 700MHz band, which could likely be targeted at rural subscribers owing to the better propagation characteristics of the lower frequency spectrum.

“We highlight that the substantial proportion of subscribers on ageing Streamyx ADSL connections provided by TM will be the next group that the MCMC will earmark for service improvements .

“The regulator will also be keen on reforming prices for fixed wireless services , which were not included in the price/bandwidth re-adjustments . 

“Complete retirement of copper networks by 2023, however, could be difficult to achieve as the government - as part of fiscal consolidation efforts - will likely slash capital expenditure, denting the ability for new generation cable roll-outs. 

“That said, penetration of advanced communications services is a strong determinant of government popularity, and as s uch, we expect the PH administration to continue pushing its aggressive broadband reforms,” Fitch Research said.
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